Year-End Tax Planning of Top Management: Evidence from High-Frequency Payroll Data

Claus Kreiner, Søren Leth-Petersen and Peer Skov

American Economic Review, 2014, vol. 104, issue 5, 154-58

Abstract: Using Danish high-frequency payroll data and tax reform variation, we detect year-end tax avoidance among top managers. Five to seven percent of top managers exploit year-end tax planning strategies to save taxes. Around 30 percent of the top managers engaging in year-end tax avoidance do so by retiming bonus payments while the rest shift regular wage income. However, bonus timing is most tax-sensitive. When considering all of the top managers receiving a December bonus, we find that more than one-quarter retime the bonus payment, whereas only 5 percent of those not receiving a bonus shift regular wage income.

JEL-codes: H24 H26 J31 J33 M10 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.5.154
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Citations: View citations in EconPapers (25)

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