This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. May 2014
  5. Year-End Tax Planning of Top Management: Evidence from High-Frequency Payroll Data

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

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

  • Claus Thustrup Kreiner
  • Søren Leth-Petersen
  • Peer Ebbesen Skov
American Economic Review
vol. 104, no. 5, May 2014
(pp. 154–58)
Download Full Text PDF

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.

Citation

Kreiner, Claus Thustrup, Søren Leth-Petersen, and Peer Ebbesen Skov. 2014. "Year-End Tax Planning of Top Management: Evidence from High-Frequency Payroll Data." American Economic Review, 104 (5): 154–58. DOI: 10.1257/aer.104.5.154

Additional Materials

JEL Classification

  • H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
  • H26 Tax Evasion
  • J31 Wage Level and Structure; Wage Differentials
  • J33 Compensation Packages; Payment Methods
  • M10 Business Administration: General