Munich Personal RePEc Archive

What happens when the income tax increases?

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

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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.

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