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Estimating Taxable Income Responses with Elasticity Heterogeneity
2017
Social Science Research Network
We explore the implications of heterogeneity in the elasticity of taxable income (ETI) for tax-reform based estimation methods. We theoretically show that existing methods yield elasticities that are biased and lack policy relevance. We illustrate the empirical importance of our theoretical analysis using the NBER tax panel for [1979][1980][1981][1982][1983][1984][1985][1986][1987][1988][1989][1990]. We show that elasticity heterogeneity is the main explanation for large differences between
doi:10.2139/ssrn.2966022
fatcat:hlfphmtidzarzkuxkor73neq2m