Thursday, October 3, 2013

Mulligan on trends in implicit tax rates

Here's an op-ed by Casey Mulligan in the Wall St. Journal with a startling graphic (thank to Greg Mankiw's blog for the cite). It also appears as Figure 2 in Mulligan's recent NBER working paper. It shows increases of about 8 percentage points in the marginal tax rate on earnings by median earners associated with the Recovery and Reinvestment Act policies, and increases of about 4.5 percentage points associated with the Affordable Care Act, around a base rate of 40% before the recession.

It would appear the marginal tax rate is strongly affected by unemployment insurance.