Do Higher Income Taxes on Top Earners Trickle Down? A Local Labor Markets Approach
This paper measures the extent to which higher income taxes on U.S. top 1% earners “trickle down” and reduce other workers’ wages via geographically concentrated spillovers. Using an exposure design that combines time-series variation in the federal marginal tax rate for top 1% earners with cross-sectional variation in the top 1% income share across local labor markets, I find very little evidence of local trickle-down effects. The point estimates imply zero local trickle-down effects. At conventional levels of confidence, the estimates are statistically inconsistent with a one percentage point increase in the top tax rate reducing worker wages by more than -0.08%. These results undermine claims that trickle-down effects should be an important consideration in setting top tax rates
Year of publication: |
[2022]
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Authors: | Kindsgrab, Paul |
Publisher: |
[S.l.] : SSRN |
Subject: | Einkommensteuer | Income tax | Regionaler Arbeitsmarkt | Regional labour market | Vermögen | Wealth | Hochqualifizierte Arbeitskräfte | Highly skilled workers |
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