PhD Seminar: Bunching evidence from Australia’s income contingent loan scheme

Crawford School of Public Policy | Tax and Transfer Policy Institute
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Event details

PhD Seminar

Date & time

Monday 01 August 2022


Molonglo Theatre , Level 2, JG Crawford Building 132, Lennox Crossing, ANU


Mr Shane Johnson, PhD Candidate, Crawford School of Public Policy, ANU


Diane Paul
02 61259318

Building on the work of Chapman & Leigh (2009) we examine behavioural responses to the first repayment threshold in Australia’s Higher Education Contributions Scheme (HECS). We find significant bunching below the notch created by first HECS threshold; however, we also find that a large share of individuals face significant frictions which prevent them from reducing their income. These frictions likely explain low estimates of the observed elasticity of taxable income in bunching studies based on kinks. Following Kleven & Waseem (2013), we estimate structural elasticities of (repayment) taxable income unattenuated by frictions. We find significant heterogeneity in structural elasticities across different sub-groups of the population ranging from around 0.05 for wage earners to 0.64 for self employed tax filers.

Shane Johnson is a Sir Roland Wilson PhD Scholar at the ANU’s Tax and Transfer Policy Institute. His research is focused on understanding taxpayer responses to Australia’s personal income tax system.

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