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Estimating taxable income responses using Danish tax reforms

Henrik Jacobsen Kleven and Esben Anton Schultz

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper estimates taxable income responses using a series of Danish tax reforms and population-wide administrative data since 1980. The tax variation and data in Denmark makes it possible to overcome the biases from nontax changes in inequality and mean reversion that plague the existing literature. We provide compelling graphical evidence of taxable income responses, arguably representing the first nonparametrically identified evidence of taxable income elasticities using tax reforms. We also present panel regression evidence that is extremely robust to specification, unlike previous results which have been very sensitive.

JEL-codes: D31 H24 H31 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc and nep-pbe
Date: 2014-11
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Published in American Economic Journal: Economic Policy, November, 2014, 6(4), pp. 271-301. ISSN: 1945-7731

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