When forces act on an economy, either to increase its activity or to cause a retreat, it activates a series of automatic self-stabilizers for the purpose of returning it to its original level of activity. This study examines the effects of one of the most important stabilizers, the tax-burden stabilizer. The paper makes two important contributions to the research of the tax-burden stabilizer. First, it adds to the very limited literature an empirical evidence for the strengths of the tax-burden stabilizer in the short term relative to the long term and its ability to neutralize economic policy aiming to revive an economy. Second, it presents empirical evidence that an economic policy which takes into account the magnitude of the tax-burden stabilizer can neutralize most of its effects.
