Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/90145 
Year of Publication: 
2014
Series/Report no.: 
ZEW Discussion Papers No. 14-001
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
We assess the effects of U.S. tax policy reforms on inequality by applying a new decomposition method allowing us to disentangle the policy effect from changing market incomes. Over the period 1979-2007, the cumulative policy effect aggravated inequality by increasing the income share of the top 20% in contrast to the middle class' share. The tax policy effect accounts for up to 29% of the total change in inequality; its contribution increases up to 41% if we take into account behavioral responses. While Republican policymakers increased inequality especially at the top, Democrats increased the income share of the bottom 80%.
Subjects: 
Tax policy
Inequality
Redistribution
Partisan Politics
Political Economy
JEL: 
H23
H31
H53
P16
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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