Are Elasticities of Taxable Income Rising?
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
This paper assesses a possible explanation for the global downward trend in top personal income tax rates over the last decades: globalization and the related tax evasion and avoidance opportunities could have raised elasticities of taxable income, which would imply lower optimal tax rates. The paper estimates elasticities of taxable income for top income earners using a large sample of economies and years with a common method, allowing an analysis of trends in such elasticities. The paper finds that elasticities do not appear to exhibit any clear pattern over the years. The downward trend in tax rates must have other possible explanations, which are briefly discussed.
Series:
Working Paper No. 2018/132
Subject:
Corporate income tax Income tax systems Marginal effective tax rate National accounts Personal income Personal income tax Tax policy Taxes
English
Publication Date:
June 13, 2018
ISBN/ISSN:
9781484361566/1018-5941
Stock No:
WPIEA2018132
Pages:
22
Please address any questions about this title to publications@imf.org