Sep 30 2020

DPA Research and Policy Virtual Seminar Series – David Merriman

September 30, 2020

12:00 PM - 1:00 PM




Chicago, IL 60607

Do Graduated Rate Tax Systems Lead To More Frequent Tax Rate Changes?

By David Merriman

Forty-three states impose a state personal income tax, but their tax systems take varied forms. In 2002 eight states had a flat rate income tax and the remaining 35 plus DC had graduated rate systems in which marginal tax rates varied with taxable income. Illinois will vote on a constitutional amendment allowing it to switch from a flat to a graduated rate system in November 2020. Scholars and advocates sometimes link the propensity to increase tax rates to the form of the tax system. I collect comprehensive data on US states’ tax rates and tax rate changes and show that tax rate changes, and especially tax rate increases, were relatively rare in both flat and graduated rate tax systems during the period 2003 to 2019. I develop a model demonstrating that rational, self-interested decisionmakers that benefit from tax rate increases will not necessarily be more likely to increase taxes in graduated rate, as compared to flat rate tax systems. I perform empirical analyses to predict the size and probability of tax rate changes and find no evidence that the nature of the tax system (flat or graduated) influences either their frequency or magnitude.

Topic: DPA Research and Policy Seminar Series

Time: Sep 30, 2020 12:00 PM Central Time (US and Canada)


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Michael Siciliano

Date posted

Aug 27, 2020

Date updated

Sep 28, 2020