UC San Diego

This dissertation explores three topics in the economics of taxation. In Chapter 1, I (coauthored with Daixin He and Langchuan Peng) conduct the first formal comparison of two approaches to estimate the elasticity of taxable income (ETI), a central parameter in the public finance literature. We find that while the bunching ETI estimates are small and stable, the tax reform ETI estimates increase concavely over time and are much larger in the long run. These stylized facts imply that very different behavioral responses are captured by the two approaches. Our findings imply that although the bunching approach has advantages in identification and application, the tax reform ETI estimates are generally more relevant for policy making due to the behavioral responses they are able to capture. In Chapter 2, I examine the reported income-consumption relation between employees and the self-employed and explore its implications on tax evasion and avoidance for U.S. households. I find that, on average for the self-employed in the U.S., the amount of tax evasion is comparable to that of tax avoidance. But the corporate self-employed rely more on tax avoidance while the non-corporate self-employed rely more on tax evasion. In Chapter 3, I study the effects of the financial transaction taxes (FTT) in Latin America on government revenues and tax bases. I find that the FTT have no crowding-out effect on the revenue of other taxes as a whole. But there seems a significantly positive association between the FTT and the CIT revenue, which suggests that the FTT may be beneficial to corporate activities. In addition, I find a negative effect of the FTT on its own tax base.