Why would a reduction in tax rates not be painless Who might

Why would a reduction in tax rates not be painless? Who might suffer? (hint: what happens to the value of itemized tax deductions?)

Solution

Tax rate reduction may encourage individuals to work, save, and invest but if the tax cuts are not financed by immediate spending cuts, they will likely also result in an increase federal budget deficit, which in the long term will reduce national saving and raise interest rate

they reduce the impact on growth is uncertain, but many estimates it is either small or negative.