Taxing the Rich to Finance Redistribution: Evidence from a Permanent Tax Increase in Singapore

Sumit Agarwal (), Wenlan Qian (), Bernard Yeung () and Huanhuan Zheng
Additional contact information
Sumit Agarwal: NUS Business School, National University of Singapore, Singapore 119077
Wenlan Qian: NUS Business School, National University of Singapore, Singapore 119077
Bernard Yeung: NUS Business School, National University of Singapore, Singapore 119077

Management Science, 2024, vol. 70, issue 4, 2518-2548

Abstract: Based on a representative sample of consumer financial transaction data, this paper studies the consumption and savings response to a 2015 permanent increase in the marginal income tax of the high-income taxpayers. Using difference-in-differences regressions, controlling for individual and time fixed effects, we show robust results that the affected consumers experienced little change in their spending. The pattern is prevalent across consumer demographics and is found even among consumers who are sophisticated, have high levels of debt, or register little income changes. Furthermore, the tax increase financed fiscal redistribution leads to a long-lasting increase in the consumption of the lower-income population.

Keywords: income tax; consumption; savings; redistributive policy; fiscal policy (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2023.4823 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:4:p:2518-2548

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().