Income Inequality, Tax Policy, and Economic Growth

• 成果类型: Article
• 署名作者: Biswas, Siddhartha; Chakraborty, Indraneel; Hai, Rong
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of Miami
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/ecoj.12485
• 发表日期: 2017
• 页码: 688-727
• 关键词: fiscal-policy; wage inequality; cross-section; panel-data; taxation; returns; harmful; MODEL; state

摘要

We investigate how the reduction of income inequality through tax policy affects economic growth. Taxation at different points of the income distribution has heterogeneous impacts on households' incentives to work, invest, and consume. Using US state-level data and micro-level household tax returns over the last three decades, we find that reducing income inequality between low and median income households improves economic growth. However, reducing income inequality through taxation between median and high-income households reduces economic growth. These asymmetric economic growth effects are attributable both to supply-side factors (i.e. changes in small business activity and labour supply) and to consumption demand.