Traditional macroeconomics finds a multiplier of 1.0 when taxes and expenditures are increased by the same amount. It results from uniform tax increases and a constant marginal propensity to consume. We show that a greater multiplier results when the tax rate increases on those with a lower...

Traditional macroeconomics finds a multiplier of 1.0 when taxes and expenditures are increased the same amount. It results from uniform tax increases and a similar constant marginal propensity to consume. I show that a greater multiplier results when the tax rate increases on those with a lower...