individual taxpayer response to tax cuts 1982 1984 with implications for the revenue maximizing tax rate abstract this paper measures the response of taxpayers to the u s personal rate reductions from 1982 to 1984 a baseline income distribution is created to describe what level and distribution could be expected in the absence of tax changes comparison of this baseline with actual tax return data shows that at least one sixth and probably one quarter of the revenue ascribable to the rate reductions was recouped by changes in taxpayer behavior the data also show that federal income tax revenue would have been maximized at a tax rate of about 35 percent and total income tax revenue maximized at a total tax rate of about 40 percent

the effect of sporting success and management failure on attendance demand in the bundesliga a revealed and stated preference travel cost approach abstractthis study examines the private consumption benefits of sports attendance using revealed and stated preference data from 28 football bundesliga teams across three divisions survey respondents were presented with positive sporting success and negative management failure scenarios and asked for the number of game trips if each scenario occurred the results of a pooled random effects poisson model show that travel costs and ticket price have a significant negative effect on the number of home game trips the weighted consumer surplus per game trip including travel costs and ticket prices is 345 consumer surplus per game trip was found to change by 41 first division and 98 second and third division if the positive scenario occurred and by 39 if the negative scenario occurred

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

tax policy and income inequality in the united states 1979 2007 this paper assesses the effects of u s tax policy reforms on inequality over around three decades from 1979 to 2007 it applies a new method for decomposing changes in government redistribution into 1 a direct policy effect resulting from policy changes and 2 the effects of changing market incomes over the period as a whole the tax policy changes increased income inequality by pushing up the income share of high income earners the top 20 jel h23 h31 h53 p16

use value of cultural experiences a comparison of contingent valuation and travel cost abstract few applications to assess the value of cultural experiences exist this is particularly frustrating for cultural institutions as it provides them with few opportunities to reveal their importance in terms of attractiveness and thus what drives tourism demand this study applies the travel cost method tcm and contingent valuation method cvm to assess the value of two rural cultural institutions in order to compare the results of the valuation methods the results reveal that visitor experiences consist of a core cultural experience as well as other valuable experiences before and after whereas cvm allows for a valuation of the core cultural experience separately from other experiences the tcm is limited to an overall assessment the tcm is therefore an inappropriate measure of the value of the cultural experiences when the total experience includes several other experiences if visitors travel for the sake of only one cultural experience tcm may be preferable due to its simple applicability and cost efficiency if however as is most often the case a cultural experience is part of a bundle of experiences the application of cvm is recommendable this is also the case if only visitors who state the cultural experience to be the primary reason for travelling are included

revealing preferences for leisure time from stated preference data when consumer choice is constrained by time as well as money willingness to pay can be defined with respect to either numeraire the two measures can be related formally within a utility consistent model of choice subject to two constraints furthermore when information is collected on both the respondent s marginal value of time can be identified a system of willingness to pay time and money and the marginal value of leisure time is estimated jointly in an application to california whalewatching and whale stock enhancement the empirical approach can be applied with only minor additions to survey techniques for nonmarket valuation

nature of transfers income tax function and empirical estimation of elasticity of taxable income for brazil abstractthis article aims to estimate the elasticity of taxable income eti taking into account the nature of transfers and their use as a redistribution package involving cash and in kind transfers to households in brazil our contributions are twofold first we provide a simple model with balanced budget government that reveals the role played by cash and in kind transfers on the labour supply and income tax revenues thereof next in order to estimate eti in the presence of cash and in kind transfers brazilian population surveys pesquisa nacional por amostra de domicilios pnad are used to explore a limited tax reform that was implemented between 1997 and 1998 this reform only affected the higher income tax bracket our findings suggest that in kind cash transfers are positively negatively associated with reported taxable income and precise estimation of eti requires estimates of both types of transfers last we estimate the eti for brazil in the range from 0 4 to 1 3 not different fro

estimating the cost of leisure time for recreation demand models abstract in this paper we propose a method of determining the opportunity cost of leisure time with an empirical recreation demand application typically the opportunity cost of leisure time is assumed to be some fraction of the wage rate this practice has limitations first it assumes that individuals can trade time for money at their wage second it offers no guidance about how to value the time of an individual who is not in the labor force this paper proposes a method of determining this cost that does not suffer from these drawbacks an empirical example is provided which demonstrates the proposed approach and contrasts it with commonly applied approaches

