On the optimality of the Nordic system of dual income taxation

• 成果类型: Article
• 署名作者: Nielsen, SB; Sorensen, PB
• 署名单位: Copenhagen Business School; University of Copenhagen
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• 发表日期: 1997
• 页码: 311-329
• 关键词: dual income tax; Optimal income taxation; human capital investment

摘要

In recent years the Nordic countries have introduced a so-called dual income tax which combines a proportional tax on capital income with progressive taxation of labour income. The paper argues that this asymmetric treatment of the two types of income can be defended on pure efficiency grounds, because the progressivity of the labour income tax serves to reduce the private return to human capital investment, thereby offsetting the tendency of a proportional comprehensive income tax to discriminate in favour of such investment. The analysis is based on an overlapping generations model of a small open economy where consumers face a trade-off between investment in human capital and investment in non-human capital. Extended versions of the model allow for liquidity constraints and an endogenous labour-leisure choice.