Tax Bunching, Income Shifting and Self-employment
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Tax Bunching, Income Shifting and Self-employment. / le Maire, Christian Daniel; Schjerning, Bertel.
Economic Policy Research Unit. Department of Economics, University of Copenhagen, 2012.Research output: Working paper › Research
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TY - UNPB
T1 - Tax Bunching, Income Shifting and Self-employment
AU - le Maire, Christian Daniel
AU - Schjerning, Bertel
N1 - JEL-Classification: H20, J20.
PY - 2012
Y1 - 2012
N2 - This paper proposes a dynamic extension to Saez (2010) bunching formula that allows us to distinguish bunching based on real responses and income shifting. We provide direct evidence of income shifting and pronounced bunching in taxable income for the case of Danish self-employed. If income shifting was neglected in this case, we would conclude that taxable incomes were highly sensitive to changes in marginal tax rates. We show, however, that more than half of the observed bunching in taxable income for the self-employed is driven by intertemporal income shifting, implying a structural elasticity in the range of 0.14-0.20.
AB - This paper proposes a dynamic extension to Saez (2010) bunching formula that allows us to distinguish bunching based on real responses and income shifting. We provide direct evidence of income shifting and pronounced bunching in taxable income for the case of Danish self-employed. If income shifting was neglected in this case, we would conclude that taxable incomes were highly sensitive to changes in marginal tax rates. We show, however, that more than half of the observed bunching in taxable income for the self-employed is driven by intertemporal income shifting, implying a structural elasticity in the range of 0.14-0.20.
KW - Faculty of Social Sciences
KW - Self-employment,
KW - tax bunching
KW - retained profits
KW - tax avoidance
KW - income shifting
M3 - Working paper
BT - Tax Bunching, Income Shifting and Self-employment
PB - Economic Policy Research Unit. Department of Economics, University of Copenhagen
ER -
ID: 38557200