Measuring the responsiveness of income tax revenue to income growth: a review and some UK values

<p>The unexpectedly high outturn of tax revenues in the UK in recent years has permitted drastic revision of borrowing and taxing plans. Such unexpectedly high outturns may result from either: </p><p>ii) An unexpectedly fast growth in one or more of the tax bases or </p><p>ii) An underestimation of the response to income growth of one or more revenue sources. </p><p> </p><p>It is, therefore, obviously important for planning that the responsiveness of tax revenues to income growth be accurately measurable and known to policy makers and this paper reviews and upgrades the current state of knowledge in respect of income tax revenue responsiveness. </p>