TY - JOUR
T1 - Tax bunching by owners of small corporations
AU - Bettendorf, Leon
AU - Lejour, Arjan
AU - van 't Riet, Maarten
PY - 2017/12
Y1 - 2017/12
N2 - We study the options for income shifting by owners of small corporations in the Netherlands using bunching techniques on individual tax records over the period 2007-2011. We find that the distribution of gross labour income strongly peaks at the minimum level of the reference wage, specified in the tax code. Next, taxable labour income bunches at the cut-offs of the tax brackets. The elasticity of taxable income at the top tax cut-off ranges from 0.06 to 0.11. Distributed profits strongly responded to the temporary tax cut from 25 to 22% in 2007, which doubled tax revenues on dividends. We reconfirm the importance of intertemporal income shifting for business owners.
AB - We study the options for income shifting by owners of small corporations in the Netherlands using bunching techniques on individual tax records over the period 2007-2011. We find that the distribution of gross labour income strongly peaks at the minimum level of the reference wage, specified in the tax code. Next, taxable labour income bunches at the cut-offs of the tax brackets. The elasticity of taxable income at the top tax cut-off ranges from 0.06 to 0.11. Distributed profits strongly responded to the temporary tax cut from 25 to 22% in 2007, which doubled tax revenues on dividends. We reconfirm the importance of intertemporal income shifting for business owners.
KW - Bunching
KW - Small corporations
KW - Taxable income
KW - Income shifting
U2 - 10.1007/s10645-017-9303-x
DO - 10.1007/s10645-017-9303-x
M3 - Article
SN - 0013-063X
VL - 165
SP - 411
EP - 438
JO - De Economist: Tijdschrift voor alle standen, tot bevordering van volkswelvaart, door verspreiding van eenvoudige beginselen van staatshuishoudkunde
JF - De Economist: Tijdschrift voor alle standen, tot bevordering van volkswelvaart, door verspreiding van eenvoudige beginselen van staatshuishoudkunde
IS - 4
ER -