scholarly journals Estimating Taxable Income Responses Using Danish Tax Reforms

2014 ◽  
Vol 6 (4) ◽  
pp. 271-301 ◽  
Author(s):  
Henrik Jacobsen Kleven ◽  
Esben Anton Schultz
Keyword(s):  
Administrative Data ◽  
Mean Reversion ◽  
Panel Regression ◽  
Tax Reforms ◽  
Taxable Income ◽  
Income Elasticities

This paper estimates taxable income responses using a series of Danish tax reforms and population-wide administrative data since 1980. The tax variation and data in Denmark makes it possible to overcome the biases from nontax changes in inequality and mean reversion that plague the existing literature. We provide compelling graphical evidence of taxable income responses, arguably representing the first nonparametrically identified evidence of taxable income elasticities using tax reforms. We also present panel regression evidence that is extremely robust to specification, unlike previous results which have been very sensitive. (JEL D31, H24, H31, J22)

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.

scholarly journals Does Cutting the Tax Rate to Zero Induce Behavior Different from Other Tax Cuts? Evidence from Pakistan

2020 ◽  
Vol 102 (3) ◽  
pp. 426-441 ◽  
Author(s):  
Mazhar Waseem
Keyword(s):  
Low Income ◽  
Tax Evasion ◽  
Tax Reforms ◽  
Middle Income ◽  
Tax Rate ◽  
Taxable Income ◽  
Administrative Records ◽  
The Difference ◽  
Wage Earners ◽  
Tax Cuts

Using a series of Pakistani tax reforms and administrative records, I document that taxable income responses induced by to-zero tax cuts are orders of magnitude larger than ones induced by similar-sized other cuts. This finding is remarkably robust to alternative specifications and holds for both the self-employed and wage earners. I explore salience, selective enforcement, and discontinuous evasion costs as explanations of the observed behavior. I find that the data favor the last explanation. The difference between the two sets of responses is primarily driven by a large, discrete tax evasion response, which is included in the former but not in the latter behavior. I estimate the difference as a lower bound on tax evasion, showing that at least 70% of the income of low- and middle-income self-employed and 1% of low-income wage earners goes unreported.

scholarly journals Tax Reforms and Intertemporal Shifting of Wage Income: Evidence from Danish Monthly Payroll Records

2016 ◽  
Vol 8 (3) ◽  
pp. 233-257 ◽  
Author(s):  
Claus Thustrup Kreiner ◽  
Søren Leth-Petersen ◽  
Peer Ebbesen Skov
Keyword(s):  
Tax Reform ◽  
Liquidity Constraints ◽  
Labor Income ◽  
Tax Rates ◽  
Tax Reforms ◽  
Taxable Income ◽  
Elasticity Of Taxable Income ◽  
Marginal Tax Rates ◽  
Willingness To Cooperate ◽  
Wage Income

This paper uses monthly payroll records for all Danish employees to identify widespread intertemporal shifting of labor income in response to a tax reform that significantly reduced the marginal tax rates for one-fourth of all employees. When ignoring shifting, the estimate of the overall elasticity of taxable income equals 0.1, and the elasticity is increasing with earnings. When removing the shifting component, the elasticity is close to zero at all earnings levels. The evidence also indicates that tax salience, liquidity constraints and firm willingness to cooperate in shifting are important factors in explaining shifting behavior. (JEL H24, H31, J22, J31)

scholarly journals Do Audits Deter or Provoke Future Tax Noncompliance? Evidence on Self-employed Taxpayers

2019 ◽  
Vol 19 (223) ◽  
Author(s):  
Sebastian Beer ◽  
Matthias Kasper ◽  
Erich Kirchler ◽  
Brian Erard
Keyword(s):  
Administrative Data ◽  
First Year ◽  
Reporting Behavior ◽  
Taxable Income ◽  
Tax Assessment ◽  
Audit Information ◽  
Tax Noncompliance

This paper employs unique tax administrative data and operational audit information from a sample of approximately 7,500 self-employed U.S. taxpayers to investigate the effects of operational tax audits on future reporting behavior. Our estimates indicate that audits can have substantial deterrent or counter-deterrent effects. Among those taxpayers who receive an additional tax assessment, reported taxable income is estimated to be 64% higher in the first year after the audit than it would have been in the absence of the audit. In contrast, among those taxpayers who do not receive an additional tax assessment, reported taxable income is estimated to be approximately 15% lower the year after the audit than it would have been had the audit not taken place. Our results suggest that improved targeting of audits towards noncompliant taxpayers would not only yield more direct audit revenue, it would also pay dividends in terms of future tax collections.

