Seminar: Bunching at Kink Points in the Dutch Tax System

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Vincent Dekker and Kristina Strohmaier (Universität Hohenheim en Ruhr-Universität Bochum)

Discussant: Nicole Bosch (CPB)

Language: English

Registration:  Please register here .

Abstract subject:
This paper presents new empirical evidence on taxpayers' responsiveness to taxation by estimating the compensated elasticity of taxable income with respect to the net-of-tax rate in the Netherlands. Making use of the bunching approach introduced by Saez (2010), we find small, but clear evidence of bunching behaviour at all thresholds of the Dutch tax schedule with a precise estimated elasticity of 0.024 at the upper threshold. In line with the literature, we find much larger estimates for women and self-employed individuals, but we can also identify bunching behavior of male and employed individuals. We add to the bunching literature by proposing an intuitive, iterative procedure for determining the bunching window as well as the optimal counterfactual model, where we rely on the information criteria to determine the model.

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