Effect of Policy Options on Employment in 2010 and 2011

"Policies that could be implemented relatively quickly or targeted toward people whose consumption tends to be restricted by their income, such as reducing payroll taxes for firms that increase payroll or boosting aid to the unemployed, would have the largest effects on output and employment per dollar of budgetary cost in 2010 and 2011. By contrast, policies that temporarily increased the after-tax income of people with relatively high income, such as an across-the-board reduction in income taxes or an increase in the exemption amount for the alternative minimum tax (AMT), would have smaller effects because such tax cuts would probably not affect the recipients’ spending significantly."

Link for above graph and quoted text: http://taxprof.typepad.com/taxprof_blog/govt_reports/

Data Source: Congressional Budget Office (CBO)