the individual travel cost method with consumer specific values of travel time savings the treatment of the opportunity cost of travel time in travel cost models has been an area of research interest for many decades our analysis develops a methodology to combine the travel distance and travel time data with respondent specific estimates of the value of travel time savings vtts the individual vtts are elicited with the use of discrete choice stated preference methods the travel time valuation procedure is integrated into the travel cost valuation exercise to create a two equation structural model of site valuation since the travel time equation of the structural model incorporates individual preference heterogeneity the full structure model provides a travel cost site demand model based upon individualized values of time the methodology is illustrated in a study of recreational birdwatching more specifically visits to a stork village in poland we show that the usual practice of basing respondents vtts on 1 3 of their wage rate is largely unfounded and propose alternatives including a separate component of the travel cost survey aimed at valuation of respondents vtts or as a second best asking if they wish if their journey was shorter and for those who do use full hourly wage as an indicator of their vtts

do tax reforms affect firm performance and executive remuneration evidence from a compressed wage environment the agency framework predicts a strong positive relationship between executive effort pay and firm performance we study how changes in norwegian payroll tax legislation and earnings tax which influence ceos return on effort affect firm performance and executive earnings for over 11 800 firms both reduced payroll tax and reduced marginal earnings tax increase firm performance measured by firms operating margins in the latter case total pay increases but contingent on the return on firm performance the fixed wage drops the sensitivity of the remuneration scheme to the earnings tax depends on ceo productivity and effort costs

experiments in islamic microfinance abstract microfinance has been identified as an important tool in increasing the productivity of the poor and in aiding economic development however a large proportion of the poor are practicing muslims and are thus unable to take advantage of traditional microfinance contracts which involve the payment of interest this paper describes and experimentally tests islamic compliant microfinance products in the context of information asymmetry and costly state verification we find significantly higher compliance rates for the islamic compliant contracts profit sharing and joint venture than for the traditional contract interest based we believe that there is great promise for these types of loans in the microfinance context for both muslims and non muslims

labor income responds differently to income tax and payroll tax reforms we estimate the responses of gross labor income with respect to marginal and average net of tax rates in france over the period 2003 2006 we exploit a series of reforms to the income tax and payroll tax schedules affecting individuals who earn less than twice the minimum wage our estimate for the elasticity of gross labor income with respect to the marginal net of income tax rate is around 0 2 while we find no response to the marginal net of payroll tax rate the elasticity with respect to the average net of tax rate is not significant for the income tax schedule while it is close to 1 for the payroll tax schedule a plausible explanation is the existence of significant labor supply responses to the income tax schedule combined with sticky posted wages i e the gross labor income minus payroll taxes divided by hours worked finally the effect of the net of income tax rate seems to be driven by participation decisions in particular those of married women

marginal tax rates and income new time series evidence this paper estimates the dynamic effects of marginal tax rate changes on income reported on tax returns in the united states over the 1950 2010 period after isolating exogenous variation in average marginal tax rates in structural vector autoregressions using a narrative identification approach i find large positive effects of tax cuts in the top 1 of the income distribution in contrast to earlier findings based on tax return data i also find large effects in other income percentile brackets a hypothetical tax reform cutting marginal rates only for the top 1 leads to sizeable increases in top 1 incomes and has a positive effect on real gdp there are also spillover effects to incomes outside of the top 1 but top marginal rate cuts lead to greater inequality in pre tax incomes

family labor supply and the timing of cash transfers evidence from the earned income tax credit abstract this paper exploits the unique disbursement timing and benefit rules of the earned income tax credit eitc to provide new evidence on how families adjust their labor supply in response to receiving anticipated cash transfers i find that income seasonality caused by eitc receipt leads to changes in the intra year labor supply patterns of married women on average receiving a 1 000 payment significantly reduces the proportion of married women who work by 1 3 percentage points in the month when the eitc is received additionally this labor supply response is mainly driven by those who are secondary earners or liquidity constrained

