Working Paper: NBER ID: w30725
Authors: Margherita Borella; Mariacristina De Nardi; Michael Pak; Nicolo Russo; Fang Yang
Abstract: While “’Tis impossible to be sure of any thing but Death and Taxes” Bullock (1716), the structure of taxes and their burden have undergone large and frequent changes over time. We provide a brief history of U.S. federal income tax reforms since the 1960s, calculate effective federal income tax rates for each wave of the Panel Study of Income Dynamics, and discuss how effective taxation changed from 1969 to 2016. We show that most tax regimes are short-lived and that the variation in taxes over time and across groups is large. We also use an estimated dynamic model of couples and singles to show that the various tax regimes that we estimate imply very different labor market and saving behavior. These findings stress the importance of studying and modeling tax changes over time and across groups.
Keywords: No keywords provided
JEL Codes: H2; H30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in effective taxation during the high-inflation period from 1973 to 1978 (H31) | Labor market participation rates for married women (J49) |
| Changes in effective taxation during the high-inflation period from 1973 to 1978 (H31) | Hours worked by young married women (D13) |
| Changes in effective taxation during the high-inflation period from 1973 to 1978 (H31) | Hours worked by various male and female groups (J21) |
| Changes in effective taxation during the high-inflation period from 1973 to 1978 (H31) | Labor income of various male and female groups (J31) |
| 1981 Reagan tax cut (E65) | Economic behaviors (labor market participation and savings) (E21) |
| Tax increases under George H. W. Bush in 1990 (H24) | Labor supply and savings behaviors (J29) |
| Tax cuts during the Bush administration (2001 and 2003) (H29) | Labor supply and savings behaviors (J29) |