IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v104y2014i5p154-58.html
   My bibliography  Save this article

Year-End Tax Planning of Top Management: Evidence from High-Frequency Payroll Data

Author

Listed:
  • Claus Thustrup Kreiner
  • S?ren Leth-Petersen
  • Peer Ebbesen Skov

Abstract

Using Danish high-frequency payroll data and tax reform variation, we detect year-end tax avoidance among top managers. Five to seven percent of top managers exploit year-end tax planning strategies to save taxes. Around 30 percent of the top managers engaging in year-end tax avoidance do so by retiming bonus payments while the rest shift regular wage income. However, bonus timing is most tax-sensitive. When considering all of the top managers receiving a December bonus, we find that more than one-quarter retime the bonus payment, whereas only 5 percent of those not receiving a bonus shift regular wage income.

Suggested Citation

  • Claus Thustrup Kreiner & S?ren Leth-Petersen & Peer Ebbesen Skov, 2014. "Year-End Tax Planning of Top Management: Evidence from High-Frequency Payroll Data," American Economic Review, American Economic Association, vol. 104(5), pages 154-158, May.
  • Handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:154-58
    Note: DOI: 10.1257/aer.104.5.154
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.5.154
    Download Restriction: no

    File URL: http://www.aeaweb.org/aer/data/10405/P2014_1092_data.zip
    Download Restriction: no

    File URL: http://www.aeaweb.org/aer/ds/10405/P2014_1092_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    References listed on IDEAS

    as
    1. Claus Thustrup Kreiner & Søren Leth-Petersen & Peer Ebbesen Skov, 2016. "Tax Reforms and Intertemporal Shifting of Wage Income: Evidence from Danish Monthly Payroll Records," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 233-257, August.
    2. Slemrod, Joel, 1995. "Income Creation or Income Shifting? Behavioral Responses to the Tax Reform Act of 1986," American Economic Review, American Economic Association, vol. 85(2), pages 175-180, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kreiner, Claus T. & Reck, Daniel & Skov, Peer Ebbesen, 2017. "Do Lower Minimum Wages for Young Workers Raise their Employment? Evidence from a Danish Discontinuity," CEPR Discussion Papers 12539, C.E.P.R. Discussion Papers.
    2. Neisser, Carina, 2017. "The elasticity of taxable income: A meta-regression analysis," ZEW Discussion Papers 17-032, ZEW - Leibniz Centre for European Economic Research.
    3. Hagen, Johannes, 2016. "What are the Health effects of postponing retirement? An instrumental variable approach," Working Paper Series 2016:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Engström, Per & Nordblom, Katarina & Stefansson, Arnaldur, 2018. "Multiple Misbehaving:Loss Averse and Inattentive to Monetary Incentives," Working Papers in Economics 729, University of Gothenburg, Department of Economics.
    5. Doerrenberg, Philipp & Peichl, Andreas & Siegloch, Sebastian, 2014. "Sufficient Statistic or Not? The Elasticity of Taxable Income in the Presence of Deduction Possibilities," IZA Discussion Papers 8554, Institute of Labor Economics (IZA).
    6. Jarkko Harju & Tuomas Matikka, 2016. "The elasticity of taxable income and income-shifting: what is “real” and what is not?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 640-669, August.
    7. repec:kap:itaxpf:v:26:y:2019:i:1:d:10.1007_s10797-018-9493-4 is not listed on IDEAS
    8. repec:nbr:nberch:13470 is not listed on IDEAS
    9. Carina Neisser, 2017. "The elasticity of taxable income: A meta-regression analysis," Working Papers 2017/10, Institut d'Economia de Barcelona (IEB).
    10. repec:eee:pubeco:v:151:y:2017:i:c:p:41-55 is not listed on IDEAS
    11. Johannes Hermle & Andreas Peichl, 2018. "Jointly Optimal Taxes for Different Types of Income," CESifo Working Paper Series 7248, CESifo Group Munich.
    12. repec:spr:jopoec:v:31:y:2018:i:1:d:10.1007_s00148-017-0664-x is not listed on IDEAS
    13. Philipp Doerrenberg & Andreas Peichl & Sebastian Siegloch, 2017. "The Elasticity of Taxable Income in the Presence of Deduction Possibilities," NBER Chapters,in: Personal Income Taxation and Household Behavior (TAPES) National Bureau of Economic Research, Inc.
    14. Neisser, Carina, 2018. "The Elasticity of Taxable Income: A Meta-Regression Analysis," IZA Discussion Papers 11958, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:154-58. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.