THE KHALDUN-LAFFER CURVE REVISITED: A PERSONAL INCOME TAX-BASED ANALYSIS FOR TURKEY

Sen H., Bulut-Cevik Z. B., KAYA A.

TRANSYLVANIAN REVIEW OF ADMINISTRATIVE SCIENCES, sa.57E, ss.103-118, 2019 (SSCI, Scopus) identifier

  • Yayın Türü: Makale / Tam Makale
  • Basım Tarihi: 2019
  • Doi Numarası: 10.24193/tras.57e.7
  • Dergi Adı: TRANSYLVANIAN REVIEW OF ADMINISTRATIVE SCIENCES
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.103-118
  • Anahtar Kelimeler: Turkey, tax policy, personal income tax, optimal tax rate, Laffer curve, COINTEGRATION, RATES, INFLATION, TAXATION, REVENUE
  • Ankara Üniversitesi Adresli: Evet

Özet

This paper focuses on an old but still discussed postulate, the Khaldun-Laffer curve, and empirically applies it to personal income tax by using annual time-series data of Turkey for the period 1970-2015. From our analysis, two fundamental findings emerge: first, Turkish data provides evidence in favor of the Khaldun-Laffer curve, suggesting that there is a non-linearity between tax rates and tax revenue. Second, the optimal tax rate that maximizes revenue from personal income tax is 15.03% against the current rate we estimate at 15.37%. These findings imply that Turkey's current personal income tax rate falls slightly into the prohibitive range of the curve.