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This paper investigates how tax changes for different income groups affect economic activity. Using data on regional tax shocks from federal tax changes, the paper finds that tax cuts targeting lower-income groups have a larger positive effect on employment growth than equally sized tax cuts for top earners. The positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups, while the effect of tax cuts for the top 10% on employment growth is small.

Author

John Smith

Language

EN