Tax Cuts for Whom? Heterogenous Macroeconomic Effects of Income & Payroll Tax Changes

2012 ◽  
Author(s):  
Owen M. Zidar
Keyword(s):  
Payroll Tax ◽  
Macroeconomic Effects ◽  
Tax Changes ◽  
Tax Cuts

scholarly journals The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks

2020 ◽  
Vol 12 (2) ◽  
pp. 167-193
Author(s):  
Domenico Ferraro ◽  
Giuseppe Fiori
Keyword(s):  
Labor Force ◽  
Baby Boomers ◽  
Unemployment Rate ◽  
Age Groups ◽  
Marginal Tax Rate ◽  
Structural Shocks ◽  
Tax Rate ◽  
Tax Shocks ◽  
Tax Changes ◽  
Tax Cuts

We study how the changing demographic composition of the US labor force has affected the response of the unemployment rate to marginal tax rate shocks. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of the unemployment rates to tax changes varies significantly across age groups: the unemployment rate response of the young is nearly twice as large as that of the old. This heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the unemployment rate to tax cuts. We find that the aging of the baby boomers considerably reduces the effects of tax cuts on aggregate unemployment. (JEL E24, E62, H24, H31, J21)

scholarly journals The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States: Reply

2019 ◽  
Vol 109 (7) ◽  
pp. 2679-2691 ◽  
Author(s):  
Karel Mertens ◽  
Morten O. Ravn
Keyword(s):  
United States ◽  
Income Tax ◽  
The United States ◽  
Corporate Income Tax ◽  
Dynamic Effects ◽  
Valid Inference ◽  
Macroeconomic Effects ◽  
Tax Changes ◽  
Inference Methods

In this reply to a comment by Jentsch and Lunsford, we show that the evidence for economic and statistically significant macroeconomic effects of tax changes in Mertens and Ravn (2013) remains present for a range of asymptotically valid inference methods. (JEL E23, E62, H24, H25, H31, H32)

Two-sector perspectives on the effects of payroll tax cuts and their financing

2009 ◽  
Vol 93 (1-2) ◽  
pp. 176-190 ◽  
Author(s):  
Alberto Petrucci ◽  
Edmund S. Phelps
Keyword(s):  
Payroll Tax ◽  
Tax Cuts

scholarly journals Workers' Spending Response to the 2011 Payroll Tax Cuts

2016 ◽  
Vol 8 (4) ◽  
pp. 124-159 ◽  
Author(s):  
Grant Graziani ◽  
Wilbert van der Klaauw ◽  
Basit Zafar
Keyword(s):  
Payroll Tax ◽  
Demographic Groups ◽  
Present Bias ◽  
Ex Post ◽  
Ex Ante ◽  
Tax Cuts

This paper investigates workers' spending response to the 2011 payroll tax cuts. Respondents were surveyed at the beginning and end of 2011, which allows the comparison of ex ante and ex post reported use of the extra income. While workers on average intended to spend 14 percent of their tax cut income, they ex post reported spending 36 percent of the funds. This pattern of higher spending ex post is shared across all demographic groups. Differences across workers in this shift to greater ex post spending are largely unexplained by differences in either present bias or unanticipated shocks, so in the end the upward revision in spending remains a puzzle. (JEL D12, D91, E21, H24, H31)

scholarly journals Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Increases, 1952–1991

2016 ◽  
Vol 8 (4) ◽  
pp. 1-42 ◽  
Author(s):  
Christina D. Romer ◽  
David H. Romer
Keyword(s):  
Monetary Policy ◽  
Social Security ◽  
Industrial Production ◽  
Positive Response ◽  
Social Security Benefit ◽  
Transfer Payments ◽  
Macroeconomic Effects ◽  
Tax Changes

This paper uses Social Security benefit increases from 1952 to 1991 to investigate the macroeconomic effects of changes in transfers. It finds a large, immediate, and significant positive response of consumption to permanent benefit increases. The response declines after about five months, and does not appear to spread to industrial production or employment. The effects of transfers are faster, but much less persistent and much smaller overall, than those of tax changes. Finally, monetary policy responds strongly to benefit increases but not to tax changes. This may account for the failure of the effects of transfers to persist or spread. (JEL E21, E62, E63, H31, H55)

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