The tax amount elasticity or revenue elasticity indicates by how many percent the tax amount changes if the tax base increases by one percent.
![\ varepsilon](https://wikimedia.org/api/rest_v1/media/math/render/svg/a30c89172e5b88edbd45d3e2772c7f5e562e5173)
It is the ratio of the relative change in the control amount S = S (B) at a relative change of the tax base B .
![{\ displaystyle \ varepsilon = {\ frac {\ frac {\ mathrm {d} S} {\ mathrm {d} B}} {\ frac {S} {B}}} = {\ frac {\ mathrm {d} S} {\ mathrm {d} B}} \ cdot {\ frac {B} {S}}}](https://wikimedia.org/api/rest_v1/media/math/render/svg/dc812b6901f3f597a8fa2e69cae878f4bd9cbce3)
This also corresponds to the quotient of the marginal tax rate and the average tax rate
![{\ displaystyle \ varepsilon = {\ frac {S '(B)} {{\ bar {s}} (B)}} = {\ frac {\ text {marginal tax rate}} {\ text {average tax rate}}}}](https://wikimedia.org/api/rest_v1/media/math/render/svg/efbeb897e2c1383044aad8f74bf452719bb23c96)
A tariff is
- elastic if
- incidence inelastic if
Progressive tariffs are elastic because here the marginal tax rate is higher than the average tax rate. Regressive tariffs are inelastic.
See also
Individual evidence
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^ Fundamentals of taxation, Silke Übelmesser, LMU Munich, SS 2010, slide 27