Research

Publication

Should dividends be included in the personal income tax base?

(Faut-il mettre au barème les dividendes ? - Revue française d'économie, vol. xxxvi, no. 1, 2021, pp. 57-98. )

with Etienne Lehmann , Michael Sicsic and Eddy Zanoutene

This paper evaluates the 2013 capital tax reform in France that included the dividends back into the personal income tax base. After an international comparison and a discussion of the main theoretical arguments, we estimate the effects of the reform using a diff-in-diff strategy. Our results suggest the reform induced a 70% cut in dividends among treated taxpayers. Moreover, these responses are not explained by income shifting from self-employed. These responses are so huge that the reform had likely reduced tax revenue. The reform would also have led to an increase in real estate assets.

[Paper]

Working paper

Estimating the Laffer Tax Rate on Capital Income: Cross-base Responses Matter

with Etienne Lehmann and Michael Sicsic

We derive a formula to estimate the Laffer tax rates on capital income. Our theory clarifies what sufficient statistics need to be estimated: the elasticities of capital income (the "direct" elasticity) and of labor income (the "cross" elasticity) with respect to the net-of-tax rate on capital income. We estimate these elasticities using reforms between 2008 and 2017 in France. We obtain a direct elasticity around 0.66 which is very robust across specifications. Ignoring the cross elasticity would lead to a Laffer rate around 60%. However, since labor incomes are much larger than capital incomes, the Laffer tax rate is especially sensitive to the cross elasticity. We estimate this cross elasticity to be positive in France, which contradicts micro-foundations of this cross elasticity that relies on income shifting but which is in line with micro-foundations from two-period labor and savings models. Our estimate for the cross base elasticity dramatically decreases the Laffer rate which can be reduced down to 20%.

[Paper]

Ph. D Thesis

Essays in Public Economics and Political Economy (Supervisors : Jean Mercier-Yhtier and Etienne Lehmann) - December 17th 2020