RT Generic
A1 Denk, Oliver
T1 Tax Reform in Norway
JF OECD Economics Department Working Papers
YR 2012
FD Apr 03
K1 Norway
K2 taxation
K3 capital taxation
K4 wealth tax
K5 rate of return allowance
K6 allowance for corporate equity
K7 dual income tax system
K8 own-occupied housing
AB Norway’s dual income tax system achieves high levels of revenue collection and income redistribution, without overly undermining economic performance and while paying attention to environmental externalities. It treats capital and labour income in different ways: capital income is taxed at a single low rate, while labour income is taxed at progressive rates. However, effective tax rates on savings vary widely across asset classes. The favourable treatment of owner-occupied housing relative to financial savings should be reduced, preferably by taxing imputed rents at the standard 28% statutory rate. The wealth tax implies very high effective tax rates on savings, indicating that it either gives rise to tax avoidance or significantly inhibits growth. The government should investigate the issue and, if the growth-equity trade-off is too unfavourable to growth, phase out or lower the wealth tax. To restrain tax avoidance by the wealthy, the base of the gift and inheritance tax should be broadened. Overall, the reform package recommended in this paper would improve the allocation of capital and increase work and investment incentives. It could be designed to be broadly neutral in regard to income redistribution and public revenue.
PB Organisation for Economic Co-operation and Development
DO 10.1787/5k9bls0vpd5d-en
UL http://www.oecd-ilibrary.org/;jsessionid=5mutiih7yajp.x-oecd-live-01content/workingpaper/5k9bls0vpd5d-en