The number of additional fiscal share per child is 0.5 share for the two first children, and 1 share for following children.
However there exist a ceiling limiting the fiscal gain per half fiscal share to 2336 €.
However there exist a ceiling limiting the fiscal gain per half fiscal share to 2336 €, and has been lowered to 1500 € in 2013.
It implies a series of thresholds given the number of children at which the MTR changes or at which households will face a lump sum decrease of their disposable income.
2011
2013
Children #
1
63158
58388
2
73615
63426
3
94419
73874
4
115287
84178
5
136064
94509
6
150656
104633
An important loss:
No other tax reforms or policy happened on the \(\text{50 000}\) €, \(\text{200 000}\) € over the 2012-2014 period.
To the exception of:
The suppression of a unique tax transfer on capital.
A change in the retirement age to get a full pension .
The analysis of behavioral reactions with respect to net of tax wage changes face an identification issue:
A change in marginal tax rate (MTR), happens on a specific part of the income distribution.
As a consequence it is not possible to disentengle the impact of a change in the income distribution, and a behavioral reaction to a change in net-of-tax income.
As noted by Piketty (1999) the family quotient adds an other source of variation that allows to control for the change in the income distribution.
The family quotient embodies a triple-difference estimator.
Even if that additionnal source of variation as been used implicitely (or explicitely) by numerous French studies (Carbonier (2014), Lehmann et al (2014), Sicsic (2018)), no recent studies has used it with a triple-difference setting.
The reform creates three separate groups:
An untreated one that is below the two thresholds.
One that face a change in MTR (Treatment 1).
One that face a lump sum decrease in disposable income (Treatment 2).
We make the assumption that in the absence of reform, households would have stayed in the same position in the income distribution.
The Échantillon Démographique Permanent:
Large dataset composed of 62 databases.
Over 2 millions households in panel, with fiscal returns.
Large set of controls.
$$~$$
What I Do:
Use the taxable income in 2011 and 2014.
On married households with and without children.
Taxable income between 50 to 200k € in 2011 or in 2014.
Classical diff-in-diff:
$$ y_{it} = \beta_0 + \beta_1 \text{Post} + \beta_2 \text{Treated} \\ + \delta \text{Treated} \times \text{Post} + c_i + \epsilon_{it} $$
Which can be estimated in first difference:
$$ \Delta y_{i} = \beta_1+ \delta_1 \text{Treated} + \epsilon_{i}$$
In our case we can do:
$$ \Delta y_{i} = \beta_0+ \beta_1 \text{Treatment}_1 +\beta_2 \text{Treatment}_2 + \epsilon_{i}$$
Intercept
Treatment 1
Treatment 2
5315***
(37)
-218** (105)
-823*** (81)
That estimation doesn't take into account potentiel changes due the change in the income distribution.
It also does not take into account potentiel difference in trend based on family composition.
Tax reform analysis is very sensible to data selection kopczuk (2005).
Availability of code (data preparation and estimation) is not good.
Administrative data leads to a very high (fixed) reproducibility cost.
One solution is to publish all the code, with as much non identifying output as possible, that allows to see exactly what has been done to attain such results.
Rich Households Taxable Income and the Lowering of the Family
Quotient Ceiling:
A French natural experiment.
Adrien Pacifico AMSE, THEMA
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