Income splitting among the self-employed

Herbert Schuetze

Canadian Journal of Economics, 2006, vol. 39, issue 4, 1195-1220

Abstract: Under individual taxation with progressive marginal tax rates, households in which the distribution of income is unequal benefit from attributing income to the lower income household member. Self-employment provides greater potential to `split' income in this way because of the absence of a third party reporting income. Using the Canadian experience as a case study, this paper develops a unique estimator of the incidence of illegal income splitting among self-employed couples. The results suggest that the incidence of income splitting among self-employed men in Canada is non-trivial; but no evidence is found that self-employed women attribute income to their spouses.

JEL-codes: H21 H26 H31 J22 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (9)

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