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UID:396-39@berlinschoolofeconomics.de
CLASS: PUBLIC
SUMMARY:Research Seminar in Economics: Michele Bernasconi (Ca' Foscari University of Venice)
DESCRIPTION:Topic: Why Do Taxpayers Bunch at Notch Points? Experimental Ev
 idence\n\nSpeaker: Michele Bernasconi (Ca' Foscari University of Venice) 
 with Irene Buso (University of Bologna), Anna Marenzi (University of Venez
 ia) and Dino Rizzi (University of Venezia) \n\nTime & venue:\n\nThursday,
  12.15–1.30 p.m.\n\nFU Berlin, Boltzmannstr. 16-20\n\nroom 202/ Kaminzim
 mer\n\nDescription: \n\nFiscal policies frequently determine discontinuit
 ies in the average tax rate; for example, introducing fiscal benefits or f
 lat-rate tax for those who report an income below a threshold produces a l
 arge discontinuous jump in tax liability – a notch – at the threshold.
  These notched tax schemes create strong and salient incentives to bunch b
 elow the threshold, either reducing their work or increasing non-complianc
 e behaviour. Empirical evidence consistently reports a density hole above 
 the notch point in the taxpayers‘ income distribution, but less than the
 oretically expected (e.g., Kleven and Waseem, 2013); experimental evidence
  supports the existence of bunching behaviour but not to the full extent w
 hat questions the understanding of incentives in notched fiscal systems (G
 ibson et al., 2019). More importantly, the empirical studies on bunching c
 an hardly distinguish whether the bunching observed in reported income is 
 due to an adjustment in labour supply or to misreporting.\n\nWe provide ev
 idence of taxpayers‘ responses to incentives produced by the notch in pe
 rsonal income taxation in a controlled setting; we investigate how tax eva
 sion possibilities influence bunching.  Four between-subject treatments w
 ith 90 subjects each are implemented in the laboratory: the earnings of a 
 real-effort task based on sliders (Gill and Prowse, 2012) are taxed with (
 i) a proportional scheme without evasion possibilities, (ii) a proportiona
 l scheme with evasion possibilities (iii) a notched scheme without evasion
  possibilities, (iii) a proportional scheme with evasion possibilities, (i
 v) a notched scheme with evasion possibilities.\n\nResults show clear evid
 ence of bunching: bunching emerges in notched tax systems both with and wi
 thout tax evasion. Furthermore, tax evasion possibilities do not crowd out
  labour supply adjustment: taxpayers react to notches by adjusting both ef
 fort and reported income.
DTSTAMP:20241107T133818Z
DTSTART:20241121T121500Z
DTEND:20241121T133000Z
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