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FBBVA Lecture 2023. The Importance of Modeling Income Taxes over Time: U.S. Reforms and Outcomes

Author

Listed:
  • Margherita Borella
  • Mariacristina De Nardi
  • Michael Pak
  • Nicolo Russo
  • Fang Yang

Abstract

The structure of taxes and their burden have undergone large and frequent changes over time. We provide a brief history of U.S. federal income tax reform since the 1960s, calculate effective federal income tax rates for each wave of the Panel Study of Income Dynamics, and discuss how effective taxation changed from 1969 to 2016. We show that most tax regimes are short-lived and that the variation in taxes over time and across groups is large. We also use an estimated dynamic model of couples and singles to show that the various tax regimes that we estimate imply very different labor market and saving behavior. These findings stress the importance of studying and modeling tax changes over time and across groups.

Suggested Citation

  • Margherita Borella & Mariacristina De Nardi & Michael Pak & Nicolo Russo & Fang Yang, 2023. "FBBVA Lecture 2023. The Importance of Modeling Income Taxes over Time: U.S. Reforms and Outcomes," Journal of the European Economic Association, European Economic Association, vol. 21(6), pages 2237-2286.
    • Handle: RePEc:oup:jeurec:v:21:y:2023:i:6:p:2237-2286.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvad053
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    Cited by:

    1. Kuhn, Moritz & Manovskii, Iourii & Qiu, Xincheng, 2024. "Female Employment and Structural Transformation," CEPR Discussion Papers 19231, Centre for Economic Policy Research.
    2. Fabio Blasutto & Egor Kozlov, 2020. "(Changing) Marriage and Cohabitation Patterns in the US: do Divorce Laws Matter?," 2020 Papers pbl245, Job Market Papers.
    3. Nezih Guner & Christopher Rauh & Gustavo Ventura, 2026. "Means-Tested Transfers in the US: Facts and Parametric Estimates," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 61, August.
    4. Zainab Iftikhar & Theresa Linhard & Hanna Schwank, 2026. "Beyond Vows: Family Structure and Consumption Inequality," ECONtribute Discussion Papers Series 409, University of Bonn and University of Cologne, Germany.
    5. Castro Nofal, Bastian & Díaz, Juan D. & Gutiérrez Cubillos, Pablo & Hansen, Erwin, 2024. "On the robustness of the relationship between tax progressivity, growth, and inequality in the US," Economics Letters, Elsevier, vol. 241(C).
    6. Jalles, João Tovar & Karras, Georgios, 2024. "Tax progressivity and income inequality in the US," Economics Letters, Elsevier, vol. 238(C).
    7. Kitae Cho & Eunseong Ma, 2024. "Designing Optimal Progressive Taxation with Hours Constraints," Working papers 2024rwp-231, Yonsei University, Yonsei Economics Research Institute.
    8. Cruces, Lidia, 2024. "A quantitative theory of the new life cycle of women's employment," Journal of Economic Dynamics and Control, Elsevier, vol. 169(C).
    9. Zainab Iftikhar & Theresa Linhard & Hanna Schwank, 2026. "Beyond Vows: Family Structure and Consumption Inequality," CRC TR 224 Discussion Paper Series crctr224_2025_750, University of Bonn and University of Mannheim, Germany.

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