Asymmetric responses to income changes: The payroll tax increase versus tax refund in 2013

- We examine individuals' spending responses to the 2013 US payroll tax increase and tax refunds received in 2013.
- Taxpayers respond asymmetrically to tax increases versus tax refunds.
- The asymmetry is persistent across race, gender, and measures of financial constraints.

We examine low-to-middle income individuals' responses to the 2013 payroll tax increase and their 2012 tax refund and find that consumption  declines  90 cents per dollar lost to the tax increase, and  rises  60 cents per additional tax refund dollar.