Taxation and top incomes in Canada

Kevin Milligan and Michael Smart

Canadian Journal of Economics, 2015, vol. 48, issue 2, 655-681

Abstract: We estimate the elasticity of reported income with respect to tax rates for high earners using sub-national variation across Canadian provinces. We argue this allows for better identification of tax elasticities than the existing literature. We find that elasticities of reported income at the provincial level are large for incomes in the top 1%, but small for lower earners. There are strong indications that the response happens both through earned and capital income. While our estimated elasticities are large, changes in tax rates cannot explain much of the overall long-run trend of higher income concentration in Canada.

JEL-codes: H21 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Taxation and top incomes in Canada (2015)
Working Paper: Taxation and Top Incomes in Canada (2014)
Working Paper: Taxation and top incomes in Canada (2014)
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