Tax Cut Not Inflationary, 73 Study Said: 73 OMB Study Said Tax Cut Would Not Fuel Inflatio
A study done late last year] by the Office of Management i and Budget said a $5 billion , federal tax cut would not add j ÛÏsignificantlyÛ *to inflation, as ! the White House says today it j would.	I</br></br>The unpublished study also1 suggested that a lax cut of J that size, which it called i "modest,Û might save as many| as 250,000 Americans from un-j employment.	ÐÊ</br></br>Democrats in the Senate are pressing for a tax cut this! election year as a way of stim- [ ulating the economy out of its first-quarter downturn. The administration opposes the move.</br></br>The OMB staff prepared the study last October, and one OMB economist noted yesterday that Û÷it was a different \ world then.Û Inflation and the! projected federal deficit for fiscal 1975, which will start! .July 1, both were lower than i they are toda>. However, the j unemployment rate was also lower. The economist said another study has been made since, and shows a tax cut would add substantially to inflation.</br></br>The Democrats plan to j bring their tax proposals up, next week, as a rider to a bill j to increase the federal debt' ceiling. Along with the taxj cut, which would mainly bene- j fit lower and middle-income I families, they are proposing aj set of tax reforms, which would mainly raise the taxes! of corporations. The reforms would recapture some of the] revenue lost in the lax cut.; but the federal deficit still| would grow next fiscal year. I