Estimating the Laffer Tax Rate on Capital Income: Cross-Base Responses Matter!

Lefebvre, Marie-Noëlle; Lehmann, Étienne; Sicsic, Michaël

doi:10.2139/ssrn.4189229

SSRN Journal

2022

DOI: 10.2139/ssrn.4189229

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Estimating the Laffer Tax Rate on Capital Income: Cross-Base Responses Matter!

Marie-Noëlle Lefebvre

Étienne Lehmann

Michaël Sicsic

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2024

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Cited by 2 publications

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The individual Laffer curve: evidence from the Spanish income tax

Gamarra Rondinel,

Sanz-Sanz,

Arrazola

2024

Empir Econ

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This paper characterises the Laffer curve of each individual taxpayer in a schedular multi-rate income tax with income shifting. Analytical expressions for the revenue-maximising tax rate and the revenue-maximising elasticity are provided for the individual taxpayer and the aggregate population, as well as new estimates of the Elasticity of Taxable Income. Applying these to the Spanish income tax demonstrates that 44.72% (58.49%) of the taxpaying population in the non-savings tax base (savings tax base) is on the “normal” side of the Laffer curve. On average, these taxpayers are 6.59 points (24.73 points) above (below) the maximum of the Laffer curve. The fraction of total tax revenue lost through behavioural responses amounts to 53.77%. However, this fraction varies by population subgroup and decreases when we account for income-shifting responses, suggesting the presence of fiscal externalities in the Spanish PIT.

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The individual Laffer curve: evidence from the Spanish income tax

Gamarra Rondinel,

Sanz-Sanz,

Arrazola

2024

Empir Econ

View full text Add to dashboard Cite

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Salah-Mohammad triangular distribution Curve is an Alternative to the Laffer curve

Salimian,

Sobhanian

2024

JDG

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Estimating the Laffer Tax Rate on Capital Income: Cross-Base Responses Matter!

Cited by 2 publications

References 21 publications

The individual Laffer curve: evidence from the Spanish income tax

The individual Laffer curve: evidence from the Spanish income tax

Salah-Mohammad triangular distribution Curve is an Alternative to the Laffer curve

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