Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306761 
Year of Publication: 
2024
Series/Report no.: 
IFN Working Paper No. 1503
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
We study responsiveness of owner-managed companies to a corporate income tax kink using Dutch tax records linking firms to their owners. The corporate taxable income elasticity (CETI) is 0.08, but tax sensitivity is over three times higher for firms using specific investment deductions. These are generous, allow for large depreciation and include assets that can reflect owner-managers' consumption. The CETI rises with deductions' use and is higher for large firms in industries with easy access to them. We document persistence at the kink, which is driven by large firms using deductions and whose owner-managers repeatedly target personal income tax kinks.
Subjects: 
taxable income elasticity
owner-managed companies
tax deductions
bunching
JEL: 
H24
H25
H26
H30
Document Type: 
Working Paper

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