Journal of Undergraduate Research
Keywords
macroeconomic model, dynamic tax scoring, income tax cuts
College
Family, Home, and Social Sciences
Department
Economics
Abstract
The goal of this project was to analyze the consequences of income tax cuts on government revenues. We did so using a large overlapping generations (OLG) model. This model was calibrated to closely match the distribution of labor, income, and wealth in the U.S. economy across both heterogeneous age and ability groups. By using a dynamic model, we were able to take into account the macroeconomic feedback effects that are absent from some analyses of tax proposals. We found that while our income tax cut was not completely self-financing, about forty three percent of a ten percent decrease in the income tax pays for itself.
Recommended Citation
Magnusson, Evan and Evans, Richard
(2016)
"A Macroeconomic Model for Dynamic Tax Scoring Analyzing Income Tax Cuts,"
Journal of Undergraduate Research: Vol. 2016:
Iss.
1, Article 31.
Available at:
https://scholarsarchive.byu.edu/jur/vol2016/iss1/31