The Significance of Federal Taxes as Automatic Stabilizers

Using the TAXSIM model for the period 1962-95, we consider the federal tax system's impact as an automatic stabilizer. Despite the many changes in the tax system, there has been relatively little change in its role as an automatic stabilizer. We estimate that individual federal taxes offset per...

Full description

Saved in:
Bibliographic Details
Published in:The Journal of economic perspectives 2000-07, Vol.14 (3), p.37-56
Main Authors: Auerbach, Alan J., Feenberg, Daniel
Format: Article
Language:English
Subjects:
Adjusted gross income
Aggregate income
Automatic stabilizers
Consumption
Consumption taxes
Corporate income taxes
Economic stabilization
Estimated taxes
Federal government
Fiscal law
Fiscal policy
Income estimates
Income taxes
Marginal tax rate
Output rate
Payroll taxes
Samples
Stabilization policy
Supply-side economics
Symposium: Fiscal Policy
Tax systems
Taxes
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Using the TAXSIM model for the period 1962-95, we consider the federal tax system's impact as an automatic stabilizer. Despite the many changes in the tax system, there has been relatively little change in its role as an automatic stabilizer. We estimate that individual federal taxes offset perhaps as much as 8 percent of initial shocks to GDP. We also suggest that the progressive income tax may help to stabilize output via its effect on the supply of labor, an additional effect that may even be of similar magnitude to the more traditional path of stabilization through aggregate demand.
ISSN:0895-3309
1944-7965
DOI:10.1257/jep.14.3.37