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American Economic Review: Vol. 89 No. 5 (December 1999)
AER Volume. 89, Issue 5 | 
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Marginal Tax Rates and Income Inequality in a Life-Cycle Model
Article Citation
Altig, David, and
Charles T. Carlstrom. 1999. "Marginal Tax Rates and Income Inequality in a Life-Cycle Model."
American Economic Review,
89(5): 1197-1215.
DOI: 10.1257/aer.89.5.1197
DOI: 10.1257/aer.89.5.1197
Abstract
In this paper we study the quantitative impact of marginal tax rates on the distribution of income. Our methodology builds on computable general-equilibrium framework. We find that distortions from marginal tax rate changes of the sort implied by the Tax Reform Act of 1986 have sizable effects on income inequality in a reasonably quantified life-cycle setting: In our model rate changes alone capture half the increase in the pretax Gini that actually occurred between 1984 and 1989.
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Authors
Altig, David (Federal Reserve Bank of Cleveland)
Carlstrom, Charles T. (Federal Reserve Bank of Cleveland)
Carlstrom, Charles T. (Federal Reserve Bank of Cleveland)
JEL Classifications
H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
H31: Fiscal Policies and Behavior of Economic Agents: Household
D31: Personal Income, Wealth, and Their Distributions
H31: Fiscal Policies and Behavior of Economic Agents: Household
D31: Personal Income, Wealth, and Their Distributions
