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1 Timothy Vermeer, The Impact of Individual Income Tax Changes on Economic Growth 1 (2022)

handle is hein.taxfoundation/iminintax0001 and id is 1 raw text is: The Impact of Individual Income Tax Changes on Economic Growth FISCAL TimothyVermeer Senior Policy Analyst FACT No. 793 June 2022 Key Findings • Research almost invariably shows a negative relationship between income tax rates and gross domestic product (GDP). • The mobility of higher-skilled and higher income earners in an open economy works against the effort of progressive state and local tax systems to achieve long-term redistribution of income. • The likelihood of an employed head of household obtaining a better job within a year is higher when a tax system's progressivity is reduced. • A decrease in a tax system's progressivity is associated with an increase in the real growth rate of wages. • Changes in rates of private investment and private consumption are highly correlated with tax changes. Measures of the magnitude of the investment and consumption changes vary, but the relationship between the variables is consistently negative: as tax levels or rates decrease, investment and/or consumption increases and vice versa. • Cuts to marginal tax rates are highly correlated with decreases in the unemployment rate. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2022 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org

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