Tax Avoidance - A Natural Experiment

Uppsala Economics Working Paper No. 2007:13

26 Pages Posted: 27 Feb 2007

See all articles by Henry Ohlsson

Henry Ohlsson

Uppsala University - Department of Economics

Date Written: February 20, 2007

Abstract

The objective of this paper is to empirically study if and to what extent people legally reduce their tax payments. There are few empirical studies of tax avoidance although avoidance may seriously affect the possibilities to raise tax revenue. I use a sample of Swedish siblings receiving inheritances in 2004. These children of deceased had the opportunity to avoid inheritance taxes by partly or fully ceding their inheritances to the grandchildren. My first main result is that almost two thirds of the children avoid taxes. The likelihood of avoiding taxes decreases with age. The more of the taxes a child potentially can avoid, the more she avoids. Second, only one out of four minimize their tax payments. The more of the taxes a child potentially can avoid, the more likely he is to minimize taxes. And third, siblings tend to make the same choices whether or not to avoid taxes and to minimize taxes.

Keywords: tax avoidance, inheritances, cede to children

JEL Classification: H24, H26, D10

Suggested Citation

Ohlsson, Henry, Tax Avoidance - A Natural Experiment (February 20, 2007). Uppsala Economics Working Paper No. 2007:13, Available at SSRN: https://ssrn.com/abstract=965428 or http://dx.doi.org/10.2139/ssrn.965428

Henry Ohlsson (Contact Author)

Uppsala University - Department of Economics ( email )

Box 513
Uppsala, SE-75120
Sweden
+46 18 471 51 04 (Phone)

HOME PAGE: http://www.uueconomics.se/henryo/

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