Skatteforsk warmly invites you to a seminar with Javier Feinmann (Paris School of Economics) on the 12th of February. He will present his paper on "Firm Behavior in Presumptive Tax Regimes". The seminar is open and all are welcome. If you're unable to join us in person, the seminar is streamed via the teams link in this invite.
Title:
Firm Behavior in Presumptive Tax Regimes
Abstract:
Simplified presumptive tax regimes for small and medium firms (SMEs) are used worldwide to reduce compliance and administrative costs, but they can distort production choices by changing incentives to hire and invest. This paper leverages a policy called \textit{Factor R}, where firms with a payroll-to-revenue ratio above 28\% would face a drop in the average revenue tax rate of 10pp. This policy induced to clean experiments to evaluate different dimensions of firms' behavior. For firms with a Factor R above 28\% pre-policy, it implied an exogenous drop in the revenue tax rate as they were automatically eligible for it. We estimate a revenue elasticity to the net of tax rate of 1.8. We find no effect on employment or employees' wages. For firms with Factor R below 28\% pre-policy, the policy discontinuously increased the return of increasing the payroll-to-revenue ratio. We find little evidence of responses through revenue suppression or higher employment and wages; instead, firms adjust primarily through income shifting, increasing the share of owner compensation paid as wages rather than dividends. We estimate an income-shifting elasticity above 2.
Practical information:
- Venue: Room T216, Tårnbygningen, NMBU, Campus Ås.
- Time: 11:15-12:00, 12th February 2026.
- Teams link: https://teams.microsoft.com/meet/37541356524156?p=qEmhokTD6Z3mAW4OQQ