This paper provides empirical evidence on the responsiveness of low-income taxpayers by estimating the elasticity of taxable income (ETI) for Spain. Using the bunching approach and administrative tax data from 2008 to 2017, we find evidence of sharp bunching at the first tax kink (ETI=0.7) and a substantial missing mass around the second tax kink (ETI=0.4). Even though we detect considerable heterogeneity in responses depending on taxpayers' personal and family circumstances, bunching and missing mass are mostly related to labour income. The main mechanism of response for bunching is associated with the use of certain deductions and allowances, while missing mass is driven by the phase-out region of a targeted deduction for labour income.

This paper characterises the Laffer curve of each individual taxpayer in a schedular multi-rate income tax with income shifting. Analytical expressions for the revenue-maximising tax rate and the revenue-maximising elasticity are provided for the individual taxpayer and the aggregate population, as well as new estimates of the Elasticity of Taxable Income. Applying these to the Spanish income tax demonstrates that 44.72% (58.49%) of the taxpaying population in the non-savings tax base (savings tax base) is on the “normal” side of the Laffer curve. On average, these taxpayers are 6.59 points (24.73 points) above (below) the maximum of the Laffer curve. The fraction of total tax revenue lost through behavioural responses amounts to 53.77%. However, this fraction varies by population subgroup and decreases when we account for income-shifting responses, suggesting the presence of fiscal externalities in the Spanish PIT.

Parenthood is associated with significant income reductions and labour market disruptions, known as the child penalty. This paper uses data from the Household, Income, and Labour Dynamics in Australia (HILDA) Survey (2001-2021) to analyse how Australia's tax, welfare, and family policies are associated with the child penalty. Our findings show that one-parent households experience more pronounced income declines in higher poverty risks than two-parent households, which reflect difference sin government support and policy eligibility. We demonstrate that one-parent households are better supported by transfer policies, while two-parent households are better supported by progressive taxation. Paid Parental Leave (PPL) is associated with a reduction in the child penalty for first births but has a limited impact for subsequent births. By linking the child penalty to poverty and inequality, our study highlights the need for integrated policies tailored to diverse household structures to mitigate these effects.

Abstract: This paper analyzes empirically the trade-off between revenue and production efficiency in the choice of tax instruments in Argentina. In this study I use an optimal tax model which I extend to account for turnover evasion. I exploit the introduction of a production inefficient tax policy, the Simplified Tax Regime, which affect firms’ behavior on compliance and real output. Based on the bunching approach and on administrative tax data covering all Corporate Income Tax returns for the years 1997-2011, I find evidence of bunching behavior among medium firms in all the period. The results suggest that the introduction of the Simplified Tax Regime provides medium enterprises with an additional incentive to reduce turnover (‘legally’ or ‘illegally’) and to comply with costs in order to take advantage of the new tax regime.

Abstract: In the past three decades, government support of higher education has nearly tripled in Australia. Most of the growth observed in its support of an income-contingent loan scheme that permits domestic students to defer payment of tuition until the students have left university and have started earning an income above a minimum threshold by the government. When this program was adopted (1989), it was applauded for its effort to introduce tuition-fees without negatively affecting low-income student enrollments. Early research suggested that the income-contingent repayment scheme did not negatively affect participation by low-income students. Internationally, research has suggested that the burden of student debt negatively affects earnings, occupational choices, and family decisions. A touted solution for addressing increasing debt burdens is through income-contingent loans. This paper analyses a long-standing program using an extensive panel data set on taxpayers in Australia to explore the impact of income-contingent loans on post-schooling outcomes.  

Abstract:  Applying the Laffer curve concept to individuals, a taxpayer lies on the "wrong" side of the Laffer curve if higher tax rates reduce their tax payments. With a tax increase restricted to higher-income individuals, some taxpayers are guaranteed to be on the wrong side of the Laffer curve. Despite its distributional properties, a progressive reform will also reduce the average tax rates of some high-income taxpayers. In relying on tax payments, standard measures systematically misrepresent the distribution of tax reform burdens, as illustrated by the 2024 Australian tax reform.