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Tax cuts and ”middle-class” workers

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  • Berisha, Edmond

Abstract

The supporters of the new tax plan, the Tax Cuts and Jobs Act, have suggested that the benefits will primarily go to workers through higher wages. In this article, I examine the impact Romer and Romer (2010) exogenous tax changes have on median weekly earnings. The findings suggest that the direct impact of lower taxes on median weekly earnings is not statistically significant. Nevertheless, the results suggest that deficit-driven tax increases contribute to lower median weekly earnings.

Suggested Citation

  • Berisha, Edmond, 2020. "Tax cuts and ”middle-class” workers," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 276-281.
    • Handle: RePEc:eee:ecanpo:v:65:y:2020:i:c:p:276-281
    DOI: 10.1016/j.eap.2019.10.004
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    References listed on IDEAS

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    1. Karel Mertens & José Luis Montiel Olea, 2018. "Marginal Tax Rates and Income: New Time Series Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(4), pages 1803-1884.
    2. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    3. Andrew Mountford & Harald Uhlig, 2009. "What are the effects of fiscal policy shocks?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 960-992.
    4. Hussain, Syed M. & Malik, Samreen, 2016. "Asymmetric Effects of Exogenous Tax Changes," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 268-300.
    5. Robert J. Barro & Charles J. Redlick, 2011. "Macroeconomic Effects From Government Purchases and Taxes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 51-102.
    6. Mountford, Andrew & Uhlig, Harald, 2005. "What are the effects of fiscal policy shocks?," SFB 649 Discussion Papers 2005-039, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
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    Cited by:

    1. Muhammad Nadeem Sarwar, 2023. "An Evaluation of Different Tax Reform Proposals in Pakistan using CGE Model," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(3), pages 309-330.
    2. Orkideh Gharehgozli & Peyman Nayebvali & Amir Gharehgozli & Zaman Zamanian, 2020. "Impact of COVID-19 on the Economic Output of the US Outbreak’s Epicenter," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 561-573, October.

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