Miller, Helen, Pope, Thomas and Smith, Kate ORCID: 0000-0003-3229-0439
(2024)
Intertemporal income shifting and the taxation of business owner-managers.
Review of Economics and Statistics, 106 (1).
pp. 184-201.
ISSN 0034-6535
![]() |
Text (Intertemporal income shifting and the taxation of business owner-managers)
- Published Version
Available under License Creative Commons Attribution. Download (1MB) |
Abstract
We use newly linked tax records to show that the large responses of UK company owner-managers to personal taxes are due to intertemporal income shifting and not to reductions in real business activity. Around half of this shifting is short-term and helps prevent volatile incomes being taxed more heavily under progressive personal taxes. The remainder reflects systemic profit retention over long periods to take advantage of lower tax rates, including preferential treatment of capital gains. We find no evidence that this tax-induced retention increases business investment. It does, however, substantially reduce the tax revenue raised from high income business owners.
Item Type: | Article |
---|---|
Additional Information: | © 2024 The Author(s) |
Divisions: | LSE |
Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HA Statistics |
JEL classification: | H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies |
Date Deposited: | 05 Feb 2024 14:39 |
Last Modified: | 15 Aug 2024 20:19 |
URI: | http://eprints.lse.ac.uk/id/eprint/121654 |
Actions (login required)
![]() |
View Item |