Abstract
Abstract
We study how taxable income responds to changes in marginal tax rates, using as a main source of identifying variation three large reforms to the Spanish personal income tax implemented in the period 1999–2014. The most reliable estimates of the elasticity of taxable income (ETI) with respect to the net-of-tax rate for this period are between 0.45 and 0.64. The ETI is about three times larger for self-employed taxpayers than for employees and larger for business income than for labor and capital income. The elasticity of broad income is smaller, between 0.10 and 0.24, while the elasticity of some tax deductions such as the one for private pension contributions exceeds one. Our estimates are similar across a variety of estimation methods and sample restrictions and also robust to potential biases created by mean reversion and heterogeneous income trends.
Publisher
Springer Science and Business Media LLC
Subject
General Economics, Econometrics and Finance
Reference33 articles.
1. Arrazola M, de Hevia J, Romero D, Sanz JF (2014) Efecto de los Tipos Marginales del IRPF Sobre los Ingresos Fiscales y la Actividad Económica en España: Un Análisis Empírico. FUNCAS working paper 740
2. Auten G, Carroll R (1999) The effect of income taxes on household income. Rev Econ Stat 81(4):681–693
3. Badenes N (2001) IRPF, Eficencia y Equidad: Tres Ejercicios de Microsimulación. PhD thesis, Instituto de Estudios Fiscales INV. 1/01
4. Chetty R (2009) Is the taxable income elasticity sufficient to calculate deadweight loss? The implications of evasion and avoidance. Am Econ J Econ Policy 1(2):31–52
5. Chetty R, Friedman JN, Olsen T, Pistaferri L (2011) Adjustment costs, firm responses and micro vs. macro labor supply elasticities: evidence from danish tax records. Q J Econ 126(2):749–804
Cited by
7 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献