The impact of income tax changes on tax revenue.
This article shows that tax revenue responses to changes in tax rates crucially depend on how the changes affect the marginal tax rate relative to the average tax rate. Using a wide range of empirical frameworks and datasets, we find that tax multipliers are consistently large and tax revenues fall...
| Publicado en: | Oxford Economic Papers Vol. 78; no. 3; pp. 712 - 740 |
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| Autores principales: | , , |
| Formato: | Artículo |
| Publicado: |
Oxford University Press / USA
Jul2026
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | This article shows that tax revenue responses to changes in tax rates crucially depend on how the changes affect the marginal tax rate relative to the average tax rate. Using a wide range of empirical frameworks and datasets, we find that tax multipliers are consistently large and tax revenues fall in response to tax rises, particularly when marginal taxes are raised. We validate our empirical findings within canonical real and new-Keynesian general equilibrium models by introducing the wedge between the average and marginal tax rates. Doing so reconciles a significant discrepancy between the theoretical and empirical size of tax multipliers. |
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