Business owners and income-shifting: evidence from Finland

Jarkko Harju, Tuomas Matikka

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)


This study examines income-shifting between tax bases among the owners of privately held businesses. The dual income tax system in Finland offers noticeable incentives for income-shifting between wages and dividends for business owners. The dividend tax reform of 2005 enables us to study how this particular form of tax avoidance reacts to an exogenous change in tax rates. Our results support highly active income-shifting behavior. We find that the income-shifting effect is homogeneous across different owners and firms. However, we find that the size of the tax incentive affects the size of the response, suggesting that costs related to income-shifting are important.

Original languageEnglish
Pages (from-to)115-136
Number of pages22
Issue number1
Publication statusPublished - 1 Jan 2016
Externally publishedYes
Publication typeA1 Journal article-refereed


  • Business owners
  • Dividend tax reform
  • Income taxation
  • Income-shifting

ASJC Scopus subject areas

  • General Business,Management and Accounting
  • Economics and Econometrics


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