Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 572: Intra-household Tax Avoidance: An Application to Swedish Household Data

Thomas Aronsson (), Sven-Olov Daunfeldt () and Magnus Wikström ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Sven-Olov Daunfeldt: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Magnus Wikström: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: This paper analyzes whether households use house interest deductions to minimize family tax payment. By applying a household model in which tax deductions are associated with a cost, we relate the likelihood of minimizing the tax payment to variables associated with the budget constraint and other household characteristics. The results show that 88 percent of the households follow an optimal (arbitrage free) avoidance strategy, and the likelihood of minimizing taxes is influenced by income, age and house ownership experience.

Keywords: Income taxation; Tax avoidance; Housing deductions

JEL-codes: H24; H29

18 pages, November 1, 2001

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