imitation contagion or exertion using a tax reform to reveal how colleagues sick leaves influence worker behaviour we analyse the social interaction effects in sick leave behaviour in the workplace using high quality norwegian matched employer employee data with detailed individual information on sick leaves during the 2004 2006 period we find that social interaction effects in sick leave behaviour in the workplace do exist and that the effects are noticeable in size the strong relationship between the sick leave rates among colleagues is not solely the result of contagious diseases nor is it caused by improved informational quality or by the increased workload for the non absent workers evidence supports the existence of reciprocal worker behaviour that is unrelated to joint leisure seeking activities

energy projects in iceland advancing the case for the use of economic valuation techniques to evaluate environmental impacts decision making in iceland has occurred without reference to economic valuations of the environmental impacts of energy projects environmental impact assessments a legal requirement for nearly all energy projects in iceland since 1994 have played an important role in identifying the environmental impacts of energy projects and proposing mitigation measures however a purely qualitative description of environmental impacts is insufficient to ensure that they are accounted for equivalently with all of the other costs and benefits of a proposed project instead as monetary information concerning the welfare gains or losses of proposed projects is not currently required to be provided to the licensing body orkustofnun there is the potential for sub optimal decision making to occur as this paper sets out a broad variety of non market valuation techniques already exist and could be applied to estimate the value of environmental benefits sacrificed to accommodate such developments these methods and their outcomes could be incorporated within mandatory cost benefit assessments for proposed icelandic energy projects communicating an estimate of the full welfare implications of approvals to decision makers and the public alike and fulfilling an oecd demand for the country to commence such processes

analysis of optimal timing of tourism demand recovery policies from natural disaster using the contingent behavior method this paper examines the applicability of contingent behavior hereafter cb method for analyzing dynamic processes and efficient policies in tourism demand recovery the cb questionnaires used for this study used a hypothetical disaster situation of bird flu in kyoto japan safety event visitor information and price discounting policies were designed accordingly respondents were then asked about their willingness to travel time the results showed the optimal timing for devising pertinent policies during the year we found that the first step requires a safety information announcement within one week immediately after disaster site decontamination the second step is the implementation of event information policy within 24th to 36th week after the disaster the third step constitutes announcing visitor information within the 37th to 52nd week after the second step the final step is the implementation of price discounting policy until the 52nd week immediately after the third step

prohibition of riba and gharar a signaling and screening explanation abstract the emergence of islamic banks ibs with sharia boards that restrict the set of permissible products and enforce prohibition of riba and gharar raises basic questions about how ib clients benefit when choosing from a restricted menu of possibly higher cost cash flows norms that restrict choice sets or impose otherwise harsh requirements would seem to act as a barrier to religious identification by raising costs for ib clients contrary to this intuition our model demonstrates that premium costs associated with restrictions on the set of financing options considered to be sharia compliant provide a signaling and screening technology that benefits ib clients who are highly pious by revealing what would otherwise remain private information about the intensity of religious piety this signaling technology simultaneously provides a screening service that enables high piety types to separate themselves and concentrate both social and commercial interactions with others who are similarly pious iannaccone 1992 demonstrates a rationale for harsh norms as a mechanism for reducing free riding in the supply of club goods in contrast our model shows that piety can be signaled by the act of choosing to become an ib client and bearing the costs of its restricted choice set and premium pricing for otherwise identical cash flows signaling and screening provide a new rationalization for prohibition of riba and gharar as a stable institution signaling piety is especially valuable in environments where piety is uncertain and otherwise difficult for others to observe the model predicts that ibs sharia compliance criteria will tend to be stricter and ib premiums larger in places where the proportion of highly pious muslims is small

valuing cultural world heritage sites an application of the travel cost method to mont saint michel abstractthis article using the zonal version of the travel cost method ztcm provides the first economic valuation of recreational trips to mont saint michel msm the msm was designated as united nations educational scientific and cultural organization world heritage site in 1979 and is the most visited coastal site in france the potential effects on consumer surplus cs estimates of some aspects of the ztcm are considered namely the treatment of the multiple purpose destination mp d trips the inclusion of the opportunity cost of time oct in the recreation demand model and the heterogeneity in the preferences the heterogeneity in the preferences is examined through a random parameters poisson model rppm the rppm generalizes the standard poisson model spm by allowing coefficients of explanatory variables to vary randomly across geographical units rather than being fixed our results show that 1 substantial cs values are associated with the msm 2 excluding ignoring mp d trips resul

