Tax planning and investment responses to dividend taxation
Koivisto, Aliisa (2023-03-20)
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Lataukset:
Koivisto, Aliisa
Valtion taloudellinen tutkimuskeskus
20.03.2023
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2023032032523
https://urn.fi/URN:NBN:fi-fe2023032032523
Kuvaus
peerReviewed
Tiivistelmä
This study explores how business owners respond to dividend taxes in different margins including tax planning and investment. I use administrative tax data on all privately held Finnish corporations and their main owners in 2006–2016. By using tax schedule discontinuities and changes in the schedule as variation, I find exceptionally clear dividend payment responses to tax rates. Evidence on the asset composition of firms indicates that a notable part of the payment response is due to inter-temporal income-smoothing, while changes in the tax schedule did not cause significant real responses in output or investment. Hence, dividend taxes capitalize into share values, as earnings are left in the firms to avoid higher dividend tax. In addition, studying the income composition of owners around tax changes reveals income-shifting between wage and dividends with negligible effect on gross income received from the firm.
Tutkimusteema
Business taxation and regulation
JEL
G38, H21, H24, H25
Avainsanat
dividend taxation, investment, income-shifting, bunching
Kokoelmat
- VATT Working Papers [164]