Why the Norwegian shareholder income tax is neutral

Arbeitspapier

This note extends the work by Sørensen (2005) and others by demonstrating why the Norwegian Shareholder Income Tax may be neutral between the two sources of equity funds, i.e. new share issues and retained earnings, despite the fact that the retention of earnings to finance new investment does not add to the tax benefits. The analysis crucially relies on the assumption that the deduction for the imputed rate of return is capitalized into the market prices of corporate shares. Absent capitalization, the shareholder tax is rather likely to leave the distortions caused by the double taxation of corporate source income unaffected.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2019:1

Classification and Topics

• Classification: Wirtschaft ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Business Taxes and Subsidies including sales and value-added (VAT) ; Fiscal Policies and Behavior of Economic Agents: Firm
• Subject: Corporate and shareholder taxation ; tax neutrality ; cost of capital

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Södersten, Jan
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/197672
• URN: urn:nbn:se:uu:diva-375434
• Last update: 10.03.2025, 11:42 AM CET