Tax bunching, income shifting and self-employment

Daniel le Maire and Bertel Schjerning

Journal of Public Economics, 2013, vol. 107, issue C, 1-18

Abstract: 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 Danish self-employed. If income shifting was neglected in this case, we would estimate a taxable income elasticity in the range of 0.43–0.53 and conclude that taxable incomes were highly sensitive to changes in marginal tax rates. We show, however, that more than half of the bunching in taxable income is driven by intertemporal income shifting, implying a structural elasticity of 0.14–0.20.

Keywords: Self-employment; Tax bunching; Retained profits; Tax avoidance; Income shifting (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (78)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0047272713001618
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Tax Bunching, Income Shifting and Self-employment (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:107:y:2013:i:c:p:1-18

DOI: 10.1016/j.jpubeco.2013.08.002

Access Statistics for this article

Journal of Public Economics is currently edited by R. Boadway and J. Poterba

More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().