Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105111
Authors: 
Harju, Jarkko
Matikka, Tuomas
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5090
Abstract: 
This study examines the extent of income-shifting between tax bases among the owners of privately held businesses. The dual income tax system in Finland offers noticeable incentives for income-shifting between wages and dividends for business owners. The dividend tax reform of 2005 enables us to study how this particular form of tax avoidance reacts to an exogenous change in tax rates. Our results support highly active income-shifting behavior. We find that the income-shifting effect is homogeneous across different owners and firms. However, we find that the size of the tax incentive affects the size of the response, indicating that costs related to income-shifting are important.
Subjects: 
business owners
income-shifting
income taxation
JEL: 
H24
H25
H32
Document Type: 
Working Paper

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