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Author: Creedy, John
Publisher: Edward Elgar Publishing
ISBN: 1802209603
Category : Business & Economics
Languages : en
Pages : 304
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Book Description
This timely book analyses the elasticity of taxable income, a central concept in public finance with a rapidly growing wealth of literature. Combining original empirical research with rigorous theoretical modelling of tax revenue and optimal tax policy, this innovative study examines the complexities and new methods of estimating the elasticity of taxable income.
Author: Creedy, John
Publisher: Edward Elgar Publishing
ISBN: 1802209603
Category : Business & Economics
Languages : en
Pages : 304
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Book Description
This timely book analyses the elasticity of taxable income, a central concept in public finance with a rapidly growing wealth of literature. Combining original empirical research with rigorous theoretical modelling of tax revenue and optimal tax policy, this innovative study examines the complexities and new methods of estimating the elasticity of taxable income.
Author: Mr.Alexander D Klemm
Publisher: International Monetary Fund
ISBN: 1484361563
Category : Business & Economics
Languages : en
Pages : 22
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Book Description
This paper assesses a possible explanation for the global downward trend in top personal income tax rates over the last decades: globalization and the related tax evasion and avoidance opportunities could have raised elasticities of taxable income, which would imply lower optimal tax rates. The paper estimates elasticities of taxable income for top income earners using a large sample of economies and years with a common method, allowing an analysis of trends in such elasticities. The paper finds that elasticities do not appear to exhibit any clear pattern over the years. The downward trend in tax rates must have other possible explanations, which are briefly discussed.
Author: Emmanuel Saez
Publisher:
ISBN:
Category : Elasticity (Economics)
Languages : en
Pages : 0
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Book Description
This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates (ETI) using tax return data. First, we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the United States to illustrate those issues. Third, we provide a critical discussion of most of the taxable income elasticities studies to date, both in the United States and abroad, in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research.
Author: Jonathan Gruber
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
Author: Joel Slemrod
Publisher: Harvard University Press
ISBN: 9780674001541
Category : Business & Economics
Languages : en
Pages : 540
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Book Description
Since the introduction of the income tax in 1913, controversy has raged about how heavily to tax the rich. Opponents of high tax rates claim that heavy assessments have negative incentives on the productivity of some of our most talented citizens; supporters stress the importance of the rich shouldering their "fair share," and decry the loopholes that permit many to escape their obligations. Notably absent from this debate is hard evidence about the actual impact of taxes on the behavior of the affluent. This book presents evidence by leading economists of the effects of taxes on the formation of businesses, the supply of labor, the form of executive compensation, the accumulation of wealth, the allocation of portfolios, and the realization of capital gains. Among its findings are that the labor supply of the rich remained unchanged in the face of large tax cuts in 1986, and that in late 1992 executives exercised billions of dollars' worth of stock options in order to beat the tax increases expected in 1993. The book also presents a history of efforts to tax the rich, a demographic snapshot of the financially affluent, and a road map to widely used tax-avoidance strategies. Does Atlas Shrug? will be of great interest to policymakers and interested citizens who want to know how much tax revenue could really be gained by increasing tax rates on the rich, or whether low capital gains tax rates really spur economic growth.
Author: Seth H. Giertz
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This chapter focuses on important developments in ETI research, both empirical and theoretical, over the first decade of the twenty-first century and relates them to important tax issues that the United States will face over the next few years. Next, the chapter examines the two most important Bush tax cuts, the Economic Growth Tax Relief and Reconciliation Act of 2001 (EGTRRA) and the Jobs Growth Tax Relief and Reconciliation Act of 2003 (JGTRRA), which are set to expire after 2010, unless additional legislation is enacted. The analysis is repeated for a range of ETI estimates to show how allowing the individual income tax rate cuts to expire might affect economic efficiency and tax revenues. Based on 2005 data, returning individual income tax rates to their 2001 levels would raise revenues by $98.6 billion dollars assuming no behavioral responses. At an elasticity of taxable income (ETI) of 0.2, $15.6 billion of this mechanical increase ($12.2 billion from the federal income tax and $3.4 billion from payroll and state taxes) would be lost due to reductions in taxable income. At an ETI of 0.8, $62.4 billion of the mechanical revenue gain ($48.8 billion from the federal income tax and $13.6 billion from payroll and state taxes) would be lost. The DWL per dollar of additional revenue from the federal income tax is also highly sensitive to the ETI, ranging from $0.18 at an ETI of 0.2 to $1.25 at an ETI of 0.8. When offsets to revenue from payroll and state taxes are taken into account, the range is from $0.19 to $1.72. Laffer curves and rates are also presented in the chapter under the range of ETI assumptions, with special attention focused on the top tax bracket. Again, estimates are quite sensitive to the ETI. At an ETI of 0.2, the estimated Laffer tax rate for the top tax bracket is 78 percent; at an ETI of 1, the estimated Laffer rate is just 41 percent-or slightly higher than the current effective marginal tax rate for this group.
