This is all David:

A related paper by BEA came out today with their updated distributional estimates of personal income. Marina Gindelsky has done a lot of work to produce these estimates.

I have a couple new papers on tax progressivity and redistribution that may be of interest to you. Both used CBO data to avoid the PSZ-AS differences. Abstracts below.

The first paper is about the ends of the distribution: tax progressivity has increased significantly since 1979 (and steadily since 1986) due to more generous tax credits for the bottom, while average tax burdens of the top have been relatively unchanged because lower marginal rates were offset by decreased use of tax shelters. The online appendix shows why the CBO estimates differ from those of Saez and Zucman (see Fig. B7 at the end; it’s mostly due to refundable credits at the bottom and imputed income at the top) and the Heathcote et al. paper you blogged about a couple months ago (it’s technical differences and their inclusion of some transfers, but their most similar measure of tax progressivity was not flat—it increased 21 percent since 1979).

The second paper, with Adam Looney and Jeff Larrimore, is about the middle of the distribution. Since 1979, we found that non-elderly middle-class market income increased 39 percent in real per person terms. The increase was 57 percent when accounting for taxes and transfers. This seems to fit with the “updated” view of stagnation—expanding male wages to also look at untaxed compensation and including female compensation and taxes/transfers shows larger median growth. But there was a structural break in 2000. Before then, middle-class incomes grew at the same rate before and after taxes and transfers, and since then income after taxes and transfers grew three times faster (Fig. 6 on page 19). We don’t discuss the recent market income slowdown (maybe related to the debated labor share break around 2000), but we show that the additional fiscal support that filled the gap looks like an unsustainable way to boost middle-class disposable incomes going forward.”

The post From David Splinter, from my email appeared first on Marginal REVOLUTION.

From David Splinter, from my email

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