The Optimal Elasticity of Taxable Income

26 Pages Posted: 26 Sep 2000 Last revised: 19 Oct 2010

See all articles by Joel B. Slemrod

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics; Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Date Written: September 2000

Abstract

The strength of the behavioral response to a tax rate change depends on the environment individuals operate in, and may be manipulated by instruments controlled by the government. We first derive a measure of the social benefit to affecting this elasticity. The paper then examines this effect in the solution to the optimal income taxation problem when such an instrument is available, first in a general model and then in an example when the government chooses the income tax base.

Suggested Citation

Slemrod, Joel B. and Kopczuk, Wojciech, The Optimal Elasticity of Taxable Income (September 2000). NBER Working Paper No. w7922. Available at SSRN: https://ssrn.com/abstract=243612

Joel B. Slemrod (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

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National Bureau of Economic Research (NBER)

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Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

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United States

Columbia University - School of International & Public Affairs (SIPA)

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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