Personal Income Tax Reforms and the Elasticity of Reported Income to Marginal Tax Rates: An Empirical Analysis Applied to Spain
María Arrazola,
Jose de Hevia,
Desiderio Romero and
José Félix Sanz-Sanz
No 18851, Working Paper Series from Victoria University of Wellington, Chair in Public Finance
Abstract:
This paper shows the utility of the elasticity of reported income to assess tax reforms in detail from the perspectives of tax revenue and well-being. We provide evidence of the value of the elasticity of reported income in Spain given the variations in marginal rates of the Personal Income Tax. The mean value of this parameter for the entire Spanish territory is 1,541. Nevertheless, we confirm the existence of considerable heterogeneity in the value of this elasticity depending on taxpayers’ characteristics. Based on these estimated elasticities, we make a detailed assessment of the impact of the recent increase in marginal tax rates that Spain approved in 2012.
Keywords: Personal income tax; Taxable income elasticity; Excess burden; Tax inefficiency (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:18851
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