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Consumption tax revenue and personal income tax: analytical elasticities under non-standard tax structures

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  • José Félix Sanz-Sanz
  • Juan Manuel Castañer-Carrasco
  • Desiderio Romero-Jordán

Abstract

This article models the elasticity of consumption taxation faced with changes in disposable income. Its calculation makes clear the importance of the design of the personal income tax and of the changes caused to the consumption of taxpayers. The modelling is performed for both individual taxpayers and the population as a whole.

Suggested Citation

  • José Félix Sanz-Sanz & Juan Manuel Castañer-Carrasco & Desiderio Romero-Jordán, 2016. "Consumption tax revenue and personal income tax: analytical elasticities under non-standard tax structures," Applied Economics, Taylor & Francis Journals, vol. 48(42), pages 4042-4050, September.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:42:p:4042-4050
    DOI: 10.1080/00036846.2016.1150951
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    References listed on IDEAS

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    1. John Creedy & Norman Gemmell, 2003. "The Revenue Responsiveness of Income and Consumption Taxes in the UK," Manchester School, University of Manchester, vol. 71(6), pages 641-658, December.
    2. Hutton, J P & Lambert, P J, 1980. "Evaluating Income Tax Revenue Elasticities," Economic Journal, Royal Economic Society, vol. 90(363), pages 901-906, December.
    3. R. A. Musgrave & Tun Thin, 1948. "Income Tax Progression, 1929-48," Journal of Political Economy, University of Chicago Press, vol. 56(6), pages 498-498.
    4. Sanz-Sanz, José Félix, 2015. "Revenue-Maximising Tax Rates in Personal Income Taxation in the Presence of Consumption Taxes: A note," Working Paper Series 4272, Victoria University of Wellington, Chair in Public Finance.
    5. Hutton, John P. & Lambert, Peter J., 1982. "Simulating the revenue elasticity of an individual income tax," Economics Letters, Elsevier, vol. 9(2), pages 175-179.
    6. 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 145-155, March.
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