Tax-Minded Executives and Corporate Tax Strategies: Evidence from the 2013 Tax Hikes

Source: Gerardo Perez Cavazos, Andreya Marie Silva, Applied Quantitative Consulting, LLC and Harvard Business School, November 15, 2014

From the abstract:
Exploiting the increase in personal tax rates due to the American Taxpayer Relief Act and Healthcare Act, we identify tax-minded executives who exhibit a preference for personal tax savings. We find that 2,281 top executives strategically realized their built in capital gains prior to the tax hikes to save nearly $741 million in personal taxes in 2012. These executives also save their shareholders taxes and save their firms cash taxes. Specifically, their firms distributed $8 billion in special and accelerated dividends in 2012, which saved shareholders nearly $700 million in taxes. Further, each tax-minded executive reduces a firm’s cash effective tax rate by 0.28%.