Marginal Tax Rates and Income Inequality in a Life-Cycle Model
- (pp. 1197-1215)
AbstractIn 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.
Citation1999. "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
- 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