Marcelo Bergolo (Universidad de La República, Uruguay)

Seminario “How do Top Earners Respond to Taxation? Evidence from a Tax Reform in Uruguay”


Presenta: Marcelo Bergolo (Ph.D. in Economics, Universidad de La Plata, Argentina; Profesor Asociado, Departamento de Economía, Universidad de la República, Uruguay)

Abstract: In this paper, we analyze how top income earners respond to personal income tax using micro-based administrative tax records from Uruguay during the period 2009-2015. Our identification strategy exploits a reform to Uruguay's progressive labor income tax schedule that generated differential changes in the top tax rates among otherwise similar taxpayers at the top of the income distribution. Based on this exogenous source of variation and a diff-in-diff empirical strategy, we estimate elasticities on three margins of behavioral responses: intensive, extensive, income-shifting to (one minus) the top labor income marginal tax rates change. Our results in the intensive margin suggest relatively low elasticities for the whole sample of top incomes earners of around 0.26, although higher elasticities for the sample of self-employed (0.6). We do not find evidence that income reporting adjustments are driven by real-labor supply responses. The extensive margin elasticities of labor income for the whole sample of top incomes are slightly above 3. However, we present suggestive evidence that most of the extensive margin response is caused by income-shifting movements from labor to corporate income tax base. We estimate that at most 25% of the projected tax revenue increase from the top tax rate reform is lost through behavioral responses.


Datos del Seminario

Fecha de inicio:
23 de Junio, 2020 | 14:00 hrs.

Fecha de término
23 de Junio, 2020 | 15:00 hrs.