The tax and program changes behind the Budget Resolution produce much stronger economic performance when compared to the rate and level of economic activity in the baseline. 6 Lower taxes stimulate greater investment, which expands the size of business activity. This expansion fuels a demand for more labor, which enters a labor market that contains workers who themselves face lower taxes. Consequently, significantly higher employment ensues. Gains in employment along with lower taxes lead to higher household incomes. The growth of business enterprise coupled with the increase in disposable income fuels more extensive savings and investment by households, which results.
