No Taxation without Reallocation: The Distributional Effects of Tax Changes

Stephanie Ettmeier

No 2022, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper investigates the dynamic effects of tax changes on the cross-sectional distribution of disposable income in the United States using a narrative identification approach. I distinguish between changes in personal and corporate income taxes and quantify the distributional effects on families and business owners. I document that tax changes affect incomes along the distribution differently and that the family status and the source of income matters. Tax reductions benefit high incomes and disadvantage lower incomes. Entrepreneurs and families benefit more from tax cuts than individuals without business income and non-families.

Keywords: Income Distribution; functional vector Autoregressions; tax policy shocks (search for similar items in EconPapers)
JEL-codes: C11 C32 E32 E62 (search for similar items in EconPapers)
Pages: 76 p.
Date: 2022
New Economics Papers: this item is included in nep-pbe and nep-pub
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https://www.diw.de/documents/publikationen/73/diw_01.c.857741.de/dp2022.pdf (application/pdf)

Related works:
Working Paper: No Taxation Without Reallocation: The Distributional Effects of Tax Changes (2023)
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