The Elasticity of Corporate Taxable Income: New Evidence from UK Tax Records

Devereux, Michael P. and Liu, Li and Loretz, Simon (2014) The Elasticity of Corporate Taxable Income: New Evidence from UK Tax Records. American Economic Journal: Economic Policy, 6 (2). pp. 19-53.

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Abstract or Table of Contents

We estimate the elasticity of corporate taxable income with respect to the statutory corporation tax rate using the population of UK corporation tax returns. We analyze bunching in the distribution of taxable income at kinks in the marginal rate schedule. We decompose this elasticity into an elasticity of total income with respect to the corporation tax rate, and an elasticity of the share of income taken as profit with respect to the difference between the personal and corporate tax rates. This implies a marginal deadweight cost at the £10,000 kink of around 29 percent of tax revenue. (authors' abstract)

Item Type: Article in Academic Journal
Classification Codes (e.g. JEL): G32; H24; H25; L25
Status: Published
Date Deposited: 05 Jun 2015 10:44
Last Modified: 01 Apr 2016 14:19
URI: http://irihs.ihs.ac.at/id/eprint/3500

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