For each of the following, state whether the policy would work according to the current income theory and the permanent income theory and explain why in detail. 

A 10-year tax cut on the personal income tax rates with reduced payroll withholding going into effect immediately.

A 10-year tax cut on corporate income tax rates.

A one-time tax rebate to everyone in the United States based on 10% of each person's prior year federal income taxes paid.

A one-time tax rebate/credit to everyone in the United States of $1,000 per person regardless of whether they had paid taxes or not.

A permanent increase of 10% in Social Security payments to all recipients.

Answer rating: 100% (QA)

According to the current income theory a 10year tax cut on personal income tax rates with reduced payroll withholding going into effect immediately would likely increase consumption in the short run T... View the full answer