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International Tax and Public Finance

, Volume 12, Issue 6, pp 777–801 | Cite as

Neutral Taxation of Shareholder Income

  • Peter Birch SørensenEmail author
Policy Watch

Abstract

A Norwegian tax reform committee recently proposed a personal tax on the realized income from shares after deduction for an imputed risk-free rate of return. This paper describes the design of the proposed shareholder income tax and shows that it will be neutral with respect to investment and financing decisions and decisions to realize capital gains, provided that full loss offsets are granted. Thus the tax allows some non-distortionary double taxation of corporate equity income. With an appropriate choice of tax rates, it also solves the problem of income shifting under a dual income tax.

Keywords

tax neutrality shareholder income tax corporate-personal tax integration 

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Copyright information

© Springer Science + Business Media, Inc. 2005

Authors and Affiliations

  1. 1.Institute of Economics and EPRUUniversity of CopenhagenCopenhagen KDenmark

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