Bunching to Maximize Tax Credits: Evidence from Kinks in the U.S. Tax Schedule
Jacob A. Mortenson
- American Economic Journal: Economic Policy (Forthcoming)
We explore bunching at U.S. 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.
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