toward obtaining a consistent estimate of the elasticity of taxable income using difference in differences abstract 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 eti 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

the recreational value of lake mckenzie fraser island an application of the travel cost method lake mckenzie is one of the most highly used and popular visitor destinations of all fraser island s natural sites attracting 2000 visitors a day in peak periods many consider this level of visitation to be unsustainable and the management authority is currently considering a range of management options to address this issue in assessing the alternatives it is useful to have some idea of the recreational use value of the lake under the current regime as it is this value that is at risk if visitor numbers are to be reduced this paper using the zonal travel cost method estimates the recreational use value of fraser island and lake mckenzie for australian resident independent visitors

the response of deferred executive compensation to changes in tax rates abstract given the increasing use of stock options in executive compensation we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes to account for this option in the empirical analysis we explore deferral by estimating how executives choice of compensation between current and deferred income depends on changes in tax policy our empirical results suggest a significant impact of taxes on the composition of executive compensation

estimating the use and preservation values of national parks tourism resources using a contingent valuation method abstract the korean national parks authority has questioned whether natural resources have enough economic value to justify an increase in admission fee in the case of inadequate assistance from the government alternatively they also question whether the national parks have sufficient value to contribute to citizens welfare in order to receive continuing support from the government hence the purpose of this research is to estimate the use and preservation values of natural and or cultural resources in five distinctive national parks using a dichotomous choice contingent valuation method the empirical results show that natural and or cultural resources of the sample national parks possessed considerable use and preservation values outweighing current admission fees and maintenance costs per visitor thus these values provide enough justification for the national park authority to increase admission fees to maintain the quality of natural environment and avoid degrading natural resources in the event of no assistance by the government the findings may provide guidance to national park managers and practitioners who establish pricing policies the results also show that values of natural and or cultural resources were different across five distinctive national parks indicating the possibility of employing differential admission fees according to park characteristics

the elasticity of taxable income with respect to marginal tax rates a critical review this paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data first we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis we discuss what other parameters should be estimated when the elasticity is not a sufficient statistic second we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the united states to illustrate those issues third we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out finally we discuss avenues for future research jel h24 h31 j22

the public and private provision of pure public goods and the distortionary effects of income taxation a political economy approach a pure public good is provided by the government and the voluntary contri butions of two types of households the government finances its contribution by means of income taxation the latter has distortionary effects a third type of household never makes contributions we analyse the effects of changes in the income tax rate on a the pro vision of the public good b the private contributions of the households and c changes in the distribution of income and welfare between contributing and non contributing households we derive a simple and testable condition under which the lowering of the income tax entails a pareto improvement jel classification h23 h24 h41 la fourniture privie et publique de biens publics purs et les effets de distorsion de l imp6t sur les revenus une approche en terme d conomie politique un bien public pur est fourni par le gouvernement et par des contributions volontaires de deux types de m6nages le gouvernement finance sa contribution par un imp6t sur le revenu qui a des effets de distorsion un troisi6me type de menages ne contribue d aucune maniere on examine les effets de changements dans le taux d imposition du revenu sur a la fourniture du bien public b les contributions privees des menages c les changements dans la distribution du revenu et du bien etre entre les menages qui contribuent et ceux qui ne contribuent pas on derive une condition simple et verifiable qui assure qu une reduction d imp6t sur le revenu va engendrer une amelioration au sens de pareto

the effect of marginal tax rates on taxable income a panel study of the 1986 tax reform act this paper uses a treasury department panel of more than 4 000 taxpayers to estimate the sensitivity of taxable income to changes in tax rates on the basis of a comparison of the tax returns of the same individual taxpayers before and after the 1986 tax reform the analysis emphasizes that the response of taxable income involves much more than a change in the traditional measures of labor supply the evidence shows an elasticity of taxable income with respect to the marginal net of tax rate that is at least one and could be substantially higher the implications for recent tax rate changes are discussed

