The impact of the Tax Cut and Jobs Act on the spatial distribution of high productivity households and economic welfare

• 成果类型: Article; Proceedings Paper
• 署名作者: Coen-Pirani, Daniele; Sieg, Holger
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh; University of Pennsylvania; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2019.04.001
• 发表日期: 2019
• 页码: 44-71
• 关键词: tax policy; Dynamic spatial equilibrium; Agglomeration externalities; local labor markets; Aggregate implications of tax policy

摘要

The Tax Cut and Jobs Act of 2017 capped state and local tax deductions. We show that this new cap primarily affects households in the top percentile of the income distribution residing in high-tax, high-cost cities. We develop a new dynamic spatial equilibrium model to evaluate the impact of this policy change on the distribution of economic activity and aggregate welfare. We show that the tax reform is likely to lead to a relocation of older high-productivity households to low-cost cities. If local agglomeration externalities depend on these high-productivity households, the tax reform may substantially lower aggregate income. (C) 2019 Elsevier B.V. All rights reserved.