The Marginal welfare cost of personal income taxation in New Zealand

John Creedy and Penny Mok

No 20255, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: This present paper reports estimates of welfare changes and the marginal welfare cost of income taxation for a wide range of income and demographic groups in New Zealand, in the context of a uniform increase in all marginal income tax rates. The results are obtained using enhancements to the NZ Treasury’s behavioural microsimulation model, Taxwell-B, which uses discrete hours modelling to examine the labour supply responses of all individuals to an income tax change. Considerable variation is found in the marginal welfare costs for different groups, with an overall value of 12 cents per extra dollar raised. The paper also demonstrates the use of a money metric utility measure in a social welfare function evaluation. A smaller reduction in ‘social welfare’ is obtained compared with the use of net incomes.

Keywords: Income taxation; Social welfare; New Zealand (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ir.wgtn.ac.nz/handle/123456789/20255

Related works:
Journal Article: The marginal welfare cost of personal income taxation in New Zealand (2018)
Working Paper: The Marginal Welfare Cost of Personal Income Taxation in New Zealand (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:20255

Access Statistics for this paper

More papers in Working Paper Series from Victoria University of Wellington, Chair in Public Finance School of Accounting & Commercial Law, Victoria University of Wellington, PO Box 600, Wellington, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Library Technology Services (library-research@vuw.ac.nz).