Identifying the elasticity of taxable income Sarah K. Burns and James P. Ziliak
By: Burns, Sarah K
.
Contributor(s): Ziliak, James Patrick.
Material type: 
ArticlePublisher: 2017Subject(s): RENTA | IMPUESTOS | ELASTICIDAD IMPOSITIVA | ESTADOS UNIDOS | ANALISIS DE PANELES
In:
The economic journal v. 127, n. 600, March 2017, p. 1441-1483Summary: We use matched panels from the Current Population Survey along with a grouping instrumentalvariables estimator to provide new estimates of the elasticity of taxable income. Our identification strategy exploits the fact that federal and state tax reforms over the past three decades have differentially affected cohorts across states and over time. We find that the elasticity is in the range of 0.4.0.55. The implication of our new estimates for tax policy is thatthe revenue-maximising tax rate is nearly 30 percentage points lower than that obtained when we use the typical identification strategyin the literature.
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| IEF | OP 282/2017/600 (Browse shelf) | Available | OP 282/2017/600 |
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Disponible también en línea a través de la Biblioteca del Instituto de Estudios Fiscales. Resumen. Bibliografía. Anexo.
We use matched panels from the Current Population Survey along with a grouping instrumentalvariables estimator to provide new estimates of the elasticity of taxable income. Our identification strategy exploits the fact that federal and state tax reforms over the past three decades have differentially affected cohorts across states and over time. We find that the elasticity is in the range of 0.4.0.55. The implication of our new estimates for tax policy is thatthe revenue-maximising tax rate is nearly 30 percentage points lower than that obtained when we use the typical identification strategyin the literature.
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