Language:

How do tax progressivity and household heterogeneity affect Laffer curves?

Quantitative economics, 2019-11, Vol.10 (4), p.1317-1356 [Peer Reviewed Journal]

Copyright © 2019 The Authors. ;COPYRIGHT 2019 John Wiley & Sons, Inc. ;2019. This work is published under http://creativecommons.org/licenses/by-nc/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;info:eu-repo/semantics/openAccess ;ISSN: 1759-7331 ;ISSN: 1759-7323 ;EISSN: 1759-7331 ;DOI: 10.3982/QE653

Full text available

Citations Cited by

Actions
1. Add to My Research
2. Remove from My Research
3. E-mail
4. Print
5. Permalink
6. Citation
7. EasyBib
8. EndNote
9. RefWorks
10. Delicious
11. Export RIS
12. Export BibTeX

Title:
How do tax progressivity and household heterogeneity affect Laffer curves?
Author: Holter, Hans A ; Krueger, Dirk ; Stepanchuk, Serhiy
Subjects: Accumulation ; Analysis ; Capital formation ; Consumption ; E62 ; Econometrics ; Economic models ; Endogenous ; H20 ; H60 ; heterogeneous households ; Households ; Human capital ; Income tax ; Income taxes ; Interest rates ; Labor force ; Labor force participation ; Labor market ; Labor supply ; Laffer curve ; Married couples ; Medium term notes ; progressive taxation ; Progressive taxes ; Single women ; Tax increases ; Tax law ; Tax rates ; Tax revenues ; Taxation ; Wages ; Wages & salaries ; Wives
Is Part Of: Quantitative economics, 2019-11, Vol.10 (4), p.1317-1356
Description: How much additional tax revenue can the government generate by increasing the level of labor income taxes? In this paper, we argue that the degree of tax progressivity is a quantitatively important determinant of the answer to this question. To make this point, we develop a large scale overlapping generations model with single and married households facing idiosyncratic income risk, extensive and intensive margins of labor supply, as well as endogenous accumulation of human capital through labor market experience. We calibrate the model to U.S. macro, micro, and tax data and characterize the labor income tax Laffer curve for various degrees of tax progressivity. We find that the peak of the U.S. Laffer curve is attained at an average labor income tax rate of . This peak (the maximal tax revenues the government can raise) increases by if the current progressive tax code is replaced with a flat labor income tax. Replacing the current U.S. tax system with one that has Denmark' s progressivity would lower the peak by . We show that modeling the extensive margin of labor supply and endogenous human capital accumulation is crucial for these findings. With joint taxation of married couples (as in the U.S.), higher tax progressivity leads to significantly lower labor force participation of married women and substantially higher labor force participation of single women, an effect that is especially pronounced when future wages of females depend positively on past labor market experience.
Publisher: New Haven, CT: The Econometric Society
Language: English;Norwegian
Identifier: ISSN: 1759-7331
ISSN: 1759-7323
EISSN: 1759-7331
DOI: 10.3982/QE653
Source: NORA Norwegian Open Research Archives
Wiley Blackwell Titles (Open access)
ProQuest Central
DOAJ Directory of Open Access Journals

Back to results list


INSPIRE LIBRARY - TON DUC THANG UNIVERSITY	(84-028) 37 755 057	Feedback
19 Nguyen Huu Tho St. Dist.7, HCM	thuvien@tdtu.edu.vn	Feedback

How do tax progressivity and household heterogeneity affect Laffer curves?

Searching Remote Databases, Please Wait