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Economic responses to fiscal incentives of owners of small corporations: evidence from the Netherlands.

Author

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  • Francois Lafont

    (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement)

Abstract

This paper investigates fisscal incentives for owners of small corporations, Directeur Grootaandeel-houders (DGAs), inherent to the Dutch tax code and how DGAs react to them. We find evidence of inter and intra-temporal income shifting, and of bunching at the kink point. These behavioural responses correspond to an elasticity of corporate income with respect to the-net-of-tax rate of 0.072. By comparing estimates for different subsamples of the DGA population, it is shown that this elasticity is composed of both a real-economic component and an income shifting component, principally via investment deductions.

Suggested Citation

  • Francois Lafont, 2018. "Economic responses to fiscal incentives of owners of small corporations: evidence from the Netherlands. ," Working Papers halshs-04504190, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04504190
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04504190
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