On Bunching and Identification of the Taxable Income Elasticity

• 成果类型: Article
• 署名作者: Blomquist, Soren; Newey, Whitney K.; Kumar, Anil; Liang, Che-Yuan
• 署名单位: Uppsala University; Massachusetts Institute of Technology (MIT); National Bureau of Economic Research; Federal Reserve System - USA; Federal Reserve Bank - Dallas
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/714446
• 发表日期: 2021
• 页码: 2320-2343
• 关键词: marginal tax rates; responses; MODEL

摘要

The elasticity of taxable income is vital when predicting the effect of taxes. Bunching at kinks/notches has been used to estimate this elasticity. We show that when the preference distribution is unrestricted, bunching at a kink or a notch is not informative about the size of the elasticity, and neither is the entire distribution of taxable income. Bunching identifies the taxable income elasticity when the preference distribution is correctly specified across the kink and provides bounds under restrictions on the preference distribution. We find wide bounds in an empirical example based on upper and lower bounds for the preference density.