Tax progressivity and output in the US

João Tovar Jalles, Georgios Karras

Research output: Contribution to journalArticlepeer-review

Abstract

Compared to the economic effects of tax rates, those of tax progressivity have benefited much less from the recent Renaissance in fiscal research. In this letter, we use a novel data set on US tax progressivity constructed by Borella et al. (2022) to estimate its output effects since 1970. Our results show that tax progressivity reduces the economy's growth rate temporarily and the level of income per capita permanently. Both effects are sizable, statistically significant, and robust to various specifications and to controlling for changes in the tax rate.

Original languageEnglish
Article number111545
JournalEconomics Letters
Volume235
DOIs
Publication statusPublished - Feb 2024

Keywords

  • Economic growth
  • Local projections
  • Tax progressivity
  • Tax rates
  • Time series

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