Tax cuts and ”middle-class” workers

The supporters of the new tax plan, the Tax Cuts and Jobs Act, have suggested that the benefits will primarily go to workers through higher wages. In this article, I examine the impact Romer and Romer (2010) exogenous tax changes have on median weekly earnings. The findings suggest that the direct impact of lower taxes on median weekly earnings is not statistically significant. Nevertheless, the results suggest that deficit-driven tax increases contribute to lower median weekly earnings.