May 9, 2003 | News Releases on Taxes
2001 Tax Cut Has Helped U.S. Avoid International Economic Woes
WASHINGTON, MAY 9, 2003
-The 2001 tax cut has not
only helped the economy, it likely is "saving the United States
from the worst of the economic stagnation now confronting most of
the world," says a new
from The Heritage Foundation.
That's hardly the conventional view, as Heritage senior research
fellow Ronald Utt
admits. Tax-cut critics in Congress often cite the slow-growing
economy to justify their opposition to approving a new cut. The
2001 cut hasn't bolstered the economy, they claim, so why pass
World Bank data show why: With only part of the 2001 tax cut in
effect, the U.S. economy grew at twice the rate of the European
economy last year. Indeed, Utt points out, the United States has
outperformed 12 of the top 15 countries listed in the World
Development Indicators 2002. Only Australia and Canada did
"Our growth is all the more impressive when you consider that it
occurred in an environment of severe economic setbacks and
international risks that other countries managed to escape," Utt
says. "America's stock-market bubble of the late 1990s was worse
than Europe's, and U.S. businesses and consumers have yet to
overcome their war worries."
Critics may counter that a one-year snapshot proves little, but
when Utt analyzed economic performance over longer periods of time,
he found essentially the same trend. France's experience is
typical: Citizens there have seen their buying power decline
relative to America's over the past two decades-a period during
which France embarked upon an aggressive tax-and-spend policy.
Today, taxes in France consume more than 45 percent of the national
economic output, compared to just over 29 percent in the United
"If Congress wants to ensure that we continue to lead the world
economically, it will approve a large and substantial pro-growth
tax cut," Utt says.
More information is available online at Heritage's "Reality Check"
on taxes: www.heritage.org/research/taxes/taxbriefingroom.cfm