The responsiveness of self-employment income to tax rate changes

Bradley Heim

Labour Economics, 2010, vol. 17, issue 6, 940-950

Abstract: This paper estimates the extent to which self-employment income responds to changes in the net-of-tax share using a panel of tax returns that spans 1987-1996. The results suggest that the elasticity of reported self-employment income to the net-of-tax share is approximately .9, implying a real elasticity (net of any reporting response) of around .4. Estimated elasticities tend to be larger for higher income taxpayers, married males, and females. In addition, the elasticity of self-employment income is considerably larger than the elasticity wage and salary income estimated using the same methodology.

Keywords: Self-employment; Taxes; Income; elasticity (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (20)

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