Estimating taxable income responses using Danish tax reforms

Henrik Jacobsen Kleven, Esben Anton Schultz

Research output: Contribution to journalArticlepeer-review

86 Scopus citations

Abstract

This paper estimates taxable income responses using a series of Danish tax reforms and population-wide administrative data since 1980. The tax variation and data in Denmark makes it possible to overcome the biases from nontax changes in inequality and mean reversion that plague the existing literature. We provide compelling graphical evidence of taxable income responses, arguably representing the first nonparametrically identified evidence of taxable income elasticities using tax reforms. We also present panel regression evidence that is extremely robust to specification, unlike previous results which have been very sensitive.

Original languageEnglish (US)
Pages (from-to)271-301
Number of pages31
JournalAmerican Economic Journal: Economic Policy
Volume6
Issue number4
DOIs
StatePublished - 2014
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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