Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/72659 
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper No. 4219
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper analyzes the sources of heterogeneity in legal tax avoidance strategies across individuals. Three conditions are required for a taxpayer to participate in tax avoidance: incentive, access, and awareness. Using rich Swedish administrative panel data with a unique link between corporate and individual tax returns, we analyze individual participation in legal tax planning around the 2006 Swedish tax reform. Our results suggest that closely held corporations are utilized to facilitate income shifting across tax bases to reduce the individual's overall tax burden. We find that both tax incentives and awareness of tax incentives impact the decision to access income-shifting opportunities. Our results show that factors explaining participation in legal tax avoidance substantially differ from those explaining participation in illegal tax evasion.
Subjects: 
tax avoidance
income shifting
income taxation
dividend taxation
JEL: 
H20
H24
H25
H26
Document Type: 
Working Paper
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