Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/196784 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12286
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
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.
Subjects: 
deductions behavior
elasticity of labor income
tax bunching
personal income taxation
misreporting
developing economies
JEL: 
H21
H24
H30
J22
Document Type: 
Working Paper

Files in This Item:
File
Size
1.04 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.