Are Elasticities of Taxable Income Rising?

Are Elasticities of Taxable Income Rising?
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Volume/Issue: Volume 2018 Issue 132
Publication date: June 2018
ISBN: 9781484361566
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Economics- Macroeconomics , Taxation - General , WP , tax rate , income share , Optimal tax , Elasticity of taxable income , Tax Progressivity , Progressive Taxation , ETI estimate , estimate ETI , tax competition , OECD tax database , tax policy rates database , cross-economy estimate , income tax tax rate , tax purpose , tax rate change , tax schedule , net-of-tax rate , Personal income , Corporate income tax , Personal income tax , Marginal effective tax rate , Income tax systems

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Summary

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.

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