Download this Paper Open PDF in Browser

The Effect of Tax Expenditures on Automatic Stabilizers: Methods and Evidence

Journal of Empirical Legal Studies 14(3):548-568, 2017

35 Pages Posted: 7 Jan 2016 Last revised: 11 Sep 2017

Hautahi Kingi

Cornell University, Department of Economics, Students

Kyle Rozema

University of Chicago - Law School

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2017

Abstract

We study the effect of tax expenditures on the stabilizing power of the tax system. We propose a microsimulation strategy which exploits links that we identify between automatic stabilizers, tax expenditures, and effective marginal tax rates. Using United States tax return microdata from 2000 to 2010, we estimate that, on average, the mortgage interest deduction and the charitable contributions deduction decreased the ability of the tax system to absorb fluctuations in aggregate consumption by an average of 7.4% and 3.9%.

Keywords: Tax Expenditures, Automatic Stabilizers

JEL Classification: K34, H24, H31, E62

Suggested Citation

Kingi, Hautahi and Rozema, Kyle, The Effect of Tax Expenditures on Automatic Stabilizers: Methods and Evidence (June 1, 2017). Journal of Empirical Legal Studies 14(3):548-568, 2017. Available at SSRN: https://ssrn.com/abstract=2711499 or http://dx.doi.org/10.2139/ssrn.2711499

Hautahi Kingi

Cornell University, Department of Economics, Students ( email )

Ithaca, NY
United States

HOME PAGE: http://hautahikingi.com/

Kyle Rozema (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

HOME PAGE: http://www.kylerozema.com

Paper statistics

Downloads
48
Abstract Views
297