taxation and the earnings of husbands and wives evidence from sweden i examine the response of husbands and wives earnings to a tax reform in which husbands and wives tax rates changed independently allowing me to examine the effect of both spouses incentives on each spouse s behavior i analyze the large swedish tax reform of 1990 1991 and find that in response to a compensated fall in one spouse s tax rate each spouse s earnings rise i compare these results to those of simplified econometric models used in the typical setting in which independent variation in each spouse s tax rate is unavailable i find that standard econometric specifications may produce substantially biased estimates

what does the taxable income elasticity say about dynamic responses to tax changes the taxable income elasticity is relevant to dynamic scoring because it broadly encompasses many ways taxpayers respond to changes in tax rates the elasticity includes for example changes in labor supply and participation savings and portfolio allocation the form of compensation the timing of income and deductions and tax evasion and avoidance on the tax base all subsumed in this one statistic this one statistic summarizes how the tax base expands or contracts in response to changes in tax rates and consequently the extent taxpayer behavior offsets the static revenue loss gain of tax rate reductions increases in contrast to conventional revenues estimates which assume that output and other key macroeconomic aggregates remain fixed when considering changes in the tax law the taxable income elasticity imposes no such constraint nevertheless some macro dynamic responses such as investment and savings related supplyside effects and crowding out are only partially captured in the taxable income elasticity and demand effects are generally not reflected at all also the taxable income elasticity generally does not account for shifting between the individual and corporate tax bases and is primarily useful to only evaluate policies that involve changes in tax rates while large is in the eye of the beholder the taxable income literature has generally found evidence of at least a modest behavioral response with some of the more recent studies suggesting a taxable income elasticity of about 0 4 this paper uses a 0 4 elasticity to simulate the revenue effect of repealing the recent reduction in the top two tax rates to 35 percent and to motivate a discussion of what the this elasticity can tell us about the dynamic response to changes in tax policy

crowd out education and employer contributions to workplace pensions evidence from canadian tax records this study assesses whether workplace pensions help individuals overcome knowledge barriers to saving for retirement using administrative data from canada and exploiting unique features of the pension system i find compelling evidence that each 1 contributed to workplace pensions partially crowds out other retirement saving by approximately 0 50 among interior savers in a regression kink design centering on unionized workers for methodological reasons further analysis indicates active versus passive decisions are influenced by education exploiting compulsory schooling reforms for identification i conclude by showing pension and education reform are both viable mechanisms for boosting saving from a life cycle perspective jel codes e21 h30 i21 j32

accounting for stochastic shadow values of time in discrete choice recreation demand models abstract in this paper a discrete choice recreation demand model that explicitly accounts for a stochastic shadow value of time function is proposed using data from a survey of san diego beach users the stochastic shadow value of time labor supply and beach choice are jointly estimated results from this joint estimation approach are compared with the familiar two step approach that estimates labor supply first and uses predicted values of time in the recreational site choice model the approaches produce markedly different welfare measures with the two step model which does not account for unobserved variability of time values predicting significantly higher values a monte carlo simulation illustrates how ignoring the stochastic nature of shadow value of time in discrete choice recreation demand models can bias model parameters and hence welfare estimates

the effect of income taxes on household income research on the distribution of income during the 1980s has identified a trend towards increasing inequality which may be the continuation and acceleration of trends spanning several decades this paper explores to what extent behavioral responses to the tax changes during the 1980s may also explain the rising inequality the 1986 tax reform act is used as a natural experiment to explore the roles played by both taxes and a variety of nontax factors our principal finding is that both tax rates and nontax factors appear to have had significant effects on relative income growth during the late 1980s

time and the recreational demand model in this paper a theoretically consistent approach to including time costs in recreational demand models is developed the demand model is conditional on the recreationist s labor market situation for individuals at corner solutions in the labor market utility maximization is subject to two constraints leading to a demand function with travel costs and travel time as independent variables with interior solutions in the labor market time is valued at the wage rate and combined with travel costs to produce one full cost variable in an illustration welfare measures based on the new model are estimated for a sample of sportfishermen

