Economic responses to fiscal incentives of owners of small corporations: evidence from the Netherlands. *

Francois Lafont
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Francois Lafont: CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement

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Abstract: This paper investigates fisscal incentives for owners of small corporations, Directeur Grootaandeel-houders (DGAs), inherent to the Dutch tax code and how DGAs react to them. We find evidence of inter and intra-temporal income shifting, and of bunching at the kink point. These behavioural responses correspond to an elasticity of corporate income with respect to the-net-of-tax rate of 0.072. By comparing estimates for different subsamples of the DGA population, it is shown that this elasticity is composed of both a real-economic component and an income shifting component, principally via investment deductions.

Keywords: Public economics; taxation; elasticity; bunching (search for similar items in EconPapers)
Date: 2018-01-06
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04504190v1
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