Robert Breunig - Taxpayer responsiveness to marginal tax rates: Bunching evidence from the Australian personal income tax system

Melbourne Institute Seminar

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Barbara Broadway

bhanel@unimelb.edu.au

Title: Taxpayer responsiveness to marginal tax rates: Bunching evidence from the Australian personal income tax system

Abstract: Utilizing the universe of taxpayer records from 2000 to 2014, we examine taxpayers' responsiveness to marginal tax rates in Australia. Unlike studies from other countries, we find sharp bunching at all kink points in the Australian tax system. Elasticities of taxable income range from effectively zero for wage earners to around 0.26 for self-employed tax-filers. We find substantial heterogeneity in responses to changes in marginal tax rates across a range of sub-groups, with higher elasticities for married females, females with children and younger tax-filers. Elasticities appear to be decreasing over time.

Presenter: Prof Robert Breunig, Australian National University

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