@article {27668,
	title = {Capital Taxation, Income Shifting, and Retained Earnings: Evidence from Dividend Tax Reforms},
	year = {Working Paper},
	abstract = {This paper analyzes the effects of dividend tax reforms on tax revenues, income shifting, and earnings retention. It examines two significant policy changes in Israel during the 2010s. Using administrative tax records, we study a permanent five-percentage point increase in the dividend tax rate in 2012, and a temporary tax relief enacted in 2017. The permanent tax hike triggered an immediate surge of over 100\% in reported dividend income and tax revenues. It did not generate a lasting shift in dividend flows. In contrast, the temporary relief of 2017 led to a sharp decline in dividend payments upon its expiration. Notably, firms increased earnings retention after the preferential rate ended, potentially anticipating similar future relief. We also find evidence of income shifting via wage-to-dividend conversions for tax planning. Finally, increased earnings retention after 2017 produced a 1- 2 percentage point downward bias in the top 1\% income share due to unreported dividend income.},
	author = {Yonatan Berman and Esteban F. Klor}
}
