American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Bunching to Maximize Tax Credits: Evidence from Kinks in the US Tax Schedule
American Economic Journal: Economic Policy
vol. 12,
no. 3, August 2020
(pp. 402–32)
Abstract
We explore bunching at US income tax kinks using a panel of 258 million tax returns from 1996 to 2014. We find bunching at seven kinks, with nearly all bunching occurring at kinks maximizing tax credits. In our sample period, the total number of bunchers increased at an 11 percent annualized growth rate, from 134,300 in 1996 to 866,600 in 2014. Approximately two-thirds of these bunchers locate at the unique point that maximizes refunds. Some taxpayers repeatedly bunch at this point, even in consecutive years when different tax kinks are refund maximizing.Citation
Mortenson, Jacob A., and Andrew Whitten. 2020. "Bunching to Maximize Tax Credits: Evidence from Kinks in the US Tax Schedule." American Economic Journal: Economic Policy 12 (3): 402–32. DOI: 10.1257/pol.20180054Additional Materials
JEL Classification
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H26 Tax Evasion and Avoidance
- H31 Fiscal Policies and Behavior of Economic Agents: Household