Are Elasticities of Taxable Income Rising?

Download or read book Are Elasticities of Taxable Income Rising? written by Mr.Alexander D Klemm and published by International Monetary Fund. This book was released on 2018-06-13 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses a possible explanation for the global downward trend in top personal income tax rates over the last decades: globalization and the related tax evasion and avoidance opportunities could have raised elasticities of taxable income, which would imply lower optimal tax rates. The paper estimates elasticities of taxable income for top income earners using a large sample of economies and years with a common method, allowing an analysis of trends in such elasticities. The paper finds that elasticities do not appear to exhibit any clear pattern over the years. The downward trend in tax rates must have other possible explanations, which are briefly discussed.