They show that taxpayers with incomes above $100,000 per year (in 1992 dollars) have an elasticity of 0.57, much higher than the 0.4 result for the whole sample. The authors also assess the parallel impact of numerous state reforms over the period. As a result, the top marginal tax rate at the federal level fell from 70 percent in 1980 to 28 percent by 1988, and the income tax schedule was reduced from 15 brackets to four. There were two major federal tax reforms, the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986. Their analysis is based on a study of U.S.tax reforms in the 1980s. Gruber and Saez demonstrate that this elasticity is primarily the result of a greater response by taxpayers with high incomes. That is, a 10 percent change in the marginal net-of-tax rate (that is, the difference between 100 percent and the marginal tax rate) leads to a 4 percent change in taxable income. 7512), NBER Research Associate Jonathan Gruber and co-author Emmanuel Saez show that the overall elasticity of taxable income with respect to changes in net-of-tax marginal rates is 0.4. In The Elasticity of Taxable Income: Evidence and Implications (NBER Working Paper No. To justify tax systems with rising marginal rates requires assumptions that give an extraordinarily low weight to the interests of higher-income groups. Transportation Economics in the 21st Century.Training Program in Aging and Health Economics.The Roybal Center for Behavior Change in Health.Retirement and Disability Research Center.Measuring the Clinical and Economic Outcomes Associated with Delivery Systems.Improving Health Outcomes for an Aging Population.Early Indicators of Later Work Levels, Disease and Death.Conference on Research in Income and Wealth.Boosting Grant Applications from Faculty at MSIs.Productivity, Innovation, and Entrepreneurship.International Finance and Macroeconomics.
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