Seminar: the elasticity of taxable income in the Netherlands

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Maaike Stoel (EUR)

Discussant: Leon Bettendorf (CPB)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject
We study the elasticity of taxable income (ETI) in the Netherlands. Specifically, we consider the responsiveness of taxable labour income of employees to changes in marginal tax rates using the large 2001 tax reform in the Netherlands. Following the recent literature we instrument the endogenous marginal tax rates with synthetic marginal tax rates using projected exogenous income. Furthermore, we consider a number of controls for exogenous income growth, including base year income and a spline in income for pre reform income growth, next to socioeconomic controls like education, ethnicity and household type. We estimate the ETI for all workers and for workers in different income groups separately. We also estimate the ETI separately for men and women.

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