![]() But as we show below, some of the discrepancies are explained by the application of different equivalence scales. There are many reasons for the differences between Kallen and Mathur’s findings and the results of other studies, not least varying assumptions about how much the law will boost growth. They suggest the law was less regressive than found by previous analysts, for example the Tax Policy Center and Joint Committee on Taxation. How Regressive was the tax bill? it depends.Ĭonsider a new analysis of the distributional impact of the 2018 tax law from our colleagues at the University of Wisconsin-Madison and the American Enterprise Institute, Cody Kallen and Aparna Mathur. ![]() ![]() The goal is to compare incomes that are equivalent across households, which is done by applying an “equivalence scale”.īut which one to choose is not so clear-and the consequences of the choice may not be trivial. The reason to do this is clear: a $50,000 annual income is a “lower” income for a family of four than for a single adult, and we should usually take that into account in studies of income trends and distribution. But a contender for nerdiest methodological issue of them all is adjusting income for household size.
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