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

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 invest... Mehr ...