Dividend Taxes and Income Shifting

Scandinavian Journal of Economics, Forthcoming

34 Pages Posted: 9 Sep 2012 Last revised: 21 Sep 2016

See all articles by Annette Alstadsæter

Annette Alstadsæter

School of Economics and Business, NMBU

Martin Jacob

University of Navarra, IESE Business School

Multiple version iconThere are 2 versions of this paper

Date Written: April 2015


This paper analyzes whether a dividend tax cut for owner-managers of closely held corporations encourages income shifting, income generation, or both. We use rich Swedish administrative micro data from 2000 to 2011 comprising detailed firm- and individual-level information. We find robust evidence of extensive income shifting across tax bases in response to the 2006 Swedish dividend tax cut. Owner-managers of closely held corporations reclassify earned income as dividend income but do not increase total income. The response is more pronounced for owner-managers with tax incentives and with easier access to income shifting through a high ownership share.

Keywords: Income shifting, income generation, dividend taxes, closely held corporations, owner–managers

JEL Classification: H21, H25, H3

Suggested Citation

Alstadsaeter, Annette and Jacob, Martin, Dividend Taxes and Income Shifting (April 2015). Scandinavian Journal of Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2143191 or http://dx.doi.org/10.2139/ssrn.2143191

Annette Alstadsaeter

School of Economics and Business, NMBU ( email )

Norwegian University of Life Sciences

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

Martin Jacob (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics