Seth Giertz (University of Nebraska, Department of Economics) presents The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review (with Emmanuel Saez (UC-Berkeley, Department of Economics) & Joel Slemrod (University of Michigan, Ross School of Business)) at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris William Sanchirico and Reed Shuldiner.  Here is the abstract:

This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates (ETI) using tax return data. First, we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the United States to illustrate those issues. Third, we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research.