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The Norwegian Shareholder Tax Reconsidered

Author

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  • Södersten, Jan

    (Uppsala Center for Fiscal Studies)

  • Lindhe, Tobias

    (Uppsala Center for Fiscal Studies)

Abstract

In an article in International Tax and Public Finance, Peter Birch Sørensen (2005) gives an in-depth account of the new Norwegian Shareholder Tax, which allows the shareholders a deduction for an imputed risk-free rate of return. Sørensen’s positive evaluation appears as reasonable for a closed economy where the deduction for the imputed return is capitalized into the market prices of corporate shares. We show that in a small open economy where no capitalization occurs, the Norwegian shareholder tax is likely to leave the distortions caused by the corporate income tax unaffected, and to add new distortions to shareholders’ portfolio decisions.

Suggested Citation

  • Södersten, Jan & Lindhe, Tobias, 2010. "The Norwegian Shareholder Tax Reconsidered," Working Paper Series, Center for Fiscal Studies 2010:4, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uufswp:2010_004
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    References listed on IDEAS

    as
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    11. Mervyn A. King & Don Fullerton, 1984. "The United States," NBER Chapters, in: The Taxation of Income from Capital: A Comparative Study of the United States, the United Kingdom, Sweden, and Germany, pages 193-267, National Bureau of Economic Research, Inc.
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Risk-free rate tax deductions
      by Economic Logician in Economic Logic on 2011-06-01 19:59:00

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    Cited by:

    1. Stenkula, Mikael & Wykman, Niklas, 2022. "The Taxation of Closely Held Firms: The Achilles Heel of the Dual Income Tax System Reconsidered," Working Paper Series 1434, Research Institute of Industrial Economics.
    2. Peter Birch Sørensen, 2014. "Taxation of Shareholder Income and the Cost of Capital in a Small Open Economy," CESifo Working Paper Series 5091, CESifo.
    3. Annette Alstadsæter & Martin Jacob & Roni Michaely, 2017. "Do Dividend Taxes Affect Corporate Investment?," NBER Chapters, in: Personal Income Taxation and Household Behavior (TAPES), National Bureau of Economic Research, Inc.
    4. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute of Labor Economics (IZA).
    5. Jan Södersten, 2020. "Why the Norwegian shareholder income tax is neutral," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 32-37, February.
    6. Tobias Lindhe & Jan Södersten, 2016. "Dividend Taxation and the Cost of New Share Issues," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 72(2), pages 158-174, June.
    7. Rainer Niemann & Mariana Sailer, 2023. "Is analytical tax research alive and kicking? Insights from 2000 until 2022," Journal of Business Economics, Springer, vol. 93(6), pages 1149-1212, August.
    8. Annette Alstadsæter & Martin Jacob, 2016. "Dividend Taxes and Income Shifting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 693-717, October.
    9. Peter Birch Sørensen, 2014. "Taxation of shareholder income and the cost of capital in a small open economy," Working Papers 1428, Oxford University Centre for Business Taxation.
    10. Kari, Seppo & Ropponen, Olli, 2016. "A Note on the Effects of Income-Splitting under Dual Income Tax," Working Papers 81, VATT Institute for Economic Research.
    11. Kari Seppo, 2015. "Corporate tax in an international environment – Problems and possible remedies," Nordic Tax Journal, Sciendo, vol. 2015(1), pages 1-16, September.
    12. Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
    13. Lindhe, Tobias & Södersten, Jan, 2013. "Distortive Effects of Dividend Taxation," Working Paper Series, Center for Fiscal Studies 2013:9, Uppsala University, Department of Economics.
    14. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," World Inequality Lab Working Papers hal-02878153, HAL.
    15. Christophe André & Hyunjeong Hwang, 2018. "Tax reform to support growth and employment in Finland," OECD Economics Department Working Papers 1468, OECD Publishing.

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    More about this item

    Keywords

    Tax neutrality; open economy; shareholder taxation; corporate-personal tax integration; small firms;
    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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