The elasticity of taxable income of low-income earners: bunching evidence from Spain
Authors: Ana Gamarra, María Arrazola & José Félix Sanz-Sanz
This paper estimates the elasticity of taxable income (ETI) for Spain. Using the bunching approach and administrative tax data from 2008 to 2017, we find evidence of bunching at the first tax kink (ETI=0.7) and missing mass around the second tax kink (ETI=0.4). Even though we detect heterogeneity in responses depending on taxpayers’ personal and family circumstances, bunching and missing mass are mostly related to labour income. The main mechanism of response for bunching is associated with the use of certain deductions and allowances, while missing mass is driven by the phase-out region of a targeted deduction for labour income.
Distributional National Accounts for Australia, 1991-2018
Authors: Matthew Fisher-Post, Nicolas Hérault & Roger Wilkins
We produce estimates of the full distribution of all national income in Australia for the period 1991 to 2018, by combining household survey with administrative tax microdata and adjusting to match National Accounts aggregates. From these estimates, we are able to rigorously document the shifts in income shares over the period, contrasting changes in the distribution of pre-tax and post-tax national income. Comparing Australia to the US and to France, we also compare our new results to traditional household survey-based estimates of inequality. Moreover, we exploit the richness of our unique microdata to shed light on the distribution of national income across and within various population groups not usually identifiable in the tax datasets that underpin reliable top-income estimates. Among our most surprising findings, inequality of post-tax national income is less than inequality of survey-based (post-transfer, disposable) income for Australia. The gender gap in income has stubbornly remained over the past three decades. Finally, we find that Australian inequality of national income is much lower than that of the United States, while it is similar to that of France, although those at the bottom of the income distribution fare better in France than in Australia.
Equal tax for equal alcohol? Beverage types and antisocial and unlawful behaviours
Authors: Preety Srivastava, Ou Yang & Xueyan Zhao
Alcohol taxation is an important policy instrument for correcting for market failures associated with excessive alcohol consumption. This paper examines the beverage-specific negative externalities by providing empirical evidence linking ten alcohol beverage types to drink driving and hazardous, disturbing or abusive behaviours when intoxicated, using data from six waves of an Australian recreational drug survey. We find regular strength beer and pre-mixed spirits in a can rank the highest in their links to negative behaviours, followed by mid-strength beer, cask wine, and bottled spirits. Conversely, drinking low strength beer or fortified wine reduces the probability for these risky and unlawful behaviours. Bottled wine is shown to be associated with an elevated chance for drink driving but a reduced chance for other negative behaviours. In contrast to the existing volumetric tax rates for per litre of alcohol, of all harmful beverage types, cask wine appears to be significantly under-taxed relative to its external costs to the society. We also note regular and mid strength beer are comparable to pre-mixed drinks in terms of external costs, and yet there is a significant disparity across their tax rates.
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