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The new tax plan approved by the U.S. Senate, the Tax Cuts and Jobs Act, claims to offer the largest benefits to individuals in the middle of the income distribution. In this article, I examine the impact exogenous tax changes have on income shares of individuals in the bottom 50 percent of the income distribution. The findings suggest that lower taxes, that are exogenous to fluctuations in business conditions, have minimal direct benefits for individuals in the bottom 50% of the income distribution. Claims that trickle-down economics lift all income shares through lower taxes are not supported by the empirical findings.

Published Citation

Berisha, E. (2018). Trickle Down? A little bit. Economics Bulletin, 38(2), 725-732.

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