The impact of state taxes on pass-through businesses: Evidence from the 2012 Kansas income tax reform

• 成果类型: Article
• 署名作者: DeBacker, Jason; Heim, Bradley T.; Ramnath, Shanthi P.; Ross, Justin M.
• 署名单位: Indiana University System; Indiana University Bloomington; University of South Carolina System; University of South Carolina Columbia; United States Department of the Treasury
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2019.03.008
• 发表日期: 2019
• 页码: 53-75
• 关键词: Taxable income elasticity; Pass-through income; Business taxation; State income taxation; Kansas

摘要

In 2012, Kansas undertook a large-scale tax reform that excluded pass-through business income from individual taxation. In theory, these changes enhance the incentives to undertake more real economic activity, such as new business formation or expansion of existing businesses. The reform also increased the incentive to avoid taxation by recharacterizing income sources. This paper provides evidence of these effects using federal administrative income tax data spanning 2010-2014. Several findings suggest that, on both the extensive and intensive margins, the pass-through exclusion led to increased tax avoidance in the form of income recharacterization and shifting of effort from activities compensated through wages to those compensated with business income. We do not find much evidence, however, that the Kansas reform led to increases in real economic activity. (C) 2019 Elsevier B.V. All rights reserved.