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Macroeconomic Implications of Tax Cuts for the Top Income Groups: 1960 - 2010

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  • Markus Poschke

    (McGill University, Montreal)

  • Baris Kaymak

    (Universite de Montreal)

Abstract

Over the last 40 years the US tax system went through striking changes that considerably reduced the progressivity of the system. This resulted in a dramatic reduction of effective tax rates on top income groups. This paper investigates the macroeconomic repercussions of this change in tax policy, particularly for the distributions of income, wealth, consumption and welfare.

Suggested Citation

  • Markus Poschke & Baris Kaymak, 2014. "Macroeconomic Implications of Tax Cuts for the Top Income Groups: 1960 - 2010," 2014 Meeting Papers 1054, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:1054
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    References listed on IDEAS

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    1. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
    2. Mark Aguiar & Mark Bils, 2015. "Has Consumption Inequality Mirrored Income Inequality?," American Economic Review, American Economic Association, vol. 105(9), pages 2725-2756, September.
    3. Olympia Bover, 2010. "Wealth Inequality And Household Structure: U.S. Vs. Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 259-290, June.
    4. Heaton, John & Lucas, Deborah J, 1996. "Evaluating the Effects of Incomplete Markets on Risk Sharing and Asset Pricing," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 443-487, June.
    5. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2017. "Optimal Tax Progressivity: An Analytical Framework," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1693-1754.
    6. Markus Poschke & Baris Kaymak & Ozan Bakis, 2012. "On the Optimality of Progressive Income Redistribution," 2012 Meeting Papers 837, Society for Economic Dynamics.
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    Cited by:

    1. Brüggemann, Bettina & Yoo, Jinhyuk, 2015. "Aggregate and distributional effects of increasing taxes on top income earners," IMFS Working Paper Series 94, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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