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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26246
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| Title: | | Anticipating tax changes: evidence from the Finnish corporate income tax reform of 2005  |
| Authors: | | Kari, Seppo Karikallio, Hanna Pirttilä, Jukka |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2201 |
| Abstract: | | Using register-based panel data covering all Finnish firms in 1999-2004, we examine how corporations anticipated the 2005 dividend tax increase via changes in their dividend and investment policies. The Finnish capital and corporate income tax reform of 2005 creates a useful opportunity to measure this behaviour, since it involves exogenous variation in the tax treatment of different types of firms. The estimation results reveal that those firms that anticipated a dividend tax hike increased their dividend payouts by 10-50 per cent. This increase was not accompanied by a reduction in investment activities, but rather was associated with increased indebtedness in non-listed firms. The results also suggest that the timing of dividend distributions probably offsets much of the potential for increased dividend tax revenue following the reform. |
| Subjects: | | corporate income taxation dividends tax reform anticipation effects |
| JEL: | | H25 H32 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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