Intertemporal Income Shifting and the Danish 2010 Tax Reform

Forskningsenhed: EPRU

In practice, decisions to change the tax system will almost always create unintended incentives for, socalled, intertemporal income shifting where tax payers earn some income in one year but report this income to the tax authorities in another year (legally or illegally). This was also the case for the recent Danish tax reform, which created large tax incentives to postpone wage payments from the end of 2009 to the beginning of 2010 and to move pension contributions forward to 2009. The main purpose of this project is to investigate the extent to which people use their employer to postpone the payment of their earnings to after the implementation of the 2010 tax reform, where the highest marginal tax rate on earned income was reduced from 59,0 to 51,5 percent (skatteloftet).

Read the full project description here

You can read the Journal article Taxation and the Long Run Allocation of Labor,Journal of Public Economics 127, 2015 pp. 74-86, Claus Thustrup Kreiner, Jakob Roland Munch & Hans Jørgen Whitta-Jacobsen here

and you can read the Working paper Year-end Planning of Top Management: Evidence from High-Frequency Payroll Data, American Economic Review, Papers and Proceedings, 2014 pp.154-158, Claus Thustrup Kreiner, Søren Leth-Petersen & Peer Ebbesen Skov here