Scandinavian Working Papers in Business Administration

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2015/30: Taxing mobile capital and profits: The nordic welfare states

Guttorm Schjelderup ()
Additional contact information
Guttorm Schjelderup: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: This paper discusses trends in capital taxation and the role of the corporate tax rate in a welfare state. It provides a summary of the tax competition literature with special application to capital taxation in small versus large countries. A main finding from this literature is that small countries set lower taxes on capital than large countries. In line with this prediction the paper shows that the Nordic countries undertook tax reforms in the 1990s, which lead to lower ratios of statutory corporate to wage taxes than in most OECD countries. The second part of the paper is devoted to tax base erosion by multinationals and how to combat it. Finally, the paper offers some concluding remarks on redistribution and the pressures of tax competition.

Keywords: Capital taxation; profit shifting; government policies

JEL-codes: F15; F23; H20; H73

19 pages, October 30, 2015

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