scholarly journals The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the1986 Tax Reform Act

10.3386/w4496 ◽  
1993 ◽  
Author(s):  
Martin Feldstein
Keyword(s):  
Tax Reform ◽  
Panel Study ◽  
Tax Rates ◽  
Taxable Income ◽  
Marginal Tax Rates

The Impact of the Source of Changes in Marginal Tax Rates on Participation in Individual Retirement Accounts

2002 ◽  
Vol 24 (1) ◽  
pp. 46-59 ◽  
Author(s):  
David H. Eaton
Keyword(s):  
Fixed Effects ◽  
Tax Reform ◽  
Tax Rates ◽  
Tax Rate ◽  
Taxable Income ◽  
Individual Retirement Accounts ◽  
Retirement Accounts ◽  
Marginal Tax Rates ◽  
The Impact ◽  
Participation Decisions

This paper uses a series of two-year panels of tax return data to estimate the effects of two sources of tax rate changes on the participation in Individual Retirement Accounts (IRAs). This paper uses a panel logit approach to control for individual specific fixed effects, which may also influence IRA participation behavior. This paper examines participation during the years of open eligibility for IRAs, as well as examining the impact of the 1986 tax reform on participation. A key finding of this paper is that taxpayers' IRA participation decisions are more sensitive to changes in tax rates due to changes in taxable income than to direct changes in the tax tables.

scholarly journals Measuring the impact of marginal tax rate reform on the revenue base of South Africa using a microsimulation tax model

2015 ◽  
Vol 18 (3) ◽  
pp. 380-394 ◽  
Author(s):  
Yolande Jordaan ◽  
Nicholaas J Schoeman
Keyword(s):  
Economic Growth ◽  
Tax Reform ◽  
Fiscal Year ◽  
Optimum Level ◽  
Tax Rates ◽  
Strong Response ◽  
Taxable Income ◽  
Marginal Tax Rates ◽  
Tax Efficiency ◽  
The Impact

This paper is primarily concerned with the revenue and tax efficiency effects of adjustments to marginal tax rates on individual income as an instrument of possible tax reform. The hypothesis is that changes to marginal rates affect not only the revenue base, but also tax efficiency and the optimum level of taxes that supports economic growth. Using an optimal revenue-maximising rate (based on Laffer analysis), the elasticity of taxable income is derived with respect to marginal tax rates for each taxable-income category. These elasticities are then used to quantify the impact of changes in marginal rates on the revenue base and tax efficiency using a microsimulation (MS) tax model. In this first paper on the research results, much attention is paid to the structure of the model and the way in which the database has been compiled. The model allows for the dissemination of individual taxpayers by income groups, gender, educational level, age group, etc. Simulations include a scenario with higher marginal rates which is also more progressive (as in the 1998/1999 fiscal year), in which case tax revenue increases but the increase is overshadowed by a more than proportional decrease in tax efficiency as measured by its deadweight loss. On the other hand, a lowering of marginal rates (to bring South Africa’s marginal rates more in line with those of its peers) improves tax efficiency but also results in a substantial revenue loss. The estimated optimal individual tax to gross domestic product (GDP) ratio in order to maximise economic growth (6.7 per cent) shows a strong response to changes in marginal rates, and the results from this research indicate that a lowering of marginal rates would also move the actual ratio closer to its optimum level. Thus, the trade-off between revenue collected and tax efficiency should be carefully monitored when personal income tax reform is being considered.

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)

Measuring Revenue-maximizing Elasticities of Taxable Income

2016 ◽  
Vol 45 (2) ◽  
pp. 174-204 ◽  
Author(s):  
John Creedy ◽  
Norman Gemmell
Keyword(s):  
Income Tax ◽  
Tax Rates ◽  
Marginal Rate ◽  
Tax System ◽  
Tax Rate ◽  
Taxable Income ◽  
Wide Range ◽  
The Us ◽  
Marginal Tax Rates ◽  
The Right

This article considers the question of whether marginal tax rates (MTRs) in the US income tax system are on the “right” side of their respective Laffer curves. Previous attention has tended to focus specifically on the top MTR. Conceptual expressions for these “revenue-maximizing elasticities of taxable income” (ETI L), based on readily observable tax parameters, are presented for each tax rate in a multi-rate income tax system. Applying these to the US income tax, with its complex effective marginal rate structure, demonstrates that a wide range of revenue-maximizing ETI values can be expected within, and across, tax brackets and for all taxpayers in aggregate. For some significant groups of taxpayers, these revenue-maximizing ETIs appear to be within the range of empirically estimated elasticities.

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)

Steuerreform 2000 – Entlastungswirkungen und Investitionsanreize für Personenunternehmen gemessen an Alternativen

2002 ◽  
Vol 3 (1) ◽  
pp. 105-116 ◽  
Author(s):  
Volker Börstinghaus ◽  
Andrea Weinelt
Keyword(s):  
Tax Reform ◽  
Investment Incentives ◽  
Tax Rates ◽  
Income Groups ◽  
Marginal Tax Rates

Abstract This paper outlines the tax reliefs and the investment incentives for partnerships that can be expected from the current tax reform in Germany. We therefore compare the enacted law with concepts that have been submitted by the socalled „Bruehler Commission“. After a brief description of the different alternatives our analysis continues with the calculation and evaluation of average and marginal tax rates for selected income groups. As a result it is argued that the alternative proposals lead to unequally distributed tax reliefs between different income groups and generate weaker investment incentives. Thus we support the enacted law.

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