Proponents of Ricardian equivalence argue that if taxes are cut without cutting government spending and taxes are not expected to increase in the future until after an individual expects to be dead, then the individual will:

Question

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Ricardian equivalence suggests that individuals will anticipate the need for future tax increases to pay off government debt, leading them to save any current increase in income to prepare for those future taxes, potentially leaving it as a bequest.

Proponents of Ricardian Equivalence Argue That If Taxes Are Cut