NDLI: The Impact of Taxes on Income Mobility

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The Impact of Taxes on Income Mobility

Content Provider	Scilit
Author	Alloza, Mario
Copyright Year	2017
Description	Journal: SSRN Electronic Journal This paper investigates how taxes affect relative mobility in the income distribution in the US. Household panel data drawn from the PSID between 1967 and 1996 is employed to analyse the relationship between marginal tax rates and the probability of staying in the same income decile. Exogenous variation in marginal tax rates is identified by using counterfactual rates based on legislated changes in the tax schedule. I find that higher marginal tax rates reduce income mobility. An increase in one percentage point in marginal tax rates causes a decline of around 0.8 percentage points in the probability of changing to a different income decile. Tax reforms that reduce marginal rates by 7 percentage points are estimated to account for around a tenth of the average movements in the income distribution in a year. Additional results suggest that the effect of taxes on income mobility differs according to the level of human capital and that it is particularly significant when considering mobility at the bottom of the distribution.
Related Links	http://eprints.lse.ac.uk/86178/1/CFMDP2016-32-Paper.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3010198
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3010198
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2017-07-28
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal History and Philosophy of Science Percentage Points Income Distribution Taxes On Income Mobility Marginal Tax
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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