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Analyzing tax reforms using the SwedishLabour Income Microsimulation Model
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2017 (English)Report (Other academic)
Abstract [en]

Labour income taxation is a central policy topic because labour income makes up the majority of national income and most taxes are in the end taxes on labour. In order to quantify how behavioural responses of labour income earners affect tax revenue, the Swedish Labour Income Microsimulation Model (SLIMM) is constructed and used to evaluate tax reforms. The model simulates taxable income responses, participation responses and income effects. Elasticities are calibrated to match midpoints of estimates found in the quasiexperimental literature. SLIMM is solidly microfounded and uses administrative register data. The model is used to analyze changes to the earned income tax credit (EITC), municipal income taxes and the central government income tax paid by high-income earners. The simulations indicate that the EITC has increased employment by 128,000 and has a degree of self-financing of 21 percent. Almost half of the revenue increase from higher municipal tax rates would disappear due to behavioural responses. Tax cuts for the richest fifth of working Swedes are completely self-financing.

Place, publisher, year, edition, pages
Uppsala, 2017. , p. 43
Series
Working paper / Department of Economics, Uppsala University (Online), ISSN 1653-6975 ; 2017:12
Keywords [en]
income taxation, behavioural responses, dynamic scoring, microsimulation, tax reform
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:uu:diva-333805OAI: oai:DiVA.org:uu-333805DiVA, id: diva2:1157915
Available from: 2017-11-16 Created: 2017-11-16 Last updated: 2017-11-16

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf