Backward bending

Stephen Gordon sorts through the corporate tax cut rhetoric.

If the CIT cuts go through and are later rescinded, we will not see a recession in which some 233,000 people lose their jobs. Instead, long-run incomes will be about 1.4% lower than they otherwise would have been. I think rescinding the CIT cut would be a mistake, and that it will cost less than the advertised $6b figure. But it wouldn’t be the worst mistake we’ve seen in the last five years.