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Neutral Taxation of Shareholder Income: A Norwegian Tax Reform Proposal

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  • Peter Birch Sørensen

    (Economic Policy Research Unit, Institute of Economics, University of Copenhagen)

Abstract

A Norwegian tax reform committee recently proposed a personal tax on the realized income from shares after deduction for an imputed risk-free rate of return. This paper describes the design of the proposed shareholder income tax and shows that it will be approximately neutral in several important dimensions, provided that full loss offsets are granted. Thus the tax allows some non-distortionary double taxation of corporate equity income. With an appropriate choice of tax rates, it also solves the problem of income shifting under a dual income tax. The final part of the paper clarifies the differences between the shareholder income tax and previous proposals for neutral capital income taxation.

Suggested Citation

  • Peter Birch Sørensen, 2003. "Neutral Taxation of Shareholder Income: A Norwegian Tax Reform Proposal," EPRU Working Paper Series 03-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:03-06
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    References listed on IDEAS

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    9. Mervyn A. King, 1980. "Savings and Taxation," NBER Working Papers 0428, National Bureau of Economic Research, Inc.
    10. Krister Andersson & Vesa Kanniainen & Jan Södersten & Peter Birch Sørensen, 1998. "Corporate Tax Policy in the Nordic Countries," Palgrave Macmillan Books, in: Peter Birch Sørensen (ed.), Tax Policy in the Nordic Countries, chapter 3, pages 72-137, Palgrave Macmillan.
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    17. Erik Fjaerli & Diderik Lund, 2001. "The choice between owner's wages and dividends under the dual income tax," Finnish Economic Papers, Finnish Economic Association, vol. 14(2), pages 104-119, Autumn.
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    Cited by:

    1. Kiesewetter, Dirk & Lachmund, Andreas, 2004. "Wirkungen einer Abgeltungssteuer auf Investitionsentscheidungen und Kapitalstruktur von Unternehmen [Effects of a flat rate tax on investment decisions and capital structure of companies]," MPRA Paper 27177, University Library of Munich, Germany.

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    More about this item

    Keywords

    tax neutrality; shareholder income tax; corporate-personal tax integration;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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