International Tax and Public Finance

, Volume 11, Issue 4, pp 469–485 | Cite as

Economic Effects of Taxing Different Organizational Forms under the Nordic Dual Income Tax

  • Tobias Lindhe
  • Jan Södersten
  • Ann Öberg


This paper analyzes the economic effects of income splitting rules for closely held corporations and sole proprietorships/partnerships under the Nordic dual income tax. Income is split by imputing a return to capital, but the methods used for this differ between the Nordic countries. With a few notable exceptions, income splitting does well in the sense that the cost of capital is approximately the same in closely and widely held corporations. The special tax rules for sole proprietorships/partnerships manage to neutralize the impact of the high labor income tax on the cost of capital.

dual income tax tax avoidance corporate and non-corporate taxation cost of capital 


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Copyright information

© Kluwer Academic Publishers 2004

Authors and Affiliations

  • Tobias Lindhe
    • 1
  • Jan Södersten
    • 2
  • Ann Öberg
    • 3
  1. 1.Swedish Ministry of FinanceRegeringskansuetStockholmSweden
  2. 2.Department of EconomicsUppsala UniversityUppsalaSweden
  3. 3.National Institute of Economic ResearchStockholmSweden

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