Tax Cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment

  title={Tax Cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment},
  author={Owen M. Zidar},
  journal={Journal of Political Economy},
  pages={1437 - 1472}
  • Owen M. Zidar
  • Published 1 June 2019
  • Economics
  • Journal of Political Economy
This paper investigates how tax changes for different income groups affect aggregate economic activity. I construct a measure of who received (or paid for) tax changes in the postwar period using tax return data from NBER’s TAXSIM. Variation in the income distribution across US states and federal tax changes generate variation in regional tax shocks that I exploit to test for heterogeneous effects. I find that the positive relationship between tax cuts and employment growth is largely driven by… Expand
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