The $800 billion Paycheck Protection Program (PPP) provided COVID-19 pandemic relief to businesses retaining employees. Prior research has not directly estimated the PPP's distributional or tax effects. Linking PPP loans to tax records, we estimate progressive effects with respect to income for both workers and business owners. Bottom-quintile incomes increased 18 percent and top-quintile incomes increased 2 percent. About half of PPP relief benefited workers. The PPP also increased taxes and decreased unemployment compensation, reducing net program costs by one-quarter. Net costs could have been even lower (and progressivity higher) without the tax exclusion of PPP forgiveness.
An important legal question for state income taxes concerns the sourcing of income from the cross-border provision of services. Are taxing rights assigned to the state where services are performed or the market state where those services are received? Focusing on four simple, illustrative cases involving the application of state income taxes to remote workers, this article presents a rough schema for understanding alternative sourcing rules and how those rules have changed over time. While place of performance sourcing has long been the dominant approach, many states now tax certain nonresident service providers based on the location of their employer or other purchaser of their services. As a result of these changes, sourcing rules today vary not only from state to state but also by the type of taxpayer, with market sourcing becoming the norm for sourcing service income of corporations, pass-through entities, and sole proprietors. The durability of this shift is clouded by pending litigation in New York (by remote employees) and California (by remote independent contractors) challenging the constitutionality of state departures from place of performance sourcing. The article considers how the resolution of these legal controversies could influence the future of state taxation of income from remote work.
The statutory incidence of the property tax is not regressive across jurisdictions when regressivity is defined as having higher effective tax rates for lower-valued properties. However, a long-standing tendency toward higher assessment rates for low-priced homes commonly leads to a regressive tax structure. Using CoreLogic data, we calculate the size of the homestead exemption that would eliminate regressivity for 9,091 municipalities, of which the vast majority (92.3 percent) have at least somewhat regressive assessment practices. The median value of the required exemption is $24,639, and the interquartile range is $10,268-$47,514.
Though safety net programs offer important benefits, take-up is often incomplete. Using machine learning models on Medicaid data, we estimate the take-up rate for children's Supplemental Security Income (SSI) and the characteristics of potentially eligible children with disabilities who do not receive benefits. Using more than 1,000 measures of health-care utilization, we estimate state-specific models that generate the probability that each child not receiving SSI is eligible. Using the expected number of potentially eligible children, the implied take-up of SSI is approximately 70 percent. Potentially eligible children have intensive health-care usage, often more intensive than current child SSI recipients.
The taxing authority of subnational governments is limited by the geographic location of individuals and economic activity. The rise of telework decouples a worker's residence from the employer's location, creating challenges for personal income taxes, corporate income taxes, and unemployment insurance. Using US Census data, we show that teleworkers are more likely than nonteleworkers to move interstate and realize larger reductions in their state tax burdens from a move. Motivated by this evidence, we evaluate alternative principles for sourcing labor income to the state of residence, the employer, or work and discuss how remote work reshapes subnational tax bases.
We present evidence that the negative association between foreign profitability and tax rates - conventionally interpreted as income shifting - is appreciably driven by the economics of foreign markets unrelated to international tax planning. To improve income shifting estimates, we propose incorporating country fixed effects in foreign profitability-based tests or using domestic profitability-based tests to validate results. We demonstrate that including country fixed effects lowers estimated outbound income shifting from $44.0 million to $29.3 million per US multinational firm annually, representing a 33.4 percent reduction. These recommendations benefit future income shifting research employing profitability-based models.
When women become mothers, many step back from the workforce. Could work from home (WFH) mitigate this motherhood penalty, particularly in traditionally family-unfriendly careers? We leverage prepandemic technological changes that increased the feasibility of WFH in some college degrees but not others. In degrees where WFH increased, motherhood gaps in employment narrowed: for every 10 percent increase in WFH, mothers' employment rates increased by 0.78 percentage points (or 0.94 percent) relative to other women's. These changes are driven by occupations with inflexible time demands. Panel data show that women who could WFH before childbirth are less likely to exit the workforce.
The year 2025 brought a historic shift in the role of tariffs in the US tax system, as the Trump administration imposed high broad tariffs while Congress simultaneously enacted large income tax cuts. This fiscal shift has important implications. While maintaining tariff rates at autumn 2025 levels would generate large government revenues, such broad tariffs have significant downsides: efficiency losses would approach one-third of revenues raised, the tax system would be less progressive, and tax administration would become more complex. Among their macroeconomic implications, broad tariffs generate a large negative supply shock, raising prices while dampening aggregate activity.
Have recent tariffs resulted in increased costs for the US health-care system? We examine US trade data and compile a database of statutory tariff changes. Tariffs on medical goods narrowly defined resulted in $3.4 billion in duties assessed between February and July 2025 - more than 10 times the same period in 2024, with a 55.8 percent rate of pass-through at the US border. We estimate that had medical goods imports observed in 2024 been subject to the statutory tariff levels prevailing in August 2025, assessed duties would have been $15.8 billion, almost 30 times higher than those observed in real time.
This paper describes traders' contribution to US manufacturing jobs over three decades, providing a broader context to assess impacts of the 2025 US import tariff increases. Traders employ 84 percent of manufacturing workers. Traders exhibit higher net job creation rates than nontraders, and higher imported input use correlates with higher job growth among traders. Recent survey data indicate declining manufacturing employment and performance since the tariff implementation. Traders' significant contribution to manufacturing job growth coupled with manufacturers' recent experiences suggests that achieving industrial growth through tariff increases is complicated in a globally integrated manufacturing sector.
