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Estimating policy-corrected long-term and short-term tax elasticities for the USA, Germany, and the United Kingdom.
- Source :
- Empirical Economics; Jan2023, Vol. 64 Issue 1, p465-504, 40p, 19 Charts, 15 Graphs
- Publication Year :
- 2023
-
Abstract
- We estimate the elasticities of the most important tax categories using a new quarterly database of discretionary tax measures for the USA, Germany, and the United Kingdom over the period 1980Q1 to 2018Q2. Employing Romer and Romer's (2009) narrative approach, we construct a policy-neutral dataset based on revenue figures from governmental records. Using this quantitative information, we are able to subtract policy-induced changes, which often are not considered in the literature. Furthermore, we estimate state-dependent elasticities. Our conclusions are as follows. (i) In Germany and the UK, long-term tax-to-base elasticities are generally higher than short-term elasticities, whereas results for the USA are mixed. (ii) Short-term base-to-output elasticities tend to be smaller than unity, whereas long-term elasticities are close to unity. (iii) German and UK tax-to-output elasticities in the short term are lower than long-term elasticities, with mixed results for the USA. (iv) For tax-to-base elasticities, we find business-cycle asymmetries across countries but not within countries. (v) For base-to-output elasticities, our results suggest few asymmetries across countries and more asymmetries across tax types. (vi) Typically, the above conclusions do not hold for corporate income tax. [ABSTRACT FROM AUTHOR]
- Subjects :
- ELASTICITY
Subjects
Details
- Language :
- English
- ISSN :
- 03777332
- Volume :
- 64
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- Empirical Economics
- Publication Type :
- Academic Journal
- Accession number :
- 161301425
- Full Text :
- https://doi.org/10.1007/s00181-022-02252-2