The elasticity of taxable income in the presence of deduction possibilities

Doerrenberg, Philipp; Peichl, Andreas; Siegloch, Sebastian

doi:10.1016/j.jpubeco.2015.10.001

Cited by 97 publications

(82 citation statements)

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“…8 See Doerrenberg et al (2016) for an overview of the German personal income tax and deduction possibilities. The deduction is capped at a maximum amount which has been raised from 525 Euro in 2002/2003 to 2100 Euro in 2008.…”

Section: Institutional Backgroundmentioning

confidence: 99%

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Do retirement savings increase in response to information about retirement and expected pensions?

Dolls

Doerrenberg

Peichl

et al. 2018

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. How can retirement savings be increased? We explore a unique policy change in the context of the German pension system to study this question. As of 2005 (with a phase-in period between 2002-04), the German pension administration started to send out annual letters providing detailed and comprehensible information about the pension system and individual expected public pension payments. This reform did not change the level of pensions, but only provided information to individuals about their expected pension payments. Using German tax return data, we exploit an age discontinuity to identify the effect of these letters on the behavior of individuals. We find an increase in tax-deductible private retirement savings and provide evidence that this is not due to a crowding-out of other forms of savings. We also show that labor earnings, i.e. the most direct way to increase public pensions, increase after receiving the letter. Terms of use: Documents inJEL-Codes: H550, H240, D140.

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Section: Institutional Backgroundmentioning

confidence: 99%

“…We observe the age of the taxpayer (the first eligibility criterion). The second eligibility criterion (having paid at least 5 years of social insurance contributions) can be checked indirectly in the data due to the deductibility of previous social insurance contributions (Doerrenberg et al 2016). …”

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confidence: 99%

Do retirement savings increase in response to information about retirement and expected pensions?

Dolls

Doerrenberg

Peichl

et al. 2018

Journal of Public Economics

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“…There are opportunities to do so depending on the tax system in place. Either taxpayers change their spending on tax-deductible items, even claiming questionable deductions (see Paetzold (2017) or Doerrenberg et al (2017)) or over-report their deductions (see Kleven et al (2011)). Income shifting between periods as documented by Goolsbee (2000b) might also drive the results.…”

Section: Estimation Techniquesmentioning

confidence: 99%

“…Study N in % Aarbu and Thoresen (2001) 8 0.56 Arrazola et al (2014) 8 0.56 Arrazola-Vacas et al (2015) 26 1.83 Auten and Carroll (1999) 20 1.41 Auten et al (2008) 10 0.70 Auten and Joulfaian (2009) 24 1.69 Auten and Kawano (2014) 10 0.70 Bakos et al (2010) 21 1.48 Blomquist and Selin (2010) 10 0.70 Burns and Ziliak (2017) 64 4.51 Carey et al (2015) 6 0.42 Carroll (1998) 12 0.85 Chetty et al (2011) 6 0.42 Doerrenberg et al (2017) 16 1.13 Ericson et al (2015) 5 0.35 Gelber (2014) (2013) 54 3.80 Kiss and Mosberger (2014) 15 1.06 Kleven and Schultz (2014) 114 8.03 Kopczuk (2005) 91 6.41 Kopczuk (2015) 30 2.11 Kumar and Liang (2015) 10 0.70 Lehmann et al (2013) …”

Section: A4 Distribution Of Estimates By Studymentioning

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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“…However, a large number of articles assume prices are not affected by taxation (Feldstein (1999), Saez (2001), Slemrod (2001), Gruber and Saez (2002), Chetty (2009a), Doerrenberg, Peichl, and Siegloch (2017), Keen and Slemrod (2017)), thus ruling out simultaneity by assumption. If there is indeed no simultaneity, reduced-form and structural coefficients are equivalent.…”

mentioning

confidence: 99%

Estimating Both Supply and Demand Elasticities Using Variation in a Single Tax Rate

Zoutman¹,

Gavrilova²,

Hopland³

2018

Econometrica

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APPENDIX A: EXTENSIONSIN THIS APPENDIX, we consider three extensions to our main result derived in Section 2. The extensions are (i) supply-side instead of demand-side taxation, (ii) nonlinear, instead of ad valorum taxation, and (iii) a setting with multiple goods and multiple taxes. A.1. Supply-Side TaxationTo extend our result to supply-side taxation, we again start out with the most general formulation of the supply-demand system given by equations (1), (2). However, we now assume the tax τ it is levied on the supply side. Because the tax is levied on the supply side, we need to slightly adjust the exclusion restrictions formulated in Section 2. In particular, in this setting, the logically equivalent SER is that the instrument can be excluded from the demand equation, because the tax is paid for by the supply side: SUPPLY-SIDE STANDARD EXCLUSION RESTRICTION:If the tax τ it is levied on the supply side, then we set γ = 0.The logical equivalent of the RER with supply-side taxation is that supply depends only on the price net of the tax rate denoted by P −τ it = (1 − τ it )P it . The motivation for the supply-side RER is similar to the motivation of the demand-side RER: it follows from rational behavior of producers, and is a standard assumption in most models of taxation. Under the supply-side RER, the supply equation is given by y it = ε S p

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The elasticity of taxable income in the presence of deduction possibilities

Cited by 97 publications

References 46 publications

Do retirement savings increase in response to information about retirement and expected pensions?

Do retirement savings increase in response to information about retirement and expected pensions?

The Elasticity of Taxable Income: A Meta-Regression Analysis

Estimating Both Supply and Demand Elasticities Using Variation in a Single Tax Rate

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