RSSE: Wojciech Kopczuk (Columbia University) Business Organizational Forms and Taxation of High-Income Professionals: Evidence from Canadian Dr.

It is our pleasure that Wojciech Kopczuk (Columbia University) will present on Friday, May 22, 2026, at 12:45 in room RB212 about the topic “Business Organizational Forms and Taxation of High-Income Professionals: Evidence from Canadian Doctors”.

Registration is not required and anyone who would like to attend is warmly invited.

It is also possible to participate online via MS Teams at this link. In case of any connection issues, please contact lubomir.cingl@vse.cz.

ABSTRACT: Small businesses including high-income professionals choose to operate as corporations or pass-through entities such as sole proprietorship on the basis of non-tax and tax considerations. Incorporation may offer businesses lower effective tax rates on income earned and distributed to the owner-manager, as well as opportunities to defer taxes to the future. We show how taxes affect labor and investment decisions over the life cycle and derive a “sufficient statistics” formula for the impact of incorporation on social welfare. Using longitudinal administrative tax data from 2001 to 2017, we study the businesses of Canadian physicians and dentists. We identify the causal effects of taxes using a triple-difference design that exploits a 2006 reform that facilitated incorporation by doctors in Ontario. Incorporation rates in the treated group rose sharply after the reform compared to a matched control group of doctors in other provinces and business owners in other industries. Combined personal-plus-corporate incomes rose initially following the reform and then fell gradually, especially for doctors in their 50s and 60s. Effective tax rates fell marginally, mainly due to the shifting of income to family members. Doctors accumulated substantial retained earnings inside their corporations, suggesting they are used as deferred-tax retirement savings vehicles. Employment and business investment rose from a small base. Taken together, these results are consistent with both tax avoidance through a corporation and real response via increased labor supply and some business expansion after incorporation.

BIO: Wojciech Kopczuk is Professor of Economics and International and Public Affairs at Columbia University. He is a leading scholar in public economics, specializing in tax policy and the measurement of income and wealth inequality. His work examines how tax systems shape economic behavior and the distribution of income and wealth, with a strong emphasis on measurement, administrative data, and institutional detail. His current research focuses on taxation and behavioral responses of closely held businesses, particularly those owned by high-income professionals.