ECON 2020 Lecture Notes - Lecture 13: Hedge Fund, Carried Interest, Fiscal Multiplier
Document Summary
Majority of working americans pay more in payroll taxes than in income taxes. Mpc - (marginal propensity to consume: people in middle class are more willing to spend there tax breaks rather than millionaires( top 1%) Multiplier: as increase in mpc ~ increase absolute value of multiplier, change in y/change in g + change in y/change in t. President bush: 2001- 03 favored income tax for people who saved in stock market. Decrease federal income tax rates: top rate 39. 6% -> 35% Lowered tax rate on cap gains and dividend(stock payout) income to 15% Phased out the estate tax: 2001 rst ,000 inheritance was tax free, 2002 mil. Monday, february 29, 2016: 2003 . 5 mil, 2004 mil, 2005 mil, 2010 unlimited. Decreased payroll tax by 2% on employee side 6. 2% -> 4. 2% If the goal is to maximize economic stimulus from a tax cut the tax cut should favor high mpc tax payers(middle class)