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Economists say that the impact of tax cuts on economic growth depends on how the tax cut is financed, and the assumed international capital flows.
Economists say that the impact of tax cuts on economic growth depends on how the tax cut is financed, and the assumed international capital flows. Deficit-financed tax cuts are especially less likely to produce long-run growth effects. Failure of capital to flow internationally, also reduces the likelihood of success of tax rate cuts. Can you explain what "deficit-financed" tax cuts mean, and why international capital flow is also a factor? Thanks. G
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