Tax Burden Shifting: What Happened in Washington,D.C.,During the 2007-2009 Recession?

Abstract

This study examined the effects of the 2007-2009 recession on the distribution of tax burdens within the District of Columbia by constructing a novel dataset via a fuzzy match between two administrative datasets. The findings revealed that homeowners with federal income less than zero experienced a lower tax burden, suggesting that the recession and its negative impact on income from capital gains contributed to a change in the tax burden. The findings also showed that in some cases, filers who reside in properties with high assessed values and who earn high wages accompanied by high capital losses experienced a lower tax liability and tax burden than filers with low wage income and zero or little income from capital gains. Overall, the tax burden shifted from filers with high wages and income from multiple sources to filers with low wages and zero income from other sources. The shift in the burden was primarily driven by a change in the individual income tax share of the total tax burden faced by filers, primarily those with low wages who faced a bigger burden.

Keywords

tax burdens tax shifting tax burdens for homeowners tax incidence

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