Final answer:
Income shifting techniques involve strategies to move income to lower-tax entities or brackets, using methods like EITC and TANF, or by adopting specific business technologies to minimize tax liability.
Step-by-step explanation:
Income shifting techniques refer to strategies used by individuals or businesses to move income from higher-tax brackets to lower-tax brackets or from taxable entities to tax-exempt or lower-tax entities. These strategies can include the use of earned income tax credit (EITC), which assists the working poor by reducing the amount of tax owed and may result in a refund. Another approach to income shifting might be through the creation of entities or adoption of technologies that allow a company to avoid state or local taxes, as companies have the flexibility to adopt technologies or business methods that can help minimize their tax liability.
Moreover, the tax code itself offers various ways to redistribute income from high-income to low-income households, as it may impose corporate income tax on profits, individual income tax on salaries, and payroll taxes. Government transfers like Temporary Assistance for Needy Families (TANF), and revenue redistribution through programs like microcredit and microsavings can also impact how income is distributed across different economic groups.