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Nordic dual income taxation of entrepreneurs

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Author Info
Vesa Kanniainen ()
Seppo Kari ()
Jouko Ylä-Liedenpohja ()

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Abstract

The paper shows how entrepreneurial taxes interact with the career choice of individuals, the quality of entrepreneurs, and their investment behavior. It is particularly relevant to differentiate the early effects on start-up enterprises with substantial uncertainty from the tax effects on mature firms where the uncertainty is resolved. Conditions are derived for the Nordic dual income tax to be neutral and they are found to be stringent. Profit expectations matter. The Nordic dual encourages (discourages) the establishment of new enterprises by entrepreneurs who anticipate high (low) profitability. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s10797-007-9023-2
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Publisher Info
Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 14 (2007)
Issue (Month): 4 (August)
Pages: 407-426
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Handle: RePEc:kap:itaxpf:v:14:y:2007:i:4:p:407-426

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Related research
Keywords: Dual income taxation Enterprise taxes H25

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Ilmakunnas, P. & Kanniainen, V. & Lammi, U., 1999. "Entrepreneurship, Economic Risks, and Risk-Insurance in the Welfare State," University of Helsinki, Department of Economics 453, Department of Economics.
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  4. Lindhe, T. & Sodersten, J. & Oberg, A., 2001. "Economic Effects of Taxing Closed Corporations under a Dual Income Tax," Papers 2001:16, Uppsala - Working Paper Series.
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  5. Alstadsaeter, Annette, 2003. "The Dual Income Tax and Firms' Income Shifting through the Choice of Organizational Form and Real Capital Investments," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  7. Erik Fjaerli & Diderik Lund, 2001. "The choice between owner's wages and dividends under the dual income tax," Finnish Economic Papers, Finnish Society for Economic Research, vol. 14(2), pages 104-119, Autumn. [Downloadable!]
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  21. Hans-Werner Sinn, 1991. "Taxation and the Cost of Capital: The "Old" View, the "New" View and Another View," NBER Working Papers 3501, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  25. Keuschnigg, Christian & Nielsen, Soren Bo, 2003. "Tax policy, venture capital, and entrepreneurship," Journal of Public Economics, Elsevier, vol. 87(1), pages 175-203, January. [Downloadable!] (restricted)
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  26. Vesa Kanniainen & Seppo Kari & Jouko Ylä-Liedenpohja, 2005. "The Start-Up and Growth Stages in Enterprise Formation: The New View of Dividend Taxation Reconsidered," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Seppo Kari & Hanna Karikallio, 2007. "Tax Treatment of Dividends and Capital Gains and the Dividend Decision Under Dual Income Tax," VATT Discussion Papers 416, Government Institute for Economic Research (VATT). [Downloadable!]
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  2. Thor O. Thoresen and Annette Alstadsæter, 2008. "Shifts in organizational form under a dual income tax system," Discussion Papers 529, Research Department of Statistics Norway. [Downloadable!]
  3. Vesa Kanniainen & Paolo M. Panteghini, 2008. "Tax Neutrality: Illusion or Reality? The Case of Entrepreneurship," Working Papers 0803, University of Brescia, Department of Economics. [Downloadable!]
    Other versions:
  4. Seppo Kari & Hietala & Harri, 2006. "Investment Incentives in Closely Held Corporations and Finland's 2005 Tax Reform," VATT Discussion Papers 392, Government Institute for Economic Research (VATT). [Downloadable!]
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