Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314692 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11653
Publisher: 
CESifo GmbH, Munich
Abstract: 
We estimate the effects of personal income tax decreases on financial well-being, including qualitative subjective assessments and quantitative measures. A plausibly causal design shows that tax decreases in the Tax Cuts and Jobs Act made survey respondents more likely to say they were "living comfortably" financially, with null effects at lower levels of subjective financial well-being. Estimates from a similar design using credit bureau data show that people who had larger tax decreases were modestly more likely to open new accounts and more likely to have higher consumer credit balances. Tax decreases had effects on credit scores and delinquencies that are indistinguishable from zero. Results suggest that larger tax decreases improve financial well-being in ways not fully proxied by typical administrative data.
Subjects: 
taxes
subjective well-being
household finances
credit
financial well-being
JEL: 
H24
G50
I31
Document Type: 
Working Paper
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