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Taxpayer responses in good times and bad

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  • Hargaden, Enda Patrick

Abstract

I show that the magnitude of taxpayer responsiveness, a key parameter in public finance, varies through time. Using linked administrative data and identifying responses from changes in notches, I document a marked decline in responsiveness during the Great Recession that cannot be explained by increased enforcement. I characterize which employee–employer pairs are best at reporting tax-advantaged incomes. Workers in industries with above-average responsiveness, such as construction, were disproportionately affected by the recession. I show responsiveness also declined for workers who remained matched with the same employers throughout the period.

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  • Hargaden, Enda Patrick, 2020. "Taxpayer responses in good times and bad," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 653-690.
    • Handle: RePEc:eee:jeborg:v:176:y:2020:i:c:p:653-690
    DOI: 10.1016/j.jebo.2020.05.003
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    Cited by:

    1. Stuart Adam & James Browne & David Phillips & Barra Roantree, 2021. "Frictions and taxpayer responses: evidence from bunching at personal tax thresholds," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 612-653, June.
    2. Roantree, Barra & Doorley, Karina & Kakoulidou, Theano & O'Malley, Seamus, 2021. "Budget 2022," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    3. Aronsson, Thomas & Jenderny, Katharina & Lanot, Gauthier, 2022. "The quality of the estimators of the ETI," Journal of Public Economics, Elsevier, vol. 212(C).
    4. McQuinn, Kieran & O'Toole, Conor & Coffey, Cathal & Wendy Disch & Eva Shiel & Eoin Kenny, 2021. "Quarterly Economic Commentary, Winter 2021," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC2021WIN, June.
    5. Kakoulidou, Theoni & Doolan, Michael & Roantree, Barra, 2022. "Earnings-related benefits in Ireland: Rationale, costs and work incentives," Papers BP2023/2, Economic and Social Research Institute (ESRI).

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    More about this item

    Keywords

    Taxable income; Behavioural response; Notches; Bunching;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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