A Data-Driven Procedure to Determine the Bunching Window
An Application to the Netherlands
International Tax and Public Finance, forthcoming
We extend the bunching approach introduced by Saez (2010) by proposing an intuitive, data-driven procedure to determine the bunching window. Our method explicitly allows the bunching window to be asymmetric around the threshold and to be more flexible. It also enhances the reproducibility of studies implementing the bunching approach. In our application to identify taxpayers' responsiveness to taxation for the Netherlands, we find clear evidence of bunching behaviour at all three thresholds of the Dutch tax schedule with a precise estimated elasticity of 0.023 at the upper threshold. We find much larger estimates for women and self-employed individuals. We also identify significant bunching behaviour for individuals in paid employment, which we can mostly attribute to tax deductions that can be shifted between married tax filers. Since bunching is absent among single tax filers, we conclude that real responses to taxation are modest.
The Elasticity of Corporate Taxable Income - Evidence from South Africa
Economics Letters, 2019, 175, 43-46
The aim of this paper is to empirically investigate firm behaviour in response to corporate taxation in a low enforcement environment. Using the population of corporate tax returns in South Africa for 2009 to 2015, we analyse bunching in the distribution of taxable income at kinks in the tax schedule and estimate the elasticity of corporate taxable income with respect to statutory corporation tax rates. The analysis yields large elasticity estimates suggesting that corporate taxpayers react sensitively to tax incentives. Detailed information on assets, costs and tax deductions moreover allows us to analyse and discuss real versus evasion responses to taxation.
Goodbye Smokers’ Corner: Health Effects of School Smoking Bans
Journal of Human Resources, forthcoming
In this paper, we study the impact of school smoking bans on individual health behavior in Germany. Using a multiple difference-in-differences approach in combination with randomization inference, we find that for individuals affected by a school smoking ban during their school time, the propensity toward smoking declines by 14 to 22 percent, while the number of smoked cigarettes per day decreases by 19 to 25 percent. After elaborating on treatment effect heterogeneity and intensity, we evaluate spillovers to smoking behavior of non-treated individuals living in the same household.
Does Regulation Trade-Off Quality against Inequality? The Case of German Architects and Construction Engineers
British Journal of Industrial Relations, 2018, 57:4, 870-893
We exploit an exogenous price increase of 10% for architectural services to answer the question how price regulation affects income inequality and service quality. Using individual-level data from the German microcensus for the years 2006 to 2012, we find a significant reform effect of 8% on personal net income for self-employed architects and construction engineers. This group moved from the second lowest to the high- est quintile of the net income distribution. This increase in inequality is associated with a deterioration of service quality. The reform reduced average scores of a peer ranking for architects by 18%.
Smoking and local unemployment: Evidence from Germany
Economics and Human Biology, 2018, 29, 138–147
In this paper, we use data from the German Socio-Economic Panel to investigate the effect of macro-economic conditions (in the form of local unemployment rates) on smoking behaviour. The results from our panel data models, several of which control for selection bias, indicate that the propensity to become a smoker increases significantly during an economic downturn, with an approximately 0.7 percentage point increase for each percentage point rise in the unemployment rate. Conversely, conditional on the individual being a smoker, cigarette consumption decreases with rising unemployment rates, with a one percentage point increase in the regional unemployment rate leading to a decrease in consumption up to 0.8 percent.
Corporate Tax Evasion and Avoidance in Developing Countries
In: The Routledge Companion to Tax Avoidance Research
The aim of this paper is to review the literature on tax evasion and avoidance in the developing world. The topic is of high importance as developing countries struggle with low tax-to-GDP ratios and hence lack resources for the provision of public goods and services. Tax noncompliance moreover not only hampers revenue collection, it also undermines the fairness of the tax system. The academic literature that quantifies tax evasion and avoidance activities in the developing world (beyond the wide array of anecdotal evidence) has, in turn, struggled with a lack of appropriate data that allows for a rigorous assessment. High-quality micro data (e.g. tax audit data on corporate tax returns) offers a more promising road to quantify the size of the tax gap in the developing world and to assess its determinants. Such data is slowly becoming available to researchers. A number of papers have presented convincing micro-data evidence suggesting a link between corporate tax rates and tax payers’ evasion practices (Waseem, 2015). In this paper, we also present micro-evidence on tax-motivated multinational income shifting from the developing world.