Shifts in Organizational Form under a Dual Income Tax System

41 Pages Posted: 9 Apr 2008

See all articles by Thor O. Thoresen

Thor O. Thoresen

Statistics Norway - Research Department; CESifo (Center for Economic Studies and Ifo Institute)

Annette Alstadsæter

School of Economics and Business, NMBU

Date Written: April 1, 2008

Abstract

Evidence of owners of small businesses engaging in tax motivated shifts in organizational form is scarce. The main reason is lack of micro data enabling us to track tax-payers' movements across organizational modes. By exploiting new panel data that combine information from several public registers, we observe Norwegian owners of small businesses and their organizational forms in the period from 1993 to 2003. Under the hypothesis that certain characteristics of the Norwegian dual income tax system encourage shifts into widely held corporations, we observe outcomes for different organizational form choices. We show that owners of small firms that became widely held corporations have higher income growth than those that remained in self-employment or as a closely held corporation.

Keywords: income shifting, small businesses, organizational shifts, dual income tax

JEL Classification: H25, L22

Suggested Citation

Thoresen, Thor O. and Alstadsaeter, Annette, Shifts in Organizational Form under a Dual Income Tax System (April 1, 2008). CESifo Working Paper Series No. 2273, Available at SSRN: https://ssrn.com/abstract=1118260 or http://dx.doi.org/10.2139/ssrn.1118260

Thor O. Thoresen

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Annette Alstadsaeter (Contact Author)

School of Economics and Business, NMBU ( email )

Norwegian University of Life Sciences
As
Norway

HOME PAGE: http://https://sites.google.com/view/annettealstadsater/start

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