The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States

This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between changes in personal and corporate income taxes and develop a new narrative account of federal tax liability changes in these two tax components. We develop an estimator which uses narratively id...

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Bibliographic Details
Published inThe American economic review Vol. 103; no. 4; pp. 1212 - 1247
Main Authors Mertens, Karel, Ravn, Morten O.
Format Journal Article
LanguageEnglish
Published Nashville American Economic Association 01.06.2013
Subjects
Aggregates
Average tax rate
Changes
Consumption
Corporate income
Corporate income tax
Corporate income taxes
Corporate taxes
Economic development
Employment
Estimated taxes
Estimates
Expenditure
Fiscal policy
GDP
Government spending
Gross Domestic Product
Income tax
Income taxes
Investments
Labour market
Narratives
Personal income
Personal income tax
Personal income taxes
Proxy reporting
Single tax system
Studies
Tax cuts
Tax rates
Tax revenues
Tax systems
U.S.A
United States > US
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Summary:This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between changes in personal and corporate income taxes and develop a new narrative account of federal tax liability changes in these two tax components. We develop an estimator which uses narratively identified tax changes as proxies for structural tax shocks and apply it to quarterly post-WWII data. We find that short run output effects of tax shocks are large and that it is important to distinguish between different types of taxes when considering their impact on the labor market and on expenditure components.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0002-8282
1944-7981
DOI:10.1257/aer.103.4.1212