Tax policy and income inequality in the US, 1979-2007

Arbeitspapier

We assess the effects of U.S. tax policy reforms on inequality by applying a new decomposition method allowing us to disentangle the policy effect from changing market incomes. Over the period 1979-2007, the cumulative policy effect aggravated inequality by increasing the income share of the top 20% in contrast to the middle class' share. The tax policy effect accounts for up to 29% of the total change in inequality; its contribution increases up to 41% if we take into account behavioral responses. While Republican policymakers increased inequality especially at the top, Democrats increased the income share of the bottom 80%.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 14-001

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Fiscal Policies and Behavior of Economic Agents: Household ; National Government Expenditures and Welfare Programs ; Capitalist Systems: Political Economy
• Subject: Tax policy ; Inequality ; Redistribution ; Partisan Politics ; Political Economy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bargain, Olivier ; Dolls, Mathias ; Immervoll, Herwig ; Neumann, Dirk ; Peichl, Andreas ; Pestel, Nico ; Siegloch, Sebastian
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/90145
• URN: urn:nbn:de:bsz:180-madoc-354560
• Last update: 10.03.2025, 11:41 AM CET