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This article explores how changes in income tax rates affect tax revenue and tax multipliers.

The impact of income tax changes on tax revenue

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This article explores how changes in income tax rates affect tax revenue and tax multipliers.
Utilized a range of empirical frameworks and datasets to analyze tax revenue responses.
Examined the relationship between marginal and average tax rates.
Validated findings using real and new-Keynesian general equilibrium models.
Found that tax revenue falls with increased marginal tax rates, particularly during tax rises.
Identified large tax multipliers consistently in empirical analyses.
Reconciled theoretical and empirical discrepancies regarding tax revenue responses.

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Analysis shows tax revenue decreases with higher marginal tax rates in response to income tax changes, implying significant tax multipliers.

McManus et al. (2026) studied this question.

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Analysis shows tax revenue decreases with higher marginal tax rates in response to income tax changes, implying significant tax multipliers.