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Small Corporations' Income Shifting through Choice of Ownership Structure - a Norwegian Case

Author

Listed:
  • Annette Alstadsater

    (Department of Health Management and Health Economics, Faculty of Medicine, University of Oslo)

  • Knut Reidar Wangen

    (Department of Health Management and Health Economics, Faculty of Medicine, University of Oslo)

Abstract

We analyze how small business owners respond to the tax-minimizing incentives inherent in the Norwegian version of the dual income tax to shift income from the personal to the corporate tax base. The corporations in our sample seem to respond to tax incentives and change their ownership structure to qualify for reduction in overall tax payments. We document substantial cohort effects end suggest that postreform corporations were better able to form tax-reducing coalitions, compared with prereform corporations. It also appears that corporations who participate in this activity are more profitable and have more to gain from tax-minimizing income shifting.

Suggested Citation

  • 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.
    • Handle: RePEc:fep:journl:v:23:y:2010:i:2:p:73-87
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Bakke, Julia Tropina & Hopland, Arnt Ove & Møen, Jarle, 2019. "Profit shifting and the effect of stricter transfer pricing regulation on tax revenue," Discussion Papers 2019/11, Norwegian School of Economics, Department of Business and Management Science.
    3. Lefebvre, Marie-Noëlle & Lehmann, Etienne & Sicsic, Michaël, 2022. "Estimating the Laffer Tax Rate on Capital Income: Cross-base Responses Matter!," CEPR Discussion Papers 17540, C.E.P.R. Discussion Papers.
    4. Segura III, Jerome, 2016. "A Regional Tale of Two Income Taxes," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(2), December.
    5. Tazhitdinova, Alisa, 2020. "Are changes of organizational form costly? Income shifting and business entry responses to taxes," Journal of Public Economics, Elsevier, vol. 186(C).

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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