Advance tax credits may require recipients to repay excess amounts. Policymakers have limited information about these repayments, their distributional impact, and the cost of repayment protections. We estimate these using tax data across four advance credits: health-insurance premium tax credits, child tax credits, earned income tax credits, and stimulus checks. Advance credit repayments usually result from income increases across credit phaseouts. Credits targeting lower-income families have phaseouts affecting many people with income increases, resulting in higher repayment rates. We discuss how advancing credits can contribute to noncompliance and introduce an approach to evaluate advance tax credit proposals.
The Earned Income Tax Credit (EITC) is designed to encourage work, but its impact on self-employment is often seen as changes in reporting, not real employment. This might not be surprising, because starting a business can be risky, uncertain, and logistically complicated, potentially keeping EITC-eligible workers from pursuing self-employment. However, gig platforms like Uber might reduce the barriers to entering self-employment. Exploiting state-level EITC policies and Uber's market entry, I find that when Uber is operating in the market, the EITC leads to additional small, significant increases in real self-employment among single-headed households, shifting household income toward larger credits.
We analyze the differential effects of minimum-wage increases on individuals with disabilities using data from the American Community Survey and leveraging state-level minimum-wage variation during the 2010s. Using a novel disability severity prediction method, we find that large minimum-wage increases significantly reduce employment and labor-force participation for individuals of all working ages with severe disabilities. These declines are accompanied by a downward shift in the earnings distribution and an increase in public assistance receipt. By contrast, we find no employment effects for all but young individuals with either nonsevere disabilities or no disabilities. Our findings highlight important heterogeneities in minimum-wage impacts, raising concerns about labor-market policies' unintended consequences for populations on the margins of the labor force.
Between 2020 and 2021, the US federal government passed four major pieces of legislation that included nearly $1 trillion in aid to state and local governments. One concern with distributing federal stimulus in the form of intergovernmental transfers is that subnational governments may use the aid to pay down unfunded pension liabilities or other debt rather than preserve employment. We examine the effect of fiscal stimulus passed in response to COVID-19 on public pensions. To address concerns about endogeneity, we use a difference-in-difference design and an instrumental variable estimator that relies on variation in congressional representation. We find that "excess" pension contributions increased, primarily in governments with low funding ratios, but that these increases represented less than 1 percent of total federal funding. We also find that governments reacted to pandemic aid by adopting more conservative assumptions for the calculation of pension liabilities.
The Child and Dependent Care Credit (CDCC) allows households to receive tax credits for certain expenses associated with the care of a spouse or adult dependent who is incapable of self care, but very few childless households claim the credit. We examine the value of the CDCC for qualifying households caring for adults. We find that, as of 2016, more than 10 percent of individuals aged 50 to 65 had a coresident spouse or parent likely to be a qualifying individual for the CDCC. We document how state and federal CDCC benefits decrease post-tax costs of typical caregiving services, such as hiring a home health aide, across states. We find that a temporary expansion during 2021 led to substantial decreases in post-tax care costs but generated considerable differences in benefits across households with spouse and nonspouse qualifying individuals. We discuss expected effects on taxpayers’ behavior of permanently expanding the CDCC and find that making the credit refundable would nearly double the number of eligible spousal caregivers aged 50 to 65, with eligibility rates increasing substantially among female, nonwhite, and low-income caregivers.
Tax benefits tied to children form a central component of the social safety net in the United States. To participate in these programs, taxpayers must claim a child on their tax return. We study the claiming of children on tax returns by drawing on health insurance information returns to establish the presence of children in the United States. We estimate that the vast majority of insured children (approximately 95 percent) and a significant majority (between 88 and 97 percent) of all US children are claimed on tax returns. Unclaimed children are disproportionately concentrated in lower-income households.
Partnerships (including limited liability companies) now report more than one-third of US business profits, but due to complexity and data limitations, economists have had difficulty identifying where a sizable portion of this income goes. Using US federal tax records, this paper describes the ultimate destination of 99 percent of reported partnership income. A larger portion goes to foreign owners than previously thought, mostly to tax havens - more than $1 trillion between 2011 and 2019. Patterns are consistent with arrangements by investment firms to shield investors from reporting or tax obligations. Evidence also suggests increased reporting after implementation of the Foreign Account Tax Compliance Act.
We examine how rising debt affects the economy and assess the risk of a fiscal crisis. The most likely consequence of rising debt is a gradual erosion of capital accumulation and national wealth, ultimately lowering living standards. We consider four potential scenarios that could lead to a crisis and argue that, even with projected increases in federal borrowing, a fiscal crisis is avoidable. If one does occur, it will likely stem from political missteps rather than the debt itself.
How should the United States respond to its unsustainable fiscal outlook? How and when a country should fiscally consolidate depends on its existing circumstances, policies, and institutions. We review the experiences of other countries that attempted consolidations and highlight lessons applicable to the United States. We find that (1) the United States does not face a short-term crisis, so it can employ gradual adjustments, which may minimize short-term harm, (2) consolidation should occur in a strong economy with monetary accommodation, and (3) tax increases (spending cuts) could plausibly play a larger (smaller) role in US consolidations than in European adjustments.
This paper describes a series of linkable individual-level data from late twentieth-century federal income tax returns. The full Internal Revenue Service (IRS) Form 1040 files from 1969, 1974, 1979, 1984, 1989, and 1994 were held at the Census Bureau since being delivered by the IRS after each year's tax returns were processed. The data were recently prepared for research, and they are now available for request through the Census Bureau's restricted data research program. We describe the provenance and composition of the files, assess the coverage and quality of the data, and discuss potential uses of the data for research.
