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Incentives Matter: Shifting Trends in Tax Policy and Economic Inequalities in the United States, 1917-2015

Author

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  • Bradley Smith

    (UPN - Université Paris Nanterre, CREA (EA 370) - Centre de Recherches Anglophones - UPN - Université Paris Nanterre, UPN LCE - Université Paris Nanterre - UFR Langues et cultures étrangères - UPN - Université Paris Nanterre)

Abstract

The increase in economic inequality in the United States since the late 1970s is well documented, thanks in particular to the research of Thomas Piketty and Emmanuel Saez, based on data supplied by various federal agencies. However, the causes and effects of these inequalities are hotly debated. This paper aims to contribute to these debates in two ways: firstly, by analyzing the empirical links between tax policies and income and wealth inequalities since the beginning of the 20th century; secondly, by highlighting the role of tax incentives in the shifts observed in the 1930s-1940s and again in the 1970s-1980s towards a reduction and then a widening of inequalities. The thesis is that these shifts cannot be attributed solely to the mechanical effects of economic cycles, but are the result of political choices.

Suggested Citation

  • Bradley Smith, 2017. "Incentives Matter: Shifting Trends in Tax Policy and Economic Inequalities in the United States, 1917-2015," Post-Print hal-04379993, HAL.
  • Handle: RePEc:hal:journl:hal-04379993
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