Title: Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act
Abstract: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 based on a comparison of the tax returns of the same indi...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 based on 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 that could be substantially higher. The implications for recent tax rate changes are discussed.Read More
Publication Year: 1995
Publication Date: 1995-01-01
Language: en
Type: preprint
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Cited By Count: 8
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