Toward obtaining a consistent estimate of the elasticity of taxable income using difference-in-differences

• 成果类型: Article
• 署名作者: Weber, Caroline E.
• 署名单位: University of Oregon
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2014.05.004
• 发表日期: 2014
• 页码: 90-103
• 关键词: income tax; taxable income; Behavioral response

摘要

The elasticity of taxable income (ETI) is a central parameter for tax policy debates. This paper shows that mean reversion prevents most estimators employed in the literature from obtaining consistent estimates of the Ell. A new method is proposed that will resolve inconsistency due to mean reversion under testable assumptions regarding the degree of serial correlation in the error term. Using this procedure. I estimate an ETI of 0.858, which is about twice as large as the estimates found in the most frequently cited paper on this subject [13]. The corresponding elasticity of broad income is 0.475. (C) 2014 Elsevier B.V. All rights reserved.