Personal Income Tax Elasticity in Turkey: 1975-2005
The estimation of tax elasticity; the response of tax revenues to changes in income, is important for at least three reasons: i) formulating government budgets and monitoring tax collections (Sen, 2002), ii) the specification of tax functions, iii) the automatic stabilizing properties of the tax system and the public sector deficit (Hutton, Lambert; 1980, 1982). Among the various approaches to tax elasticity calculation in literature (Tanzi, 1969, 1976; Greytak and McHugh, 1978; Hutton and Lambert, 1980; Ehdaie, 1990), the most famous approach is Tanzi’s Method due to its simplicity and the consensus about its correctness of elasticity estimates. Johansen cointegration tests for the period 1975 - 2005 show that personal income tax elasticity in Turkey is around 0.95, indicating almost unit elasticity. Increasing income can be considered as insurance to maintain an equivalent increase in tax revenue; however it doesn’t seem to be the way to obtain higher tax revenues.
|Date of creation:||11 Jul 2006|
|Date of revision:||11 Jul 2006|
|Contact details of provider:|| Web page: http://www.deu.edu.tr/DEUWeb/Icerik/Icerik.php?KOD=442|
More information through EDIRC
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.:
- Austan Goolsbee, 1999. "Evidence on the High-Income Laffer Curve from Six Decades of Tax Reform," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 1-64.
- Latham, Roger, 1988. "Lorenz-Dominating Income Tax Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 185-200, February.
- Hutton, John P & Lambert, Peter J, 1982. "Modelling the Effects of Income Growth and Discretionary Change on the Sensitivity of UK Income Tax Revenue," Economic Journal, Royal Economic Society, vol. 92(365), pages 145-55, March.
- Feenberg, D.R. & Poterba, J.M., 1992.
"Income Inequality and the Incomes of Very High Income Taxpayers: Evidence from Tax Returns,"
92-16, Massachusetts Institute of Technology (MIT), Department of Economics.
- Daniel R. Feenberg & James M. Poterba, 1993. "Income Inequality and the Incomes of Very High-Income Taxpayers: Evidence from Tax Returns," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 145-177 National Bureau of Economic Research, Inc.
- Daniel Feenberg & James Poterba, 1992. "Income Inequality and the Incomes of Very High Income Taxpayers: Evidence from Tax Returns," NBER Working Papers 4229, National Bureau of Economic Research, Inc.
- Tanzi, Vito, 1969. "Measuring the Sensitivity of the Federal Income Tax from Cross-Section Data: A New Approach," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 206-09, May.
- Alan J. Auerbach & Daniel Feenberg, 2000.
"The Significance of Federal Taxes as Automatic Stabilizers,"
NBER Working Papers
7662, National Bureau of Economic Research, Inc.
- Alan J. Auerbach & Daniel R. Feenberg, 2000. "The Significance of Federal Taxes as Automatic Stabilizers," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 37-56, Summer.
- Singer, Neil M, 1970. "Estimating State Income-Tax Revenues: A New Approach," The Review of Economics and Statistics, MIT Press, vol. 52(4), pages 427-33, November.
- Hutton, J P & Lambert, P J, 1980. "Evaluating Income Tax Revenue Elasticities," Economic Journal, Royal Economic Society, vol. 90(363), pages 901-06, December.
When requesting a correction, please mention this item's handle: RePEc:deu:dpaper:0601. 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: (Gonca Konyali)
If references are entirely missing, you can add them using this form.