%0 Report
        %A Bergolo, Marcelo
%A Burdin, Gabriel
%A Rosa, Mauricio De
%A Giaccobasso, Matias
%A Leites, Martin
        %T Tax Bunching at the Kink in the Presence of Low Capacity of Enforcement: Evidence from Uruguay
        %D 2019
        %8 2019 Apr
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 12286
        %U https://www.iza.org/publications/dp12286
        %X By using a bunching design on rich administrative tax records from Uruguay's tax agency we explore how individual taxpayers respond to personal income taxation in a context with high sheltering opportunities. We estimate a moderated elasticity of taxable income in the first kink point (0.16) driven by a combination of gross labor income and deductions responses. Taxpayers use personal deductions more intensively close to the kink point and undereport income unilaterally or through employer-employee collusion. Our results suggest that policy efforts should be directed at broadening the tax base and improving the enforcement capacities rather than eroding tax progressivity.
        %K deductions behavior
%K elasticity of labor income
%K tax bunching
%K personal income taxation
%K misreporting
%K developing economies