Did Tax Cuts and Jobs Act Create Jobs and Stimulate Growth? Early Evidence Using State-Level Variation in Tax Changes

26 Pages Posted: 4 May 2020 Last revised: 7 May 2020

See all articles by Anil Kumar

Anil Kumar

Federal Reserve Bank of Dallas - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: January, 2020

Abstract

The Tax Cuts and Jobs Act (TCJA) of 2017 is the most extensive overhaul of the U.S. income tax code since the Tax Reform Act of 1986. Existing estimates of TCJA’s economic impact are based on economic projections using pre-TCJA estimates of tax effects. Following recent pioneering work of Zidar (2019), I exploit plausibly exogenous state-level variation in tax changes and find that an income tax cut equaling 1 percent of GDP led to a 1 percentage point higher nominal GDP growth and about 0.3 percentage point faster job growth in 2018.

Keywords: Taxes and Economic Growth, Tax Cuts and Jobs Act

JEL Classification: H30, E62

Suggested Citation

Kumar, Anil, Did Tax Cuts and Jobs Act Create Jobs and Stimulate Growth? Early Evidence Using State-Level Variation in Tax Changes (January, 2020). Available at SSRN: https://ssrn.com/abstract=3592424 or http://dx.doi.org/10.24149/wp2001

Anil Kumar (Contact Author)

Federal Reserve Bank of Dallas - Research Department ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
73
Abstract Views
306
rank
344,960
PlumX Metrics