Tax cuts increase GDP as long as any of the money not paid in taxes is spent. It's right there in the GDP as "Personal consumption expenditures" and "Gross private domestic investment". As long as all of a tax cut is not saved, there will be some increase in GDP by simple definition. To what degree tax cuts will stimulate ethe economy by expanding GDP is the debate rather than whether tax cuts will stimulate the economy. Take an economist like Joseph Stiglitz, for example. Stiglitz was a primary economics advisor to Clinton and a Nobel prize winner in economics. He signed the statement against Bush' tax plan. He wrote a good book on the IMF called "Globalization and its Discontents". In that book he comments on the success of the Keynesian model (cut taxes and increase spending). Now what he is opposed to in the Bush plan is the distribution of tax cuts not the idea of a tax cut itself. (He is also opposed to a permanent tax cut).
One of the most debated questions in economics is how to get the best multiplier for a tax cut. Every dollar is spent more than once. I buy a $2500 television. The guy that owns the store then turns around and invests part of that, distributes some to employees, etc. etc. One dollar is spent many times.
As far as experiments go, the difficulty is no one knows what the economics situation would have been without the stimulus. If one cuts taxes and the economy increases .5%. Who is to say that without the stimulus the economy would have been at -1%?
A simpler example is on the government spending side. If the economy was on pace for -1% but government increases enough to increase the GDP by more than 1% (about $100 billion) then one avoids a recession.
I think were seeing that right now.
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