How does fiscal reform affect the elasticity of income tax revenues? The case of Spain, 2003-2008

Diego Martínez-López
Authors registered in the RePEc Author Service: Diego Martínez

International Journal of Public Policy, 2017, vol. 13, issue 6, 337-357

Abstract: This paper estimates the extent to which an exogenous change in income affects income tax revenues. We focus on the case of Spain over the period 2003-2008, as the income tax experienced a substantial reform in 2007. Using both an analytical method and a numerical simulation, we find a significant increase in aggregate income tax elasticities from 1.4 for 2003-2006 to around 1.8 for 2007-2008. The sensitivity of results to the presence of housing tax credits, non-equiproportional variations in income, changes in income inequality and fiscal drag is also considered. Finally, some policy implications are drawn.

Keywords: income tax; progressivity; tax rates; tax credits; Spain. (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijpubp:v:13:y:2017:i:6:p:337-357

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