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Taxing Mobile Capital and Profits: The Nordic Welfare States

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  • Guttorm Schjelderup

Abstract

This paper discusses trends in capital taxation and the role of the corporate tax rate in a welfare state. It provides a summary of the tax competition literature with special application to capital taxation in small versus large countries. A main finding from this literature is that small countries set lower taxes on capital than large countries. In line with this prediction the paper shows that the Nordic countries undertook tax reforms in the 1990s, which lead to lower ratios of statutory corporate to wage taxes than in most OECD countries. The second part of the paper is devoted to tax base erosion by multinationals and how to combat it. Finally, the paper offers some concluding remarks on redistribution and the pressures of tax competition.

Suggested Citation

  • Guttorm Schjelderup, 2015. "Taxing Mobile Capital and Profits: The Nordic Welfare States," CESifo Working Paper Series 5603, CESifo.
  • Handle: RePEc:ces:ceswps:_5603
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 25/1/16: Nordic Model: Not Too Heavy Handed on Corporate Profits
      by Constantin Gurdgiev in True Economics on 2016-01-25 22:16:00

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    More about this item

    Keywords

    capital taxation; profit shifting; government policies;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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