responses. The first elasticity (supply side) is the sole real factor limiting optimal top tax rates. The optimal tax system … should be designed to minimize the second elasticity (avoidance) through tax enforcement and tax neutrality across income … forms, in which case the second elasticity becomes irrelevant. The optimal top tax rate increases with the third elasticity …

large public finance literature estimating the elasticity of taxable income and quantifying the efficiency loss from … allocation corresponds to an elasticity of taxable income with respect to the net-of-tax rate in the range 0.15-0.35. …