TY  - JOUR
AU  - Saez,Emmanuel
AU  - Slemrod,Joel B.
AU  - Giertz,Seth H.
TI  - The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15012
PY  - 2009
Y2  - May 2009
UR  - http://www.nber.org/papers/w15012
L1  - http://www.nber.org/papers/w15012.pdf
N1  - Author contact info:
Emmanuel Saez
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-4631
Fax: 510/642-6615
E-Mail: saez@econ.berkeley.edu

Joel Slemrod
University of Michigan Business School
701 Tappan Street
Room R5396
Ann Arbor, MI  48109-1234
Tel: 734/936-3914
Fax: 734-615-4323
E-Mail: jslemrod@umich.edu

Seth Giertz
University of Nebraska
Dept. of Economics, CBA 368
P.O. Box 880489
Lincoln, NE 68588-0489
Tel: 402-472-7932
Fax: 402-472-9700
E-Mail: sgiertz2@unl.edu
AB  - This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates (ETI) using tax return data. First, we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the United States to illustrate those issues. Third, we provide a critical discussion of most of the taxable income elasticities studies to date, both in the United States and abroad, in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research.
ER  -