Jump to ContentJump to Main Navigation
Tax Systems$
Users without a subscription are not able to see the full content.

Joel Slemrod and Christian Gillitzer

Print publication date: 2014

Print ISBN-13: 9780262026727

Published to MIT Press Scholarship Online: May 2014

DOI: 10.7551/mitpress/9780262026727.001.0001

Show Summary Details
Page of

PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2017. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use (for details see http://www.mitpress.universitypressscholarship.com/page/privacy-policy).date: 17 October 2017

Endogenous Elasticity

Endogenous Elasticity

Chapter:
(p.137) 9 Endogenous Elasticity
Source:
Tax Systems
Author(s):

Joel Slemrod

Christian Gillitzer

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262026727.003.0009

This chapter addresses the implications of when a tax base elasticity is endogenous to other tax-system parameters or to actions taken by taxpayers. It develops a formal theoretical model of this issue where the income tax rate elasticity depends on the tax base breadth, which is a policy choice. The analysis shows that in this case the tax rate elasticity is not an exogenous parameter, but is chosen through the choice of tax base breadth, and that therefore there is an optimal elasticity of taxable income that depends on behavioral responses and the social preferences regarding income inequality. Ignoring these issues can lead to sub-optimal policy, for example if income tax rates are chosen assuming that, because of inadequate enforcement, tax rate elasticities are larger than they would be if optimally enforced; the chosen tax rates will be too low.

Keywords:   Endogenous elasticity, Optimal elasticity, Enforcement

MIT Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.