Elasticity of Taxable Income: Evidence from Changes in Municipal Income Tax Rates in Finland

Matikka, Tuomas

doi:10.1111/sjoe.12236

Cited by 22 publications

(22 citation statements)

References 26 publications

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“…Her approach makes it possible to deal with serially correlated transitory income shocks. Besides Weber (2014b), different instruments have recently been developed such as in Blomquist and Selin (2010), Burns and Ziliak (2017), Gelber (2014) or Matikka (2016) . I summarize all other types of instruments in a third category (IV: other).…”

Section: Income Conceptmentioning

confidence: 99%

The Elasticity of Taxable Income: A Meta-Regression Analysis

Neisser

2017

SSRN Journal

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The IEB research program in Tax Systems Analysis aims at promoting high quality research in the field of taxation, taking into account not only the traditional approach to optimal taxation, but also administrative issues and the decentralization or globalization context. The ultimate aim of the program is to generate socially useful knowledge in this field. Special emphasis is put on empirical research, and on the analysis of the Spanish Tax System. The program enjoys the support from the IEB-Foundation. The IEB working papers represent ongoing research that is circulated to encourage discussion and has not undergone a peer review process. Any opinions expressed here are those of the author(s) and not those of IEB. IEB Working Paper 2017/10 THE ELASTICITY OF TAXABLE INCOME:A META-REGRESSION ANALYSIS * Carina NeisserABSTRACT: The elasticities of taxable (ETI) and broad income (EBI) are key parameters in optimal tax and welfare analysis. To examine the large variation in estimates found in the literature, I conduct a comprehensive meta-regression analysis of elasticities that measure behavioral responses to income taxation using information from 51 different studies containing 1,420 estimates. I find that heterogeneity in reported estimates is driven by regression techniques, sample restrictions and variations across countries and time.Moreover, I provide descriptive evidence of the correlation between contextual factors and the magnitude of an elasticity estimate. Overall, the study confirms the fact that the ETI itself is endogenous to the underlying tax system. I also document that selective reporting bias is prevalent in the literature. The direction of reporting bias depends on whether or not deductions are included in the tax base.JEL Codes: C81, H24, H26

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Section: Income Conceptmentioning

confidence: 99%

The Elasticity of Taxable Income: A Meta-Regression Analysis

Neisser

2017

SSRN Journal

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“…Elasticity of taxable corporate income (ETI) is a key index for the analysis of income tax efficiency and of the revenues from the income tax (Matikka, 2018) [27]. Changes of the fixed income tax rates are instrumental for the changes in the marginal tax rates.…”

Section: Resultsmentioning

confidence: 99%

Tax gap management: theory and practice

Косова¹,

Slobodyanyuk²,

Polzikova³

et al. 2018

EA-XXI

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Introduction. The focus of the study is determined by the urgency of the task to increase the budgetary income, which is one of prerequisites for successful breakthrough of Ukraine in military-political and socio-economic crisis. Purpose: to ground the concept of application of the gap-management for better sustainability of the budgetary system. The research subject is the views on tax gap prevention, and their effectiveness in domestic practice. We were reviewing theoretical, methodological and practical foundations of tax administration improvement. Methodologically research is based on gap-management theory. Results. Specific misbalances inherent to the tax systems are generalized by the authors, i.e. between the outcomes of progressive and flat taxation, between public income and expenses at different level of government, in foreign economic activity depending on the location of VAT taxation, in the internal processes of defining tax credit on VAT, and in the time gap between consolidation of the GDP and generation of tax income to the budget. Based on critical assessment of the tax risk management, five stages of process were defined: exposure of risks, their evaluation, determination and introduction of the counter-measures, efficiency assessment of the results. Conclusion. The results are grounded in the critical comparative analysis of the practice of tax management in Ukraine and of the established international practices. The international standards of introduction of fiscal transparency, sustainability, and tax risk management were analysed in their interconnection and mutual impact. We introduced the model which explained strategic mechanisms and principles of state tax management by the shift of emphasis in the system of tasks from achieving of the planned indicators of tax income to the budget, to the minimization of the tax gap. On the practical side, our research provides recommendations for long-term prognoses on the tax income and reporting on the fiscal risks.Косова Т. Д. доктор економічних наук, професор, професор кафедри фінансів, банківської справи та підприємництва, Донбаська державна машинобудівна академія, Краматорськ, Україна Слободянюк Н. О. доктор економічних наук, доцент, завідувач кафедри фінансів та банківської справи, Донецький національний університет економіки і торгівлі імені Михайла Туган-Барановського, Кривий Ріг, Україна Ползікова Г. В. кандидат економічних наук, доцент кафедри фінансів і маркетингу, ДВНЗ «Придніпровська державна академія будівництва та архітектури», Дніпро, Україна Шатанова А. кандидат економічних наук, професор, коледж міжнародного бізнесу ISM Slovakia, Прешов, Словаччина Gap-менеджмент в оподаткуванні: теоретичний і прикладний аспекти Анотація. У статті узагальнено специфічні дисбаланси, притаманні податковим системам: між наслідками оподаткування за прогресивною та рівномірною шкалами; між доходами й видатками бюджетів різних рівнів через наявність трансфертів; у сфері зовнішньоекономічної діяльності залежно від місця обкладання ПДВ; у внутрішніх процеса...

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“…We choose to make a simple compromise-admittedly a somewhat arbitrary one-of taking employee social security contributions into account in full, whereas leaving out employer social security contributions altogether. This division has the additional benefit that it corresponds to the way in which the baseline tax rates are constructed for the estimations of the ETI in Matikka (2016), which form an integral part of our calculations (see below).…”

Section: Current Effective Top Marginal Tax Ratementioning

confidence: 99%

“…The broad conclusion from this literature is that the ETI is fairly small on average-see Saez et al (2012) for a review. Matikka (2016) has estimated the ETI for Finland. He uses municipal income taxes as the source of tax rate variation in the estimation.…”

Section: Elasticity Of Taxable Income and Income-shiftingmentioning

confidence: 99%

“…2 A key feature of our analysis is that we explicitly take into account the effect of income-shifting when calculating the revenuemaximizing top earned income tax rate. In the context of Nordic dual income taxation, where earned income at the top is taxed at a considerably higher rate than capital income, there are ample incentives and possibilities for income-shifting (see, e.g., Tuomala 2008 andHarju andMatikka 2016). Taking into account this type of arbitrage has important implications for the revenuemaximizing top earned income tax rate, as some of the lost tax revenue will be recouped through other tax bases.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Revenue-maximizing top earned income tax rate in the presence of income-shifting

Kotakorpi

Matikka

2017

Nordic Tax Journal

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We provide an analysis of the revenue-maximizing top earned income tax rate for a country with one of the highest levels of earnings taxation in the world, Finland, and compare it to the current level of taxation. We account for the effect of income-shifting possibilities in the calculations and find that the current top tax rate on earnings in Finland is likely to be below the revenue-maximizing rate. We provide an explicit account of assumptions behind the Laffer curve calculations and demonstrate that policy conclusions depend critically on non-trivial choices regarding, for example, how the current top tax rate is calculated. The assumptions in the Laffer curve calculations need to be made explicit if the calculations are to provide guidance for policy.

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Elasticity of Taxable Income: Evidence from Changes in Municipal Income Tax Rates in Finland

Cited by 22 publications

References 26 publications

The Elasticity of Taxable Income: A Meta-Regression Analysis

The Elasticity of Taxable Income: A Meta-Regression Analysis

Tax gap management: theory and practice

Revenue-maximizing top earned income tax rate in the presence of income-shifting

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