The Optimal Elasticity of Taxable Income

By Joel B. Slemrod, W. Kopczuk. 2000

297 citations recorded by the source corpus.

The strength of the behavioral response to a tax rate change depends on the environment individuals operate in, and may be manipulated by instruments controlled by the government. We first derive a measure of the social benefit to affecting this elasticity. The paper then examines this effect in the solution to the optimal income taxation problem when such an instrument is available, first in a general model and then in an example when the government chooses the income tax base.

Subfields: Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/54386b31801fb248086ac995b25cab13dcb8e816

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. H. Kleven
2. Laurent Simula
3. Alain Trannoy
4. Emmanuel Saez
5. A. Landier
6. E. Schultz
7. Guillaume Plantin
8. David A. Weisbach

In Gender Studies

1. H. Kleven
2. Laurent Simula
3. Alain Trannoy
4. Emmanuel Saez
5. David A. Weisbach
6. E. Schultz
7. Nathaniel Hendren
8. Stefanie Stantcheva

Citations in the corpus

• Optimal Income Tax under the Threat of Migration by Top-Income Earners (2010, background): “…option.3 Because many empirical studieshave shownthat thepropensity tomigrate increaseswith the skill level, it is sensible to assume thatmore productive individuals havemore e amore limited set of instruments thanwhen they face tax evasion ilde (1998), Sandmo (1981), Slemrod and Kopczuk (2002)).”
• Estimating Taxable Income Responses using Danish Tax Reforms (2014, background): “…particularly important because taxable income elasticities are not structural parameters that depend only on individual preferences, but depend in important ways on the opportunities for tax avoidance and tax evasion that are a reflection of policy choices (Slemrod 1998; Slemrod and Kopczuk 2002).”
• Hourly Wage Rate and Taxable Labor Income Responsiveness to Changes in Marginal Tax Rates (2010, unknown): “Third, as highlighted by Slemrod and Kopczuk (2002) and Kopczuk (2005) the elasticity of taxable income is a reduced form parameter and to some extent under government control.”
• Taxing the Rich (2016, background): “Slemrod and Kopczuk (2002) and Piketty et al. (2014) capture avoidance in a reduced form, as an exogenous elasticity of taxable income to the tax rate.”
• The Effect of Marginal Tax Rates on Income: A Panel Study of 'Bracket Creep' (2003, background): “Finally, as pointed out in Slemrod and Kopczuk (2000), the elasticity of taxable income is not an immutable parameter but might change when the tax law is modified, loopholes are closed, or new loopholes are introduced.”
• Bunching and Non-Bunching at Kink Points of the Swedish Tax Schedule (2012, unknown): “a very similar band as that implied by the paper by Blomquist and Selin (2010).(27) When comparing our bunching analysis with Gelber (2011), Blomquist and Selin (2010) and Hansson (2007) the following cautious remark should be made.”