The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review / Emmanuel Saez, Joel B. Slemrod, Seth H. Giertz.

Format:

Book

Author/Creator:

Saez, Emmanuel.

Contributor:

National Bureau of Economic Research.

Slemrod, Joel B.

Giertz, Seth H.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15012.

NBER working paper series no. w15012

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Elasticity of Taxable Income with Respect to Marginal Tax Rates

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates (ETI) using tax return data. First, we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the United States to illustrate those issues. Third, we provide a critical discussion of most of the taxable income elasticities studies to date, both in the United States and abroad, in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research.

Notes:

Print version record

May 2009.