I don&#x27;t know what confusion of ideas created your current state of mind, but a reduction in tax is not a subsidy.<p>The maximum benefit to the economy is achieved when economic distortion due to tax or subsidy is zero.<p>Consider the traditional supply vs demand plot:<p><pre><code>  $| \D   S&#x2F;    In an undistorted market,
   |  \   &#x2F;     the equilibrium point where
   |   \ &#x2F;      D and S intersect determine
  A|----X       the price (A) and quantity (B)
   |   &#x2F;|\      that will be sold. 
   |  &#x2F; | \
   | &#x2F;  |  \
   +---------
        B   #
</code></pre>
The consumer benefit to trade is the area <i>below</i> D and <i>above</i> A.  The producer benefit to trade is the area <i>below</i> A and <i>above</i> S.<p><pre><code>  $| \D   S&#x2F;    In a taxed market, the tax
  C|--\   &#x2F;     creates a difference between
   |  |\ &#x2F;      what the consumer pays (C) and 
  A|  | X       what the producer gets (E).
   |  |&#x2F; \      As a result, the quantity sold
  E|--&#x2F;   \     drops to a lower value (F).
   | &#x2F;|    \
   +---------
      F B   #
</code></pre>
The tax revenue is the area <i>above</i> E, <i>below</i> C, and <i>left of</i> F.  It is possible this can be returned to the economy intact, if the government spends it wisely.  The triangle of the former benefit of trade to the <i>right of</i> F and <i>left of</i> B is <i>deadweight loss</i>, and is lost forever.  The new consumer benefit is <i>above</i> C and <i>below</i> D, while the new producer benefit is <i>below</i> E and <i>above</i> S.<p><pre><code>  $| \D   S&#x2F;    In a subsidized market, the subsidy
  G|--\---&#x2F;     creates a difference between
   |   \ &#x2F;|     what the consumer pays (H) and 
  A|    X |     what the producer gets (G).
   |   &#x2F; \|     As a result, the quantity sold
  H|--&#x2F;---\     increases to a higher value (I).
   | &#x2F;    |\
   +---------
        B I #
</code></pre>
The cost of the subsidy is the area <i>below</i> G, <i>above</i> H, and <i>left of</i> I.  This produces an additional consumer benefit <i>below</i> A and D, and <i>above</i> H, and additional producer benefit <i>above</i> A and S, and <i>below</i> G.  Note that this produces another triangular area of deadweight loss that the government spends to produce zero additional economic benefit.<p>In conclusion, a reduction in tax cannot in any way be reasonably considered equivalent to a subsidy.