the effect of marginal tax rates on income a panel study of bracket creep this paper uses a panel of individual tax returns and the bracket creep as source of tax rate variation to construct instrumental variables estimates of the sensitivity of income to changes in tax rates from 1979 to 1981 the us income tax schedule was fixed in nominal terms while inflation was high around 10 this produced a real change in tax rate schedules taxpayers near the top end of a tax bracket were more likely to creep to a higher bracket and thus experience a rise in marginal rates the following year than the other taxpayers compensated elasticities can be estimated by comparing the differences in changes in income between taxpayers close to the top end of a tax bracket to the other taxpayers these estimates based on comparisons between very similar groups are robust to underlying changes in the income distribution such as a rise in inequality the elasticities of taxable income and adjusted gross income are around 0 4 and significant but the elasticities of wage income are in general insignificant and close to zero 2002 elsevier science b v all rights reserved

a unified welfare analysis of government policies we conduct a comparative welfare analysis of 133 historical policy changes over the past half century in the united states focusing on policies in social insurance education and job training taxes and cash transfers and in kind transfers for each policy we use existing causal estimates to calculate both the benefit that each policy provides its recipients measured as their willingness to pay and the policy s net cost inclusive of long term impacts on the government s budget we divide the willingness to pay by the net cost to the government to form each policy s marginal value of public funds or its mvpf comparing mvpfs across policies provides a unified method of assessing their impact on social welfare our results suggest that direct investments in low income children s health and education have historically had the highest mvpfs on average exceeding 5 many such policies have paid for themselves as governments recouped the cost of their initial expenditures through additional taxes collected and reduced transfers we find large mvpfs for education and health policies amongst children of all ages rather than observing diminishing marginal returns throughout childhood we find smaller mvpfs for policies targeting adults generally between 0 5 and 2 expenditures on adults have exceeded this mvpf range in particular if they induced large spillovers on children we relate our estimates to existing theories of optimal government policy and we discuss how the mvpf provides lessons for the design of future research

searching for the opportunity cost of an individual s time a traditional assumption made in the literature is that the value of an individual s time spent in any activity is equal to his or her wage rate this result stems from the derivation of the value of leisure time in the context of the standard labor supply model this paper pre sents some reasons why the relationship be tween the wage rate and the value of time does not hold suggestions for what to do when the relationship breaks down and the investigator needs some value to impute to the individual are given in the final section of the paper

hourly wage rate and taxable labor income responsiveness to changes in marginal tax rates recently a voluminous literature estimating the taxable income elasticity has emerged as an important field in empirical public economics however to a large extent it is still unknown how the hourly wage rate an important component of taxable income reacts to changes in marginal tax rates in this study we use a rich panel data set and a sequence of tax reforms that took place in sweden during the 1980 s to estimate the elasticity of the hourly wage rate with respect to the net of tax rate while carefully accounting for the endogeneity of marginal tax rates as well as other factors that determine wage rates we do find a statistically significant response both among married men and married women the hourly wage rate elasticity with respect to the net of tax rate is estimated to 0 14 0 16 for males and 0 41 0 57 for females in addition we obtain uncompensated taxable labor income elasticities of around 0 21 for men and 0 96 1 44 for women in contrast to earlier studies we also find significant income effects for males accordingly for males the compensated taxable labor income elasticity is about 4 percentage points higher than the uncompensated one

what happens when you tax the rich evidence from executive compensation this paper examines the responsiveness of taxable income to changes in marginal tax rates using detailed compensation data on several thousand corporate executives from 1991 to 1995 the data confirm that the higher marginal rates of 1993 led to a significant decline in taxable income indeed this small group of executives may account for as much as 20 percent of the aggregate change in wage and salary income for approximately the one million richest taxpayers over this time period one person alone can account for more than 2 percent the decline however is almost entirely a short run shift in the timing of compensation rather than a permanent reduction in taxable income the short run elasticity of taxable income with respect to the net of tax share exceeds one in this sample but the elasticity after one year is at most 0 4 and probably closer to zero breaking out the tax responsiveness of different types of compensation shows that the large short run responses come almost entirely from a large inc

