Arbeitspapier
Estimating Taxable Income Responses using Danish Tax Reforms
This paper presents evidence on taxable income responses using administrative data that link tax return information to detailed socioeconomic information for the entire Danish population over 25 years. The identifying variation is provided by a series of tax reforms that create large tax variation across individuals, income forms, and over time. It is argued that the unique tax variation and data in Denmark makes it possible to control for the biases from non-tax changes in the income distribution and mean reversion that plague much of the existing literature. Our main findings are the following: (i ) Labor income elasticities are modest overall, around 0.05 for wage earners and 0.10 for self-employed individuals. (ii ) Capital income elasticities are about 2-3 times larger than labor income elasticities. (iii ) Behavioral elasticities are much larger when estimated from large tax reform episodes than for small tax reform episodes, consistent with idea that responses to small tax changes are attenuated by optimization frictions such as adjustment costs and inattention. (iv) Crosstax effects between labor and capital incomefor example due to income shiftingare in general small. (v) All of our findings are extremely robust to specification (such as pre-reform income controls), suggesting that we have controlled in a sufficiently rich way for non-tax factors impacting on taxable income.
- Language
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Englisch
- Bibliographic citation
-
Series: EPRU Working Paper Series ; No. 2011-02
- Classification
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Wirtschaft
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Fiscal Policies and Behavior of Economic Agents: Household
Time Allocation and Labor Supply
- Subject
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Steuerreform
Steuerwirkung
Einkommenselastizität
Dänemark
- Event
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Geistige Schöpfung
- (who)
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Jacobsen Kleven, Henrik
Schultz, Esben Anton
- Event
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Veröffentlichung
- (who)
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University of Copenhagen, Economic Policy Research Unit (EPRU)
- (where)
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Copenhagen
- (when)
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2011
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Jacobsen Kleven, Henrik
- Schultz, Esben Anton
- University of Copenhagen, Economic Policy Research Unit (EPRU)
Time of origin
- 2011
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