Do Audits Deter or Provoke Future Tax Noncompliance? Evidence on Self-Employed Taxpayers

2020 ◽  
Vol 66 (3) ◽  
pp. 248-264 ◽  
Author(s):  
Sebastian Beer ◽  
Matthias Kasper ◽  
Erich Kirchler ◽  
Brian Erard
Keyword(s):  
Administrative Data ◽  
Risk Scores ◽  
First Year ◽  
Reporting Behavior ◽  
Taxable Income ◽  
Tax Assessment ◽  
Audit Information ◽  
Substantial Heterogeneity ◽  
Tax Noncompliance

Abstract This article employs unique tax administrative data and operational audit information, including risk scores used for audit selection, from a sample of approximately 7500 self-employed US taxpayers to investigate the effects of operational tax audits on future reporting behavior. Our estimates indicate that audits can have substantial deterrent or counter-deterrent effects, depending on the audit outcome. In the aggregate, taxable income is estimated to increase by roughly 15% 1 year after an operational audit. However, this figure masks substantial heterogeneity within the population. Among those taxpayers who receive an additional tax assessment, reported taxable income is estimated to be 64% higher in the first year after the audit (44% after 3 years) than it would have been in the absence of the audit. In contrast, among those taxpayers who do not receive an additional tax assessment, reported taxable income is estimated to be approximately 15% lower the year after the audit (21% 3 years later) than it would have been had the audit not taken place. Our results suggest that improved targeting of audits toward noncompliant taxpayers would not only yield more direct audit revenue but also pay dividends in terms of future tax collections.

scholarly journals Is the Taxable Income Elasticity Sufficient to Calculate Deadweight Loss? The Implications of Evasion and Avoidance

2009 ◽  
Vol 1 (2) ◽  
pp. 31-52 ◽  
Author(s):  
Raj Chetty
Keyword(s):  
Income Elasticity ◽  
Weighted Average ◽  
Deadweight Loss ◽  
Tax Rates ◽  
Tax Rate ◽  
Taxable Income ◽  
Income Elasticities ◽  
Highly Sensitive ◽  
Efficiency Cost ◽  
Resource Cost

Martin Feldstein's (1999) widely used taxable income formula for deadweight loss assumes the marginal social cost of evasion and avoidance equals the tax rate. This condition is likely to be violated in practice for two reasons. First, some of the costs of evasion and avoidance are transfers to other agents. Second, some individuals overestimate the costs of evasion and avoidance. In such situations, excess burden depends on a weighted average of the taxable income and total earned income elasticities, with the weight determined by the resource cost of sheltering income from taxation. This generalized formula implies the efficiency cost of taxing high income individuals is not necessarily large despite evidence that their reported incomes are highly sensitive to marginal tax rates. (JEL H21, H24, H26)

scholarly journals Pengaruh Volatilitas Arus Kas, Volatilitas Penjualan, Dan Perbedaan Laba Akuntansi Dengan Laba Fiskal Terhadap Persistensi Laba

2020 ◽  
Vol 2 (1) ◽  
pp. 2129-2141
Author(s):  
Doli Andi ◽  
Mia Angelina Setiawan
Keyword(s):  
Regression Analysis ◽  
Sampling Method ◽  
Stock Exchange ◽  
Secondary Data ◽  
Cash Flows ◽  
Earnings Persistence ◽  
Panel Regression ◽  
Manufacturing Companies ◽  
Taxable Income ◽  
Negative Effect

This study aimed to examine the effect of the volatility of cash flows, sales volatility and differences in accounting income with taxable income of the persistence of earnings. This research is classified research causative. The population in this research is manufacturing companies listed in Indonesia Stock Exchange in 2014-2018. By using purposive sampling method, there are 42 companies as samples. The data used is secondary data obtained from www.idx.co.id. The analytical method used is a panel regression analysis. The results of this study indicate that the volatility of cash flow and significant negative effect on the persistence of earnings, while variable sales volatility and differences in accounting income to taxable income has no effect on earnings persistence.

Sign in / Sign up

Export Citation Format

Share Document