In this report, we combine theory and empirical estimates for how labor earnings respond to changes in tax rates and unearned income. We use lottery winnings to obtain variation in unearned income and tax reforms to obtain variation in the net of tax rate. Combining this information with...

We investigate bunching at personal tax thresholds over a 40-year period. At kinks, where the marginal tax rate rises, we find bunching among company owner-managers and the self-employed, but not those with only employment income. Notches, where the average rate rises, provide compelling...