The Elasticity of Taxable Income in New Zealand

Iris Claus (), John Creedy and Josh Teng

No 1104, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper reports estimates of the elasticity of taxable income with respect to the net-of-tax rate for New Zealand taxpayers. The elasticity of taxable income was estimated to be substantially higher for the highest income groups. Generally it was higher for men than for women. Changes in the timing of income flows for the higher income recipients were found to be an important response to the announcement of a new higher-rate bracket. The marginal welfare costs of personal income taxation were consistent across years, being relatively small for all but the higher tax brackets. For the top marginal rate bracket of 39 per cent, the welfare cost of raising an extra dollar of tax revenue was estimated to be well in excess of a dollar. Furthermore, for the top bracket the marginal tax rate was often found to exceed the revenue-maximising tax rate.

Keywords: Income taxation; Taxable income; Elasticity of taxable income; Excess (search for similar items in EconPapers)
JEL-codes: H24 H31 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010
New Economics Papers: this item is included in nep-pbe and nep-pub
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Citations: View citations in EconPapers (9)

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http://fbe.unimelb.edu.au/__data/assets/pdf_file/0006/801078/1104.pdf (application/pdf)

Related works:
Journal Article: The Elasticity of Taxable Income in New Zealand (2012)
Working Paper: The Elasticity of Taxable Income in New Zealand (2012)
Working Paper: The Elasticity of Taxable Income in New Zealand (2012)
Working Paper: The Elasticity of Taxable Income in New Zealand (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:1104

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