The Responsiveness of Taxable Income to Changes in Marginal Tax Rates in Barbados
Since 2003 policymakers in Barbados have implemented a series of tax reforms that have lowered both basic as well as marginal income tax rates. These changes have more than likely induced taxpayers to alter their behaviour in order to affect their reported taxable income. This paper employs an annual sample of 3,000 individual taxpayers between 2003 and 2006 to investigate the sensitivity of taxable income to changes in marginal tax rates. The empirical approach adopted also allows the researcher to provided evidence on the variation in taxable income by gender and income group. The paper finds that for every 1 percent rise in the marginal tax rate, taxable income decreases by 0.2 percent. Further disaggregation of the database also revealed that a strong negative labour supply effect causes the elasticity for low-income taxpayers to rise to 0.9, while females tend to be more responsive to changes in marginal taxes relative to males.
|Date of creation:||15 Jun 2008|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Gruber, Jon & Saez, Emmanuel, 2002.
"The elasticity of taxable income: evidence and implications,"
Journal of Public Economics,
Elsevier, vol. 84(1), pages 1-32, April.
- Jon Gruber & Emmanuel Saez, 2000. "The Elasticity of Taxable Income: Evidence and Implications," NBER Working Papers 7512, National Bureau of Economic Research, Inc.
- James E. Long, 1999. "The Impact of Marginal Tax Rates on Taxable Income: Evidence from State Income Tax Differentials," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 855-869, April.
- Gerald Auten & Robert Carroll, 1999. "The Effect Of Income Taxes On Household Income," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 681-693, November.
- Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(4), pages 403-422, July-Aug..
- Nina Smith & Shirley Dex & Jan Dirk Vlasblom & Tim Callan, 2003. "The effects of taxation on married women's labour supply across four countries," Oxford Economic Papers, Oxford University Press, vol. 55(3), pages 417-439, July.
- Austan Goolsbee, 1997.
"What Happens When You Tax the Rich? Evidence from Executive Compensation,"
NBER Working Papers
6333, National Bureau of Economic Research, Inc.
- Austan Goolsbee, 2000. "What Happens When You Tax the Rich? Evidence from Executive Compensation," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 352-378, April.
- James R. Hines Jr., 1993.
"Altered States: Taxes and the Location of Foreign Direct Investment in America,"
NBER Working Papers
4397, National Bureau of Economic Research, Inc.
- Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
- Michael Bleaney & Norman Gemmell & Richard Kneller, 2001. "Testing the endogenous growth model: public expenditure, taxation, and growth over the long run," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 36-57, February.
- Georgios Karras, 1999. "Taxes And Growth: Testing The Neoclassical And Endogenous Growth Models," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 177-188, 04.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:21583. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.