What happens when the income tax increases?

Cerqua, Augusto (2018): What happens when the income tax increases?

Abstract

This paper exploits a sudden income tax rate increase in a large Italian region to examine whether this induced taxpayers to change their tax-related behavior. By using a spatial regression discontinuity design and a detailed dataset at the municipality level, we find a sizable and persistent decrease in declared income only for the self-employed and entrepreneurs.

• Item Type: MPRA Paper
• Language: English
• Keywords: Income tax; tax evasion; spatial regression discontinuity design
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure

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