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The choice between owner's wages and dividends under the dual income tax

Author

Listed:
  • Erik Fjaerli

    (Research Department, Statistics Norway, Norway)

  • Diderik Lund

    (Department of Economics, University of Oslo, Norway)

Abstract

Tax-motivated shifting of income between different tax bases erodes tax revenues, confuses income statistics, and makes the effects of tax reforms unpredictable. Few studies have been able to use micro data to investigate this phenomenon. Using a rather unique data set, this study shows that the choice of type of payout from corporations to owners is strongly, but not uniquely, motivated by taxes. There are indications that the personal tax system is more clearly perceived by the owners than is the system of corporate taxes and regulations, and that own wage payments are motivated by rights to social security benefits.

Suggested Citation

  • 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.
    • Handle: RePEc:fep:journl:v:14:y:2001:i:2:p:104-119
    as

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    References listed on IDEAS

    as
    1. Gordon, Roger H. & MacKie-Mason, Jeffrey K., 1994. "Tax distortions to the choice of organizational form," Journal of Public Economics, Elsevier, vol. 55(2), pages 279-306, October.
    2. Peter Sørensen, 1994. "From the global income tax to the dual income tax: Recent tax reforms in the Nordic countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 1(1), pages 57-79, February.
    3. Kanniainen, Vesa & Sodersten, Jan, 1995. "The importance of reporting conventions for the theory of corporate taxation," Journal of Public Economics, Elsevier, vol. 57(3), pages 417-430, July.
    4. Heinz König & François Laisney & Michael Lechner & Winfried Pohlmeier, 1995. "Tax Illusion and Labour Supply of Married Women: Evidence from German Data," Kyklos, Wiley Blackwell, vol. 48(3), pages 347-368, August.
    5. Konig, Heinz, et al, 1995. "Tax Illusion and Labour Supply of Married Women: Evidence from German Data," Kyklos, Wiley Blackwell, vol. 48(3), pages 347-368.
    6. Fujii, Edwin T & Hawley, Clifford B, 1988. "On the Accuracy of Tax Perceptions," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 344-347, May.
    7. Brannas, Kurt & Karlsson, Niklas, 1996. "Estimating the perceived tax scale within a labor supply model," Economics Letters, Elsevier, vol. 52(1), pages 75-79, July.
    8. Alan J. Auerbach & James M. Poterba, 1987. "Why Have Corporate Tax Revenues Declined?," NBER Chapters, in: Tax Policy and the Economy, Volume 1, pages 1-28, National Bureau of Economic Research, Inc.
    9. Lund, Diderik, 1986. "Less than single dividend taxation: A note," Journal of Public Economics, Elsevier, vol. 29(2), pages 255-261, March.
    10. Nielsen, Soren Bo & Sorensen, Peter Birch, 1997. "On the optimality of the Nordic system of dual income taxation," Journal of Public Economics, Elsevier, vol. 63(3), pages 311-329, February.
    11. Arrazola, Maria & de Hevia, Jose & Sanz, Jose F., 2000. "More on tax perception and labour supply: the Spanish case," Economics Letters, Elsevier, vol. 67(1), pages 15-21, April.
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    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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