Understanding middle-class tax cuts

Alex Brill ()

AEI Economic Perspectives, 2016

Abstract: Middle-class tax relief has widespread support across the political spectrum, but the consequences of different strategies for achieving this goal are not well understood. Using a new modeling suite incubated by AEI's Open Source Policy Center, this paper evaluates stylized versions of middle-class tax relief options with respect to the average effective marginal tax rate (EMTR) on labor income, the number of taxpayers claiming the standard deduction, the number of taxpayers receiving tax relief, and the macroeconomic effects. The analysis finds that either doubling the standard deduction or expanding the brackets for the 10 or 15 percent tax rates results in lower EMTRs for taxpayers in the middle class, but that these policies have quite different effects both within the middle class and across the aggregate economy.

Keywords: tax reform; Middle class; AEI Economic Perspectives; What to Do: Policy Recommendations on Tax Reform; Open Source Policy Center (OSPC) (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:aei:journl:y:2016:id:881479

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