35 years of reforms a panel analysis of the incidence of and employee and employer responses to social security contributions in the uk we exploit variation in national insurance contributions nics the uk s system of social security contributions and a large panel dataset to examine the effects of 35 years of employee and employer nics reforms on labour cost gross earnings plus employer nics hours of work and labour cost per hour both immediately 0 6 months after reforms are implemented and in the slightly longer term 12 18 months we consider assumptions under which the estimated coefficients on net of marginal and net of average tax rates in a panel regression can be interpreted as behavioural elasticities or as reflecting incidence we find a compensated elasticity of taxable earnings with respect to the marginal rate of employee nics of about 0 2 0 3 operating largely through hours of work while that with respect to the marginal rate of employer nics is not statistically significantly different from zero we also find that labour cost falls by a much larger amount when the average rate of employer nics is reduced than when the average rate of employee nics is reduced which is consistent with the economic incidence of nics being strongly affected by its formal legal incidence estimates from the hours and hourly labour cost regressions provide further support to this interpretation of the findings and also suggest the presence of substantial income effects though also after 1999 a puzzling effect of average employer nics rates on hours of work each of these results remains true after 12 18 months if anything coefficients on lagged changes in nics rates strengthen these findings implying that any shifting of employer nics changes to the individual employees concerned and vice versa for employee nics does not begin over this time horizon these results are similar to those found by lehmann et al 2013 for france but represent an extension of that work by considering hours as well as labour cost responses and second year as well as immediate effects

estimating taxable income responses with elasticity heterogeneity abstract we explore elasticity heterogeneity in the estimation of the elasticity of taxable income eti and propose potentially valid instruments we show that previously used instruments are not valid and yield weighted averages of etis of different taxpayers plus a bias using the nber tax panel for 1979 1990 we find a weighted average eti of 0 57 when using all available variation in budget set changes provided by the tax reforms in the data our results also demonstrate that elasticity heterogeneity is an important explanation for the remarkable divergence of estimates in the previous literature

reported gross income and marginal tax rates estimation of the behavioural reactions of spanish taxpayers this article estimates for the spanish personal income tax the elasticity of reported gross income to marginal tax rates the identification of this elasticity has been performed using the reform approved by law 35 2006 which came into force in january 2007 the elasticities obtained suggest the existence of important efficiency costs with significant regional differences the average elasticity estimated for spain as a whole is 0 676 however this elasticity is highly dispersed throughout the spanish administrative regions which indicates the unequal power of distortion of the tax thus households whose principal source of income is salary display an elasticity of 0 337 compared to 0 682 for households whose main income source comes from business or savings lastly a positive correlation is also detected between elasticity and income level an elasticity of 3 6 is reached for taxpayers with an annual gross income exceeding 100 000

the economics of attribute based regulation theory and evidence from fuel economy standards in many countries fuel economy standards mandate that vehicles meet a certain fuel economy but heavier or larger vehicles are allowed to meet a lower standard this has the perverse implication of allowing automakers to meet standards either by improving fuel economy or by increasing weight which lowers fuel economy and increases externalities related to accidents this is but one example of an attribute based regulation in which the regulation imposed on a product depends on both the externality it creates and some other attribute attribute basing potentially motivates rms and individuals to strategically alter the attribute thereby endogenously altering the stringency of the regulation this paper develops a theory of attribute basing to demonstrate the costs and benets of its use the paper then empirically examines the consequences of attribute based fuel economy standards in japan where fuel economy standards are a notched attribute based function of vehicle weight we use cross sectional and panel techniques to demonstrate that attribute based regulation has signicantly altered the distribution of vehicle weight in japan where 10 of vehicles bunch at weight notches for cars whose weight is altered in response to the policy we estimate that the alteration generates a welfare loss from the exacerbation of weight related externalities of 1 500 per unit sold which translates into a 700 million annual loss across the japanese auto market

the elasticity of taxable income in the presence of deduction possibilities several recent studies show that the elasticity of taxable income eti is not a sufficient statistic for the welfare costs of taxation due to factors such as tax base shifting this paper provides an additional argument demonstrating the non sufficiency of the eti namely tax deductions building on a theoretical framework which incorporates deductions in a standard optimal tax model we show that the eti is not sufficient for welfare analysis if i deductions generate externalities and if ii deductions are responsive to tax rate changes while the first condition should arguably hold true for the majority of tax deductions we provide an empirical examination of the second condition relying on rich german panel data from administrative tax records we exploit several tax reforms that were implemented in germany between 2001 and 2008 our main estimates indicate an overall eti between 0 54 and 0 68 and an elasticity of deductions with respect to the net of tax rate of about 0 9 these results suggest that the eti is not sufficient to calculate the welfare cost of taxation