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Trickle Down? A little bit

Author

Listed:
  • Edmond Berisha

    (Montclair State University)

Abstract

The new tax plan approved by the U.S. Senate, the Tax Cuts and Jobs Act, claims to offer the largest benefits to individuals in the middle of the income distribution. In this article, I examine the impact exogenous tax changes have on income shares of individuals in the bottom 50 percent of the income distribution. The findings suggest that lower taxes, that are exogenous to fluctuations in business conditions, have minimal direct benefits for individuals in the bottom 50% of the income distribution. Claims that trickle-down economics lift all income shares through lower taxes are not supported by the empirical findings.

Suggested Citation

  • Edmond Berisha, 2018. "Trickle Down? A little bit," Economics Bulletin, AccessEcon, vol. 38(2), pages 725-732.
    • Handle: RePEc:ebl:ecbull:eb-18-00006
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I2-P72.pdf
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    References listed on IDEAS

    as
    1. Slemrod,Joel, 1997. "Tax Progressivity and Income Inequality," Cambridge Books, Cambridge University Press, number 9780521587761.
    2. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
    3. 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.
    4. Daniel R. Feenberg & James M. Poterba, 1993. "Income Inequality and the Incomes of Very High-Income Taxpayers: Evidence from Tax Returns," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 145-177, National Bureau of Economic Research, Inc.
    5. Lindsey, Lawrence B., 1987. "Individual taxpayer response to tax cuts: 1982-1984 : With implications for the revenue maximizing tax rate," Journal of Public Economics, Elsevier, vol. 33(2), pages 173-206, July.
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    Cited by:

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    More about this item

    Keywords

    Tax Changes; National Income Shares;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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