Dividend Taxation of Non-listed Companies, Resource Allocation and Productivity

Niku Määttänen and Olli Ropponen

No 56, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract We consider the taxation of non-listed companies and their owners in Finland. We analyse how the current highly non-linear dividend taxation influences the allocation of labour and capital across different firms, average labour productivity and the equilibrium wage level. To this end, we use a general equilibrium model of firm investment where firms may have different production technologies. We find that the current tax system is likely to distort resource allocation compared to linear dividend taxation. This works to lower the average labour productivity as well as the general wage level.

Keywords: Dividend taxation; Non-listed companies; Productivity (search for similar items in EconPapers)
JEL-codes: D92 G35 H24 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2016-08-26
New Economics Papers: this item is included in nep-acc, nep-cfn, nep-eff, nep-pbe and nep