Author: Mr.Michael Keen
Publisher: International Monetary Fund
ISBN: 1475570309
Category : Business & Economics
Languages : en
Pages : 27
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Book Description
This paper sets out a framework for analyzing optimal interventions by a tax administration, one that parallels and can be closely integrated with established frameworks for thinking about optimal tax policy. Its key contribution is the development of a summary measure of the impact of administrative interventions—the “enforcement elasticity of tax revenue”—that is a sufficient statistic for the behavioral response to such interventions, much as the elasticity of taxable income serves as a sufficient statistic for the response to tax rates. Amongst the applications are characterizations of the optimal balance between policy and administrative measures, and of the optimal compliance gap.
Author: John Creedy
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
"This paper examines two problems in the estimation of the elasticity of taxable income. The first arises from the need to deal with endogeneity arising from the fact that the marginal tax rate and taxable income are jointly determined in a multi-tax structure.The approach taken in many empirical studies has been to use instrumental variable estimation. In contrast, the approach proposed in the present paper is to use ordinary least squares using proxy variables. It is shown that more robust, plausible results can be obtained using this approach. Secondly, the paper considers a potential role for income effects. One approach previously adopted has involved the addition of a term involving the proportional change in the net-of-tax average rate in addition to the change in the marginal net-of-tax rate. It is shown that the derivation of this specification, starting from the Slutsky equation, involves an invalid assumption (that virtual income can be neglected) at a crucial step. Nevertheless, for the New Zealand case, correction for this assumption leads to empirical results which also support the finding that income effects are negligible and statistically insignificant. In addition, the simpler specification can be derived more easily from a direct utility function. Following Kleven and Schultz (2014), income effects a real so examined by introducing a term involving the proportional change in virtual income. Estimates reported here show a very small negative, but significant, coefficicient on this variable when a proxy based on the expected tax rate is used, but an egligible and insignificant coefficient when a proxy based on an unchanged taxable income is used"--Page 1.
Author: Kamila Kaucká
Publisher: LAP Lambert Academic Publishing
ISBN: 9783844321296
Category :
Languages : en
Pages : 112
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Book Description
Tax rate change influences taxpayers' behavior and hence taxable income and tax revenue of the state budget. Any such change can affect declared taxable income through its effect on quality or quantity of labor supply, savings, portfolio decisions, tax avoidance by legal means or illegal tax evasion. In this work I focus on elasticity of taxable income as an estimate of these behavioral responses to a (personal income) tax rate change. First, I summarize theoretical background and fundamental analyses dealing with elasticity of taxable income. Further, I describe one of the methods, and its constraints, used for in empirical work on elasticity estimation known as difference-in-differences." I apply this method and estimate elasticity of taxable income in the Czech Republic using several recent personal income tax reforms. Those estimates that are consistent with economic theory and common sense suggest, along with results from optimal taxation theory, that the top marginal personal income tax rate in the Czech Republic should not exceed 71.8%, but any lower tax rate is justifiable based on redistributive tastes of a government.
Author: Aspen Gorry
Publisher:
ISBN:
Category : Elasticity (Economics)
Languages : en
Pages : 32
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Book Description
Knowing the elasticity of taxable income (ETI) is crucial for understanding the effects of taxation on taxpayer behavior and consequently on tax revenues. Previous research finds that high-income individuals are the most sensitive to tax policy changes. However, these individuals have more opportunities to defer income to future tax bases by altering the composition of their compensation than lower-income individuals. This paper considers the taxable income elasticity when individuals can shift income across tax bases and thereby defer taxation. We decompose the elasticity of taxable income into a real response as well as an income shifting response. We measure the tax rate on deferred income by the expected tax gain from deferring income using stock options as developed by Hall and Liebman (2000). Our results demonstrate that income shifting is an important component of previous estimates of the ETI. Because shifted income is taxed at future dates, income shifting decreases the welfare loss from personal income taxation associated with previous estimates.
