Tax cuts for the rich increase the income gap

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Tax cuts for the rich increase the income gap

#1  Postby Thomas Eshuis » Dec 17, 2020 5:53 pm

http://eprints.lse.ac.uk/107919/1/Hope_economic_consequences_of_major_tax_cuts_published.pdf

The Economic Consequences of Major Tax Cuts for the Rich
David Hope, Julian Limberg
Working Paper 55December2020

Abstract
This paper uses data from 18 OECD countries over the last five decades to estimate the causal effect of major tax cuts for the richon income inequality, economic growth, and un-employment. First, we use a new encompassing measure of taxes on the rich to identify in-stances of major reductions in tax progressivity. Then, we look at the causal effect of these episodes on economic outcomes by applying a nonparametric generalization of the differ-ence-in-differences indicator that implements Mahalanobis matching in panel data analysis. We find that major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pre-tax national income. The effect remains stable in the medium term. In contrast, such reforms do not have any significant effect on economic growth and unemployment.

...

Our results have important implications for current debates around the economic consequences of taxing the rich, as they provide causal evidence that supports the growing pool of evidence from correlationalstudies that cutting taxes on the rich increases top income shares, but has little effect on economic performance (Lee and Gordon, 2005; Piketty et al., 2014; Roine et al., 2009).
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Re: Tax cuts for the rich increase the income gap

#2  Postby Seabass » Dec 18, 2020 3:22 am

Great. Now someone tell the Republicans... :-|
"Those who can make you believe absurdities, can make you commit atrocities." —Voltaire
"They want to take away your hamburgers. This is what Stalin dreamt about but never achieved." —Sebastian Gorka
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Re: Tax cuts for the rich increase the income gap

#3  Postby I'm With Stupid » Dec 18, 2020 3:41 am

I don't know why. None of them pay any anyway.
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Re: Tax cuts for the rich increase the income gap

#4  Postby Cito di Pense » Dec 18, 2020 7:35 am

Tax cuts for the rich increase the income gap. In other news, water is wet. Who the fuck knew?
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Translation by Elbert Hubbard: Do not take life too seriously. You're not going to get out of it alive.
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Re: Tax cuts for the rich increase the income gap

#5  Postby SafeAsMilk » Dec 18, 2020 1:53 pm

Everyone except for republicans, apparently. They'll of course be more skeptical of this report than they will be of trickle down economics.
"They call it the American dream, because you have to be asleep to believe it." -- George Carlin
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Re: Tax cuts for the rich increase the income gap

#6  Postby Thommo » Dec 18, 2020 4:13 pm

I thought it was interesting. It's not obvious to me that pre-tax incomes would be affected by tax rates. :dunno:

I admit I haven't followed the methods used, or the timescale over which the change takes place according to the study.
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