Giertz, Seth (2007): The Elasticity of Taxable Income over the 1980s and 1990s. Published in: National Tax Journal , Vol. 60, No. 4 : pp. 743-768.
Download (137kB) | Preview
Taxable (and broad) income elasticities are estimated using tax return data from 1979 to 2001. Data from the Continuous Work History Survey (CWHS) yield an estimated taxable income elasticity for the 1990s that is about half the corresponding 1980s estimate. Estimates from the full Statistics of Income, which heavily oversamples high–income filers, generally confirm the CWHS results. More sophisticated income control brings the estimates for the two decades closer together—to 0.40 for the 1980s and 0.26 for the 1990s. Work by Kopczuk (2005) implies that the narrowing of the tax base since 1986 could account for 14 to 29 percent of the remaining difference.
|Item Type:||MPRA Paper|
|Original Title:||The Elasticity of Taxable Income over the 1980s and 1990s|
|Keywords:||Taxable Income Elasticity; Behavioral Responses to taxation; Efficiency;|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
H - Public Economics > H2 - Taxation, Subsidies, and Revenue
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor
|Depositing User:||Seth Giertz|
|Date Deposited:||03. Nov 2009 03:10|
|Last Modified:||12. Feb 2013 12:47|
Auten, Gerald and Robert Carroll, “The Effect of Income Taxes on Household Behavior,” Review of Economics and Statistics, 81 No. 4 (November 1999): 681-693.
Bakija, Jon, “Documentation for a Comprehensive Historical U.S. Federal and State Income Tax Calculator Program,” economics department working paper, Williamstown, MA: Williams College, April 2006.
Feldstein, Martin, “The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act,” Journal of Political Economy, 103 No. 3 (June 1995): 551–572.
Feldstein, Martin, “Tax Avoidance and the Deadweight Loss of the Income Tax,” Review of Economics and Statistics, 81 No. 4 (November 1999): 674–680.
Feldstein, Martin and Marian Wrobel. “Can State Taxes Redistribute Income?,” Journal of Public Economics, 68 No. 3 (September 1998): 369-396.
Giertz, Seth, “The Elasticity of Taxable Income During the 1990s: A Sensitivity Analysis,” CBO Working Paper 2006-3, Washington D.C.: U.S. Congressional Budget Office, February 2006, www.cbo.gov/ftpdocs/70xx/doc7037/2006-03.pdf.
Giertz, Seth, “A Sensitivity Analysis of the Elasticity of Taxable Income,” CBO Working Paper 2005-01, Washington D.C.: U.S. Congressional Budget Office, February 2005, www.cbo.gov/ftpdocs/60xx/doc6077/WP-2005-01.pdf.
Giertz, Seth, “Recent Literature on Taxable-Income Elasticities,” CBO Technical Paper 2004 16, Washington D.C.: U.S. Congressional Budget Office, December 2004, www.cbo.gov/ftpdocs/60xx/doc6028/2004 16.pdf.
Goolsbee, Austan, “Evidence on the High-Income Laffer Curve from Six Decades of Tax Reforms,” Brookings Papers on Economic Activity, 1999 No. 2 (1999): 1–47.
Gruber, Jonathan and Emmanuel Saez, “The Elasticity of Taxable Income: Evidence and Implications,” Journal of Public Economics, 84 No. 1 (April 2002): 1–32.
Heim, Bradley, “The Elasticity of Taxable Income: Evidence from a New Panel of Tax Returns,” working paper, 2007.
Internal Revenue Service, “Individual Income Tax Returns with Positive Adjusted Gross Income (AGI)” Unpublished Statistics of Income data, Washington, D.C.: Internal Revenue Service, September 2004.
Internal Revenue Service, “Individual Income Tax Returns – Publication 1304” Statistics of Income, Washington, D.C.: Internal Revenue Service, 1979-1998.
Harig, Bob, “The 19th Hole,” The St. Petersburg Times (October 14, 2004): C-8.
Imbens, Guido, and Tony Lancaster, ‘‘Efficient Estimation and Stratified Sampling,’’ Journal of Econometrics, 74 No. 2 (October 1996): 289–318.
Jones, Gregg, “The Nation on State Tax Policy: Everyone Has a Formula for Reform,” The Los Angeles Times (February 25, 2003), A-1.
Kopczuk, Wojciech, “Tax Bases, Tax Rates and the Elasticity of Reported Income,” Journal of Public Economics, 89 No. 11-12 (December 2005): 2093-2119.
Lemieux, Thomas, "Post-secondary Education and Increasing Wage Inequality", American Economic Review Papers and Proceedings, (May 2006): 1-23.
Piketty, Thomas and Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics, 118 No. 1 (February 2003): 1–39.
Piketty, Thomas and Emmanuel Saez, “How Progressive is the U.S. Federal Tax System? A Historical and International Perspective,” Journal of Economic Perspectives, 21 No. 1 (Winter 2007): 3-24.
Saez, Emmanuel, “Reported Incomes and Marginal Tax Rates, 1960–2000: Evidence and Policy Implications,” In Tax Policy and the Economy 18, edited by James Poterba, 117-173. Cambridge: the MIT Press, 2004.
Saez, Emmanuel and Michael Veall, “The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence,” American Economic Review 95 No. 3 (June 2005): 831-849.
Slemrod, Joel, “High income families and the tax changes of the 1980s: The Anatomy of Behavioral Response,” In Empirical Foundations of Household Taxation, edited by Martin Feldstein and James Poterba, 169-189. Chicago: University of Chicago Press, 1996.
Slemrod, Joel, “Methodological Issues in Measuring and Interpreting Taxable Income Elasticities,” National Tax Journal, 51 No. 4 (December 1998): 773–788.
Slemrod, Joel and Wojciech Kopczuk, “The Optimal Elasticity of Taxable Income,” Journal of Public Economics, 84 No. 1 (April 2002): 91–112.