A Structural Approach to Income Elasticity Measurement: An Application to Sweden

Measuring the elasticity of taxable income (ETI) is central for tax policy design. Yet, there are few arguments which support or in firm that current methods yield measurements of the ETI that can be trusted. We have shown in a related simulation study that estimators based on indirect inference pri...

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Bibliographic Details
Published in:Proceedings (Conference on Taxation) 2020-01, Vol.113, p.1-19
Main Authors: Aronsson, Thomas, Jenderny, Katharina, Lanot, Gauthier
Format: Article
Language:English
Subjects:
Behavioral Issues in Tax & Public Finance
Online Access:Get full text
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Summary:Measuring the elasticity of taxable income (ETI) is central for tax policy design. Yet, there are few arguments which support or in firm that current methods yield measurements of the ETI that can be trusted. We have shown in a related simulation study that estimators based on indirect inference principles can be expected tp produce more precise estimates of the ETI than any of the most commonly used methods. Our purpose in this paper is to apply indirect inference estimation to Swedish tax data. This is the first application of this method to empirical data in the field of the ETI measurement.
ISSN:1549-7542
2377-5661