Tax Cuts Are The Best Stimulus Measures

Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.

From a research paper, "Large changes in fiscal policy: taxes versus spending" by Alberto Alesina and Silvia Ardagna, August 2009, Revised: October 2009.

The New York Times is publishing an article by Greg Mankiw, "Tax Cuts Might Accomplish What Spending Hasn’t" on Sunday, December 12, 2009 that discusses and summarizes current economic research that shows that of the three government options to combat economic slowdowns; deficit financed stimulus spending (Keynesian approach), tax financed stimulus spending and tax cuts. According to Mankiw's summary of the research, tax cuts that promote investment are the most effective remedy to increase an economy's output.