Powered by Skippy
Question:
Click Here (https://www.chegg.com/homework-help/questions-and-answers/prior-beginning-
work-assignment-read-chapter-4-financial-forecasting-textbook-review-curre-q84371768)
Answer:
sol :
Zidar’s research indicates instead that job growth is more likely to follow
when legislators cut taxes for people earning a living somewhere below
the income stratosphere. Heterogeneous Effects of Income Tax Changes
on Growth and Employment ,» published earlier this summer. Zidar uses
tax data from 1980 to 2007 and exploits variations in income across
states to investigate how tax changes to different groups of earners
affect employment outcomes. Zidar finds that a tax cut equal to 1% of a
state’s gross domestic product for the bottom 90% of income earners
results in 3.4 percentage points’ growth in the number of people
employed in that state two years later. »
He finds virtually no change in employment for an equivalent tax cut for
the top 10% of earners. A tax cut totaling $1 billion is enacted favoring the
bottom 90% of earners.Two years later, the state would expect to see job
growth in the range of 3.4 percentage points compared with the year
before the tax cut, according to Zidar’s analysis. If cuts at the bottom are
spent at a higher rate, then demand for goods and services throughout
the economy will increase more and generate more activity.He further
finds that a tax increase equal to 1% of a state’s GDP on the bottom 90%
of income earners reduced labor force participation by 3.5 percentage
points and hours by 2%. Zidar notes that the employment and labor
force fluctuations he observes could be different if tax rate changes
since the 1980s had been more substantial. » The 2017 tax cuts weren’t
included in this paper. .
Early returns from the Tax Cuts and Jobs Act of 2017
Unemployment remains low, but part of the Trump administration’s
sales pitch was that the 2017 tax cuts would incentivize companies that
had gone overseas to come back. Investment hasn’t been as strong as
predicted, according to a working paper from International Monetary
Fund economists. Whether that economic activity comes to pass
remains to be seen. The second quarter of 2019 saw a decline in
inventory investment , according to data from the U. Another recent
paper looks at first-quarter 2018 earnings conference calls from 424
