The effect of recent tax changes on taxable income: Evidence from a new panel of tax returns

Heim, Bradley T.

doi:10.1002/pam.20406

Cited by 40 publications

(35 citation statements)

References 18 publications

(27 reference statements)

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“…We argue that our findings represent one possible explanation for the results in Burns and Ziliak (2012) since well-educated individuals with higher incomes and a higher propensity to be self-employed are more likely to have better evasion opportunities. Our findings are also consistent with Heim (2009Heim ( , 2010 who shows that the ETI is increasing in income and larger for the self-employed. Again, we argue that access to evasion might play a role in explaining these results.…”

Section: Discussionsupporting

confidence: 92%

Experimental Evidence on the Relationship between Tax Evasion Opportunities and Labor Supply

Doerrenberg

Duncan

2012

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Motivated by the observation that access to evasion opportunities is distributed heterogeneously across the labor market, this paper examines the extent to which labor supply elasticities with respect to tax rates depend on such evasion opportunities. We first set up a theoretical model to formally show that labor supply responses depend on access to evasion. The model is then tested in a lab experiment in which all participants undertake a real-effort task over several rounds. Subjects face a tax rate, which varies across rounds and are required to pay taxes on earned income. The treatment group is given the opportunity to underreport income while the control group is not. We find zero labor effort responses to tax rates in the control group and positive statistically significant adjustments in the treatment group; suggesting that both groups indeed react differently to taxes. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S

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Section: Discussionsupporting

confidence: 92%

Experimental Evidence on the Relationship between Tax Evasion Opportunities and Labor Supply

Doerrenberg

Duncan

2012

SSRN Journal

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“…In the case of the ETI, such explicit modelling has only been used in a few studies (Holmlund and Soderstrom, 2008, Giertz, 2008b, and Heim, 2007). These papers augment the traditional panel specification (21) by adding a lagged change in marginal tax rate term (and sometimes a prospective rate change term).…”

Section: • Advantages Of Panel Analysismentioning

confidence: 99%

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

2009

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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.

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“…However, Kopczuk (2005) fi nds similarly estimated results to be quite sensitive to sample selection and model specifi cation. Both Giertz (2006) and Heim (2007) also report estimates for the 1990s that are very sensitive to an array of factors. Others (e.g., Saez (2004) and Goolsbee (1999)) report great heterogeneity in estimated responses across time periods.…”

Section: Introductionmentioning

confidence: 99%

The Elasticity of Taxable Income over the 1980s and 1990s

Giertz¹

2007

National Tax Journal

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The effect of recent tax changes on taxable income: Evidence from a new panel of tax returns

Cited by 40 publications

References 18 publications

Experimental Evidence on the Relationship between Tax Evasion Opportunities and Labor Supply

Experimental Evidence on the Relationship between Tax Evasion Opportunities and Labor Supply

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

The Elasticity of Taxable Income over the 1980s and 1990s

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