Advanced Search
MyIDEAS: Login to save this article or follow this journal

The responsiveness of self-employment income to tax rate changes

Contents:

Author Info

  • Heim, Bradley T.

Abstract

This paper estimates the extent to which self-employment income responds to changes in the net-of-tax share using a panel of tax returns that spans 1987-1996. The results suggest that the elasticity of reported self-employment income to the net-of-tax share is approximately .9, implying a real elasticity (net of any reporting response) of around .4. Estimated elasticities tend to be larger for higher income taxpayers, married males, and females. In addition, the elasticity of self-employment income is considerably larger than the elasticity wage and salary income estimated using the same methodology.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6VFD-4YH568W-1/2/b2267ad1d0b85289115f7bc662b77b6c
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 6 (December)
Pages: 940-950

as in new window
Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:940-950

Contact details of provider:
Web page: http://www.elsevier.com/locate/labeco

Related research

Keywords: Self-employment Taxes Income elasticity;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. C. Harry Kahn, 1964. "Appendixes to "Business and Professional Income Under the Personal Income Tax"," NBER Chapters, in: Business and Professional Income Under the Personal Income Tax, pages 130-190 National Bureau of Economic Research, Inc.
  2. Giertz, Seth, 2006. "The Elasticity of Taxable Income During the 1990s: A Sensitivity Analysis," MPRA Paper 17603, University Library of Munich, Germany.
  3. Bradley T. Heim, 2009. "The effect of recent tax changes on taxable income: Evidence from a new panel of tax returns," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(1), pages 147-163.
  4. Parker, Simon C, 1996. "A Time Series Model of Self-Employment under Uncertainty," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 63(251), pages 459-75, August.
  5. Bradley T. Heim, 2007. "The Incredible Shrinking Elasticities: Married Female Labor Supply, 1978–2002," Journal of Human Resources, University of Wisconsin Press, vol. 42(4).
  6. Clotfelter, Charles T, 1983. "Tax Evasion and Tax Rates: An Analysis of Individual Returns," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 363-73, August.
  7. Francine D. Blau & Lawrence M. Kahn, 2005. "Changes in the Labor Supply Behavior of Married Women: 1980-2000," NBER Working Papers 11230, National Bureau of Economic Research, Inc.
  8. Austan Goolsbee, 2000. "What Happens When You Tax the Rich? Evidence from Executive Compensation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(2), pages 352-378, April.
  9. Giertz, Seth H., 2007. "The Elasticity of Taxable Income over the 1980s and 1990s," National Tax Journal, National Tax Association, vol. 60(4), pages 743-68, December.
  10. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, Elsevier, vol. 84(1), pages 1-32, April.
  11. Hausman, Jerry A., 1985. "Taxes and labor supply," Handbook of Public Economics, Elsevier, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 4, pages 213-263 Elsevier.
  12. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
  13. Robert Carroll & Douglas Holtz-Eakin & Mark Rider & Harvey S. Rosen, 2001. "Personal Income Taxes and the Growth of Small Firms," NBER Chapters, in: Tax Policy and the Economy, Volume 15, pages 121-148 National Bureau of Economic Research, Inc.
  14. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
  15. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  16. Emmanuel Saez & Joel B. Slemrod & Seth H. Giertz, 2009. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," NBER Working Papers 15012, National Bureau of Economic Research, Inc.
  17. Robert A Moffitt & Mark Wilhelm, 2000. "Taxation and the Labor Supply - Decisions of the Affluent," Economics Working Paper Archive, The Johns Hopkins University,Department of Economics 414, The Johns Hopkins University,Department of Economics.
  18. C. Harry Kahn, 1964. "Business and Professional Income Under the Personal Income Tax," NBER Books, National Bureau of Economic Research, Inc, number kahn64-1, October.
  19. Wojciech Kopczuk, 2003. "Tax Bases, Tax Rates and the Elasticity of Reported Income," NBER Working Papers 10044, National Bureau of Economic Research, Inc.
  20. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  21. R. Glenn Hubbard & William M. Gentry, 2000. "Tax Policy and Entrepreneurial Entry," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 283-287, May.
  22. Naomi E. Feldman & Joel Slemrod, 2007. "Estimating tax noncompliance with evidence from unaudited tax returns," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(518), pages 327-352, 03.
  23. Klepper, Steven & Nagin, Daniel, 1989. "The Anatomy of Tax Evasion," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 5(1), pages 1-24, Spring.
  24. Slemrod, Joel & Kopczuk, Wojciech, 2002. "The optimal elasticity of taxable income," Journal of Public Economics, Elsevier, Elsevier, vol. 84(1), pages 91-112, April.
  25. Shih-Ying Wu, 2005. "The Tax Effect on Taxable Income from Privately Held Businesses," Southern Economic Journal, Southern Economic Association, vol. 71(4), pages 891-912, April.
  26. C. Harry Kahn, 1964. "Introductory pages to "Business and Professional Income Under the Personal Income Tax"," NBER Chapters, in: Business and Professional Income Under the Personal Income Tax, pages -15--1 National Bureau of Economic Research, Inc.
  27. Giertz, Seth, 2004. "Recent Literature on Taxable-Income Elasticities," MPRA Paper 16159, University Library of Munich, Germany.
  28. Carroll, Robert, et al, 2000. "Income Taxes and Entrepreneurs' Use of Labor," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(2), pages 324-51, April.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Doerrenberg, Philipp & Duncan, Denvil, 2014. "Experimental evidence on the relationship between tax evasion opportunities and labor supply," European Economic Review, Elsevier, vol. 68(C), pages 48-70.
  2. Dan Andrews & Aida Caldera Sánchez & Åsa Johansson, 2011. "Towards a Better Understanding of the Informal Economy," OECD Economics Department Working Papers 873, OECD Publishing.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:940-950. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.