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Shifts in Organizational Form under a Dual Income Tax System

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  • Thor O. Thoresen
  • Annette Alstadsæter

Abstract

There is scant evidence of business owners engaging in tax-motivated shifts in organizational form. The main reason is the lack of micro data for tracking the movement of taxpayers across organizational modes. By utilizing rich Norwegian micro data on individuals, firms, and firms' owners in the period 1993-2003, we are able to follow a panel of existing businesses and their owners over time and evaluate the effect of a shift in a firm's organizational form on the owner's personal income. We find that the interaction between business characteristics and features of the dual income tax system motivate organizational shifts that result in substantial income gains for the owners.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 66 (2010)
Issue (Month): 4 (December)
Pages: 384-418

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201012)66:4_384:siofua_2.0.tx_2-o

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Keywords: income shifting; small businesses; organizational shifts; dual income tax; instrumental variables;

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References

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Citations

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Cited by:
  1. John Creedy & Elin Halvorsen & Thor O. Thoresen, 2011. "Inequality Comparisons in a Multi-Period Framework: The Role of Alternative Welfare Metrics," Department of Economics - Working Papers Series 1127, The University of Melbourne.
  2. Thor O. Thoresen & Trine E. Vattø, 2013. "Validation of structural labor supply model by the elasticity of taxable income," Discussion Papers 738, Research Department of Statistics Norway.
  3. Drange, Nina, 2012. "Crowding out Dad? The Effect of a Cash-for-Care Subsidy on Family time Allocation," UiS Working Papers in Economics and Finance 2012/3, University of Stavanger.
  4. Thor O. Thoresen & Jørgen Aasness & Zhiyang Jia, 2008. "More realistic estimates of revenue changes from tax cuts," Discussion Papers 545, Research Department of Statistics Norway.
  5. Joel Slemrod & Thor Olav Thoresen & Erlend Eide Bø, 2013. "Taxes on the Internet: Deterrence Effects of Public Disclosure," CESifo Working Paper Series 4107, CESifo Group Munich.
  6. Annette Alstadsæter & Erik Fjærli, 2009. "Neutral taxation of shareholder income? Corporate responses to an announced dividend tax," International Tax and Public Finance, Springer, vol. 16(4), pages 571-604, August.
  7. Shafik Hebous, 2011. "Money at the Docks of Tax Havens: A Guide," CESifo Working Paper Series 3587, CESifo Group Munich.
  8. Arnaldur Sölvi Kristjánsson & Peter J. Lambert, 2012. "Structural Progression Measures for Dual Income Tax Systems," Working Papers 269, ECINEQ, Society for the Study of Economic Inequality.
  9. Annette Alstadsæter & Wojciech Kopczuk & Kjetil Telle, 2013. "Are closely-held firms tax shelters?," Discussion Papers 764, Research Department of Statistics Norway.
  10. Annette Alstadsæter & Knut Reidar Wangen, 2008. "Corporations’ Choice of Tax Regime when Transition Costs are Small and Income Shifting Potential is Large," CESifo Working Paper Series 2392, CESifo Group Munich.
  11. Peter J. Lambert & Thor O. Thoresen, 2011. "The inequality effects of a dual income tax system," Discussion Papers 663, Research Department of Statistics Norway.
  12. Erlend Bø & Peter Lambert & Thor Thoresen, 2012. "Horizontal inequity under a dual income tax system: principles and measurement," International Tax and Public Finance, Springer, vol. 19(5), pages 625-640, October.
  13. Annette Alstadsater & Knut Reidar Wangen, 2010. "Small Corporations' Income Shifting through Choice of Ownership Structure - a Norwegian Case," Finnish Economic Papers, Finnish Economic Association, vol. 23(2), pages 73-87, Autumn.

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