This paper examines the elasticity of tax revenue with respect to a marginal rate change, at both the individual and aggregate level. The roles of the elasticity of taxable income (the behavioural effect on taxable income of a tax rise) and the revenue elasticity (the structural effect on...

This paper reports estimates of the elasticity of taxable income with respect to the net-of-tax rate for New Zealand taxpayers. The relative stability of the New Zealand personal income tax system, in terms of marginal rates, thresholds and the tax base, provides helpful conditions for deriving...

This paper examines estimation of the elasticity of taxable income using instrumental variable regression methods. It is argued that the standard instrument for the net-of-tax rate - the rate that would be applicable post-reform but with unchanged income levels - is unsatisfactory in contexts...