Tax Reforms, Dividend Policy and Trends in Income Inequality Empirical Evidence based on Norwegian Data
This paper discusses the degree of intertemporal comparability of national estimates of income inequality when data are based on income tax records. The problem of comparability is particular crucial when major tax reforms have taken place and pre- and post-reform income data are used as basis for comparing trends in income inequality. Particular attention is paid to the definition and measurement of income from shares. The conventional wisdom that the increase in inequality in Norway during the 1990's was caused by a rising disequalizing contribution of capital income is questioned by the present results. The rise in income inequality coincided with the implementation of a major tax reform that affected the financing incentives in the corporate sector and the income shifting incentives in small enterprises. Thus, when tax reported dividends are used as a measurement of returns from shares, changes in the estimated income inequality may be a result of changes in the income reporting behavior rather than factual changes in the distribution of income. Our results suggest that the observed rise in income inequality during the 1990's to some extent can be explained by a change in the dividend policy of the corporations, induced by the tax reform in 1992. When the total return from shares is taken into account, we find less increase in the level of inequality and less increase in the contribution to inequality from share ownership.
|Date of creation:||Aug 2000|
|Contact details of provider:|| Postal: P.O.Box 8131 Dep, N-0033 Oslo, Norway|
Phone: (+47) 21 09 00 00
Fax: +47 - 62 88 55 95
Web page: http://www.ssb.no/en/
More information through EDIRC
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.:
- Devereux, Michael P & Hubbard, R Glenn, 2003.
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 10(4), pages 469-487, August.
- Michael P. Devereux & R. Glenn Hubbard, 2000. "Taxing Multinationals," NBER Working Papers 7920, National Bureau of Economic Research, Inc.
- Hans-Werner Sinn, 1991. "Taxation and the Cost of Capital: The "Old" View, the "New" View, and Another View," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 25-54 National Bureau of Economic Research, Inc.
- Hans-Werner Sinn, 1990. "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.
- Roger H. Gordon & David F. Bradford, 1980. "Taxation and the stock market valuation of capital gains and dividends : Theory and emphirical results," NBER Chapters, in: Econometric Studies in Public Finance, pages 109-136 National Bureau of Economic Research, Inc.
- Gordon, Roger H. & Bradford, David F., 1980. "Taxation and the stock market valuation of capital gains and dividends : Theory and emphirical results," Journal of Public Economics, Elsevier, vol. 14(2), pages 109-136, October.
- Rolf Aaberge, 2007. "Gini’s nuclear family," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(3), pages 305-322, December.
- Rolf Aaberge, 2006. "Gini's Nuclear Family," Discussion Papers 491, Statistics Norway, Research Department.
- Aaberge, Rolf, et al, 2000. " Unemployment Shocks and Income Distribution: How Did the Nordic Countries Fare during Their Crises?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 77-99, March.
- Rolf Aaberge & Anders Björklund & Markus Jäntti & Peder J. Pedersen & Nina Smith & Tom Wennemo, 1997. "Unemployment Shocks and Income Distribution How Did the Nordic Countries Fare During their Crises?," Discussion Papers 201, Statistics Norway, Research Department.
- Sinn, H.W., 1990. "Taxation And The Cost Of Capital: The "Old" View, And Another View," Papers 59, Princeton, Woodrow Wilson School - Discussion Paper.
- Martin Feldstein & James R. Hines Jr. & R. Glenn Hubbard, 1995. "Taxing Multinational Corporations," NBER Books, National Bureau of Economic Research, Inc, number feld95-1, April.
- Hicks, J. R., 1975. "Value and Capital: An Inquiry into some Fundamental Principles of Economic Theory," OUP Catalogue, Oxford University Press, edition 2, number 9780198282693.
- Roger H. Gordon & Jeffrey K. MacKie-Mason & R. Glenn Hubbard, 1995. "The Importance of Income Shifting to the Design and Analysis of Tax Policy," NBER Chapters, in: Taxing Multinational Corporations, pages 29-38 National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)