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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.

Suggested Citation

  • Thor O. Thoresen & Annette Alstadsæter, 2010. "Shifts in Organizational Form under a Dual Income Tax System," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(4), pages 384-418, December.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201012)66:4_384:siofua_2.0.tx_2-o
    DOI: 10.1628/001522108X549262
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    More about this item

    Keywords

    income shifting; small businesses; organizational shifts; dual income tax; instrumental variables;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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