American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Estimating Taxable Income Responses Using Danish Tax Reforms
American Economic Journal: Economic Policy
vol. 6,
no. 4, November 2014
(pp. 271–301)
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.Citation
Kleven, Henrik Jacobsen, and Esben Anton Schultz. 2014. "Estimating Taxable Income Responses Using Danish Tax Reforms." American Economic Journal: Economic Policy, 6 (4): 271–301. DOI: 10.1257/pol.6.4.271Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H31 Fiscal Policies and Behavior of Economic Agents: Household
- J22 Time Allocation and Labor Supply
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