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Deficit Reduction Act

The Deficit Reduction Act was passed by the US Congress in 1993 under the Clinton administration. It was designed to increase tax revenues by $250 billion over a period of 5 years and to reduce Federal spending by the same amount. The legislation increased the top marginal tax rate on personal income to 39.6% and added roughly four cents per gallon to the Federal excise tax on gasoline. All in all, it promoted a reverse crowding-out effect .

Reference

McConnell Brue Economics , 15th Edition, McGraw-Hill

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