scholarly journals Elasticity of Taxable Income and Deadweight Loss

2009 ◽  
Vol 29 (2) ◽  
pp. 213-242 ◽  
Author(s):  
Choi, Seng-Eun
Keyword(s):  
Deadweight Loss ◽  
Taxable Income ◽  
Elasticity Of Taxable Income

Does Evasion Invalidate the Welfare Sufficiency of the ETI?

2016 ◽  
Vol 16 (4) ◽  
Author(s):  
Christian Gillitzer ◽  
Joel Slemrod
Keyword(s):  
Economic Policy ◽  
Risk Aversion ◽  
Tax Evasion ◽  
Income Elasticity ◽  
Deadweight Loss ◽  
Sufficient Statistic ◽  
Taxable Income ◽  
Elasticity Of Taxable Income ◽  
Efficiency Cost ◽  
Economic Journal

Abstract In an influential article, Raj Chetty (2009, “Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance.” American Economic Journal: Economic Policy 1 (2):31–52) argues that in the presence of tax evasion the elasticity of taxable income (ETI) is no longer a sufficient statistic for the marginal efficiency cost of funds (MECF). We show that, under Chetty’s (2009, “Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance.” American Economic Journal: Economic Policy 1 (2):31–52) risk-neutrality assumption, correctly measuring the standard MECF only requires adding detected evasion inclusive of penalties. In the more general case of risk aversion, it further requires amending the formula to address the private risk-bearing cost of tax evasion.

The Tax Elasticity of Financial Statement Income: Implications for Current Reform Proposals

2020 ◽  
Vol 73 (4) ◽  
pp. 1047-1064
Author(s):  
Dhammika Dharmapala
Keyword(s):  
Conceptual Framework ◽  
Welfare Analysis ◽  
Financial Statement ◽  
Deadweight Loss ◽  
Corporate Tax ◽  
Taxable Income ◽  
Relevant Evidence ◽  
Elasticity Of Taxable Income ◽  
Current Reform

Current reform proposals in international and corporate tax (most notably the Organisation for Economic Co-operation and Development’s Global Anti-Base Erosion proposal) envisage taxing financial statement income. This paper develops a conceptual framework, based on the literature on the elasticity of taxable income (ETI), for the welfare analysis of such proposals and discusses the available evidence on the tax elasticity of financial statement income. The central conclusion is that the most relevant evidence suggests a large responsiveness of financial statement income to taxes (and, hence, albeit with significant limitations and caveats, arguably a large deadweight loss). The paper also highlights the need for more evidence on this question.

scholarly journals The Elasticity of Taxable Income: A Meta-Regression Analysis*

2021 ◽  
Author(s):  
Carina Neisser
Keyword(s):  
Regression Analysis ◽  
Policy Analysis ◽  
Selective Reporting ◽  
Tax Base ◽  
Taxable Income ◽  
Income Elasticities ◽  
Elasticity Of Taxable Income ◽  
Meta Regression ◽  
Meta Regression Analysis ◽  
Key Parameter

Abstract The elasticity of taxable income (ETI) is a key parameter in tax policy analysis. To examine the large variation found in the literature of taxable and broad income elasticities, I conduct a comprehensive meta-regression analysis using information from 61 studies containing 1,720 estimates. My findings reveal that estimated elasticities are not immutable parameters. They are correlated with contextual factors and the choice of the empirical specification influences the estimated elasticities. Finally, selective reporting bias is prevalent, and the direction of bias depends on whether deductions are included in the tax base.

Estimating the Elasticity of Taxable Income in New Zealand

2014 ◽  
Vol 91 (292) ◽  
pp. 54-78 ◽  
Author(s):  
Simon Carey ◽  
John Creedy ◽  
Norman Gemmell ◽  
Josh Teng
Keyword(s):  
New Zealand ◽  
Taxable Income ◽  
Elasticity Of Taxable Income

scholarly journals The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review

2012 ◽  
Vol 50 (1) ◽  
pp. 3-50 ◽  
Author(s):  
Emmanuel Saez ◽  
Joel Slemrod ◽  
Seth H Giertz
Keyword(s):  
The United States ◽  
Critical Discussion ◽  
Future Research ◽  
Tax Rates ◽  
Empirical Estimation ◽  
Sufficient Statistic ◽  
Tax Rate ◽  
Taxable Income ◽  
Elasticity Of Taxable Income ◽  
Marginal Tax Rates

This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates 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 selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research. (JEL H24, H31, J22)

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