Earnings responses to even higher taxes

Dingquan Miao (), Håkan Selin and Martin Söderström ()
Additional contact information
Martin Söderström: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden

No 2022:12, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: We exploit a recent Swedish tax reform, implying higher marginal tax rates for the top 5% of the earnings distribution, to learn about earnings responses in an economy where taxes already are high. Using a simple and graphical cross sectional method, we estimate earnings elasticities in the range 0.13-0.16. We interpret the response using a simulation model in which people face uncertain marginal tax rates due to earnings dynamics. The tax response is surprisingly sharp given the earnings variability at the top of the earnings distribution.

Keywords: Earnings supply; Income taxation (search for similar items in EconPapers)
JEL-codes: H24 J22 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2022-05-30
New Economics Papers: this item is included in nep-eur, nep-lma, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.ifau.se/globalassets/pdf/se/2022/wp-20 ... ven-higher-taxes.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2022_012

Access Statistics for this paper

More papers in Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy IFAU, P O Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ali Ghooloo ( this e-mail address is bad, please contact ).