Hi Setanta, I was replying to RealMusic's post, which appeared generic in nature, hence the generic reply.
I'm not sure about the specifics of the tax cut you were discussing, but it sounds plausible.
In terms of markets tanking. I have a bigger overall picture to offer you. Economies do get stimulated by interest rates cuts, and Western countries each had a board responsible for the official interest rate, which started off high. At each recession, they slashed interest rates. Housing prices eventually went up because of that. So each subsequent time, they were unable raise interest rates as high as the previous period (else the housing market would fall over, and business suffers in the disposable income shortage). So each recession, the official interest rate got lower and lower, until it was basically minimum rates with nowhere for the government to go.
So the only way to stimulate the economy is to borrow, or cut tax (which governments have never taken back). Currently, there appears no political taste for recessions (which correct a lot of price blowouts), so governments are left with either borrowing, or cutting tax.
The Western worlds debt is piling up, and continues to grow (with several basket cases, or borderline basket cases in Europe already). That is patently unsustainable. Governments say it is, and they promise to return to surplus...but for many western countries, the return to surplus isn't happening, nor getting close to happening.
If you look at my previous post - the pattern is that the burden (ie both debt, and tax revenue for the government) of stimulating business is being transferred to the workers. There is a growing divide between rich and poor which backs this up.
This problem set aside (and it is a problem)....the other problem is, the system cannot sustain ever increasing debt. At some stage, it has to come crashing down. If I had to guess, I'd say it will trigger a depression, rather than just a recession.