When Congress enacts a tax cut that is phased in over a period of years, revenue neutrality is achieved.

Question

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Revenue neutrality means that the tax cut does not result in a decrease in government revenue. If the tax cut is phased in over a period of years, it will initially result in a decrease in revenue before eventually reaching revenue neutrality. Therefore, revenue neutrality is not immediately achieved when a tax cut is phased in over time.

When Congress Enacts a Tax Cut That Is Phased in Over