TY  - JOUR
AU  - Saez,Emmanuel
TI  - Do Taxpayers Bunch at Kink Points?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7366
PY  - 1999
Y2  - September 1999
UR  - http://www.nber.org/papers/w7366
L1  - http://www.nber.org/papers/w7366.pdf
N1  - Author contact info:
Emmanuel Saez
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-4631
Fax: 510/642-6615
E-Mail: saez@econ.berkeley.edu
AB  - This paper investigates whether taxpayers bunch at the kink points of the US income tax schedule (i.e. where marginal rates jump) using tax returns data. Clear evidence of bunching is found only at the first kink point (where marginal rates jump from 0 to 15%). Evidence for other kink points is weak or null. Evidence of bunching is stronger for itemizers than for non-itemizers. Theoretical models of behavioral responses to taxation show that bunching is proportional to the compensated elasticity of income with respect to tax rates. These models are used to perform simulations of bunching and calibrate the key parameters (the behavioral elasticity and the extent to which taxpayers control their income) to the empirical income distributions. Except for low income earners, the behavioral elasticity consistent with the empirical results is small.
ER  -