Tax Elasticity Calculator

✖Change in Tax Revenue is the percentage increase or decrease in total tax income over a specific period, typically comparing it to the previous period.ⓘ Change in Tax Revenue [%ΔR]			+10% -10%
✖Change in Economic Activity is the percentage increase or decrease in overall economic output or productivity over a specific period, typically compared to the previous period.ⓘ Change in Economic Activity [%ΔE]			+10% -10%

✖Tax Elasticity is responsiveness of tax revenue to changes in the economic base that generates the revenue, without any alteration in tax rates.ⓘ Tax Elasticity [TE]

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Formula

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Tax Elasticity

Formula

`"TE" = "%ΔR"/"%ΔE"`

Example

`"6.666667"="20"/"3"`

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Tax Elasticity Solution

STEP 0: Pre-Calculation Summary

Formula Used

Tax Elasticity = Change in Tax Revenue/Change in Economic Activity
TE = %ΔR/%ΔE
This formula uses 3 Variables

Variables Used

Tax Elasticity - Tax Elasticity is responsiveness of tax revenue to changes in the economic base that generates the revenue, without any alteration in tax rates.
Change in Tax Revenue - Change in Tax Revenue is the percentage increase or decrease in total tax income over a specific period, typically comparing it to the previous period.
Change in Economic Activity - Change in Economic Activity is the percentage increase or decrease in overall economic output or productivity over a specific period, typically compared to the previous period.

STEP 1: Convert Input(s) to Base Unit

Change in Tax Revenue: 20 --> No Conversion Required
Change in Economic Activity: 3 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

TE = %ΔR/%ΔE --> 20/3

Evaluating ... ...

TE = 6.66666666666667

STEP 3: Convert Result to Output's Unit

6.66666666666667 --> No Conversion Required

FINAL ANSWER

6.66666666666667 ≈ 6.666667 <-- Tax Elasticity

(Calculation completed in 00.020 seconds)

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Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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Cost Benefit Analysis

Go Benefit Cost Ratio = (sum(x,0,Number of Periods,(Cash Flow of Benefits/(1+(0.01*Discount Rate))^x)))/(sum(x,0,Number of Periods,(Cash Flow of Costs/(1+(0.01*Discount Rate))^x)))

Marginal Propensity to Consume

Go Marginal Propensity to Consume = Consumption/(Disposable Income*(Revenue-Tax Imposed))

Tax Incidence for Customers

Go Tax Incidence = 100*(Elasticity of Supply/(Elasticity of Demand+Elasticity of Supply))

Tax Incidence for Producers

Go Tax Incidence = 100*(Elasticity of Demand/(Elasticity of Demand+Elasticity of Supply))

Tax Burden for Customers

Go Tax Burden = Elasticity of Supply/(Elasticity of Demand+Elasticity of Supply)

Tax Burden for Suppliers

Go Tax Burden = Elasticity of Demand/(Elasticity of Demand+Elasticity of Supply)

Budget Balance

Go Budget Balance = Tax Revenue-Government Consumption-Transfer Payments

Tax Multiplier

Go Tax Multiplier = ((1-Marginal Propensity to Consume)/Marginal Propensity to Save)

Tax Elasticity

Go Tax Elasticity = Change in Tax Revenue/Change in Economic Activity

Marginal Tax Rate

Go Marginal Tax Rate = Change in Taxes Paid/Change in Taxable Income

Marginal Propensity to Save

Go Marginal Propensity to Save = Change in Savings/Change in Income

Debt to GDP Ratio

Go Debt to Gdp = Total Debt of Country/Gross Domestic Product (GDP)

Budget Deficit

Go Budget Deficit = Government Expenditure-Government Income

Tax Buoyancy

Go Tax Buoyancy = Change in Tax Revenue/Change in GDP

Average Tax Rate

Go Average Tax Rate = Tax Paid/Net Income

Tax Liability

Go Tax Liability = Tax Base*0.01*Tax Rate

Tax Revenue

Go Tax Revenue = Tax Liability*Taxpayer

Laffer Curve

Go Revenue = Tax Rate*Taxable Base

Tax Elasticity Formula

Tax Elasticity = Change in Tax Revenue/Change in Economic Activity
TE = %ΔR/%ΔE

What is Tax Elasticity?

Tax elasticity is a crucial concept in fiscal policy and economics, referring to the responsiveness of tax revenue to changes in the economic base that generates that revenue, without any alteration in tax rates. A tax is considered elastic if it is greater than 1, meaning tax revenues grow faster than the economy. Conversely, a tax with an elasticity less than 1 is inelastic, indicating tax revenues grow more slowly than the economy. Elastic taxes are sensitive to economic cycles, with revenues significantly increasing during economic booms and decreasing during recessions. Inelastic taxes provide a more stable revenue stream across economic cycles.

How to Calculate Tax Elasticity?

Tax Elasticity calculator uses Tax Elasticity = Change in Tax Revenue/Change in Economic Activity to calculate the Tax Elasticity, The Tax Elasticity refers to the responsiveness of tax revenue to changes in economic variables such as income, prices, or other factors. Tax Elasticity is denoted by TE symbol.

How to calculate Tax Elasticity using this online calculator? To use this online calculator for Tax Elasticity, enter Change in Tax Revenue (%ΔR) & Change in Economic Activity (%ΔE) and hit the calculate button. Here is how the Tax Elasticity calculation can be explained with given input values -> 6.666667 = 20/3.

FAQ

What is Tax Elasticity?

The Tax Elasticity refers to the responsiveness of tax revenue to changes in economic variables such as income, prices, or other factors and is represented as TE = %ΔR/%ΔE or Tax Elasticity = Change in Tax Revenue/Change in Economic Activity. Change in Tax Revenue is the percentage increase or decrease in total tax income over a specific period, typically comparing it to the previous period & Change in Economic Activity is the percentage increase or decrease in overall economic output or productivity over a specific period, typically compared to the previous period.

How to calculate Tax Elasticity?

The Tax Elasticity refers to the responsiveness of tax revenue to changes in economic variables such as income, prices, or other factors is calculated using Tax Elasticity = Change in Tax Revenue/Change in Economic Activity. To calculate Tax Elasticity, you need Change in Tax Revenue (%ΔR) & Change in Economic Activity (%ΔE). With our tool, you need to enter the respective value for Change in Tax Revenue & Change in Economic Activity and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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