Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/197682
Authors: 
Kumar, Anil
Liang, Che-Yuan
Year of Publication: 
2017
Series/Report no.: 
Working Paper 2017:5
Abstract: 
We explore the implications of heterogeneity in the elasticity of taxable income (ETI) for tax-reform based estimation methods. We theoretically show that existing methods yield elasticities that are biased and lack policy relevance. We illustrate the empirical importance of our theoretical analysis using the NBER tax panel for 1979-1990. We show that elasticity heterogeneity is the main explanation for large differences between estimates in the previous literature. Our preferred, newly suggested method yields elasticity estimates of approximately 0.7 for taxable income and 0.2 for broad income.
Subjects: 
elasticity of taxable income
elasticity heterogeneity
tax reforms
panel data
preference heterogeneity
JEL: 
D11
H24
J22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.