(household spending) Explaining why a lower income bracket would have a larger tax impact than a higher one?


I've been using IMPLAN to test potential household spending impact data, and I noticed something curious: For a specific spending event, tax receipts from a spending event set to a lower income bracket (15-30K) were higher than when the assumed household income was set a bracket higher (30-40K), by a slim margin.

Now, I actually can imagine why this might be the case, assuming that lower-income households might tend to spend proportionately more on items that are subject to local or state taxes.  However, are there any resources that can be used/cited to explain why a lower-income bracket would produce more tax receipts than a higher one (all other factors being identical)?

Kindest regards to all!

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  • Hello Donald!

    Correct! Another factor likely at play here could be that the lower income group is spending a higher percentage of their income than the higher income group (reflecting a lower savings rate). All else equal, that would lead to a higher tax value paid by the lower HH Income group. However, as you said - these spending patterns of the various income groups are in fact different. For us to dive into what specifically is causing the differences in your case, we would need to know more about which Region, and Data Year you are working with as well as more about your project setup/ where you are seeing these Results (Federal, State, etc.).


    Michael Nealy

  • Michael,

    Thank you for the response, that was helpful- For my own purposes, I don't particularly need to dig deeper, at least at the moment.


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