Intertemporal income shifting and taxing owners of closely held businesses
Owners of closely held businesses often receive favourable tax treatment and are highly responsive to the tax system. We show that the high responsiveness of owners of closely held UK businesses is entirely explained by intertemporal income shifting. Individuals shift income across years to smooth taxable income around tax kinks, but they also shift income over longer periods, allowing them to access favourable capital gains tax treatment at company liquidation. Ignoring income shifting leads to an overestimate of the potential deadweight loss from taxing these individuals. Our results are informative about the avoidance costs associated with tax breaks offered to “entrepreneurs”.

Please sign up for meetings below:
docs.google.com/spreadsheets/d/1E5r49PtKF_pYo9dooJaPckbIw0s_Uvs-j_-yT4hjxp4/edit#gid=0
Date: 31 January 2019, 16:30 (Thursday, 3rd week, Hilary 2019)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Kate Smith (UCL)
Organising department: Department of Economics
Part of: Applied Microeconomics Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark