Tax Bunching at the Kink in the Presence of Low Capacity of Enforcement: Evidence from Uruguay
Marcelo Bergolo (),
Gabriel Burdín (),
Mauricio De Rosa (),
Matias Giaccobasso () and
Martin Leites ()
Additional contact information
Mauricio De Rosa: Universidad de la República, Uruguay
Matias Giaccobasso: University of California, Los Angeles
Martin Leites: Universidad de la República, Uruguay
No 12286, IZA Discussion Papers from Institute of Labor Economics (IZA)
By using a bunching design on rich administrative tax records from Uruguay's tax agency we explore how individual taxpayers respond to personal income taxation in a context with high sheltering opportunities. We estimate a moderated elasticity of taxable income in the first kink point (0.16) driven by a combination of gross labor income and deductions responses. Taxpayers use personal deductions more intensively close to the kink point and undereport income unilaterally or through employer-employee collusion. Our results suggest that policy efforts should be directed at broadening the tax base and improving the enforcement capacities rather than eroding tax progressivity.
Keywords: deductions behavior; elasticity of labor income; tax bunching; personal income taxation; misreporting; developing economies (search for similar items in EconPapers)
JEL-codes: H21 H24 H30 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lam, nep-lma, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Tax bunching at the Kink in the Presence of Low Capacity of Enforcement: Evidence From Uruguay (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp12286
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().