Conference Agenda

We study the introduction of reduced dividend taxation for majoritarian shareholders

in Switzerland. We show that these tax cuts disproportionately benefited the very top of the income distribution and substantially reduced tax progressivity, lowering the effective personal income tax rate for the top 0.01% by about one third—from 28.5% to 19.8%. The reform also affects tax statistics, introducing a downward bias in measured top income shares and thereby distorting the assessment of income inequality in Switzerland.

We examine the effect of increasing dividend taxes on shareholders’ consump-tion using administrative data from Norway. Exploiting a large dividend tax increase, we show that higher dividend taxes lead to a persistent decline in con-sumption of owners of private firms as well as publicly traded firms. We also show that owners partially offset the consumption decline by reducing private savings. Firms, in turn, increase retained earnings but do not expand produc-tive investment. Instead, they accumulate financial assets, suggesting a realloca-tion of savings to the corporate level. Our findings highlight the consequences of dividend taxation on consumption and capital allocation.

This paper examines the behavioral responses of individual taxpayers to targeted tax benefits. We study a senior relief policy in Honduras that grants additional standard deductions to individuals aged 65 and older, leveraging a 2020 reform that expanded an existing deduction and automated benefit delivery. Using administrative records of personal income tax and a regression discontinuity design, we find that the expected reduction in tax burden is accompanied by substantial behavioral responses: beneficiaries report 46.1% higher adjusted gross income. This discontinuity is driven primarily by self-employed taxpayers, who exhibit an 54.7% increase, with taxpayers in special activities and services reporting AGI increases exceeding 70%. We find no changes in real activity, suggesting that the responses reflect reporting adjustments rather than underlying economic behavior. Our lower-bound estimate of evasion around the cutoff is 32.9%.

We construct a new cross-country database on personal income tax deductions using standardized case studies for 44 countries. We document substantial heterogeneity in the availability and effective use of deductions across countries. Housing-related deductions account for the largest reductions in taxable income and disproportionately benefit higher-income taxpayers. We also show that larger tax savings from deductions

are associated with lower hours worked but higher employment rates. While the overall number of deductions is unrelated to progressivity, housing-related provisions significantly reduce progressivity. Our findings highlight how the composition of tax expenditures shapes redistribution, labor supply, and tax system design.