| Abstract: | This article studies the effects of federal tax changes on U.S.‐state‐level income. Utilizing an exogenous tax shock series recently proposed in the literature, we find considerable variation in how federal tax changes affect regional income: estimated state income multipliers range between –0.2 in Utah and –3.7 in Hawaii. Analyzing the determinants of differences in regional tax multipliers suggests that size and composition of the state tax base help explain the observed heterogeneity in the transmission of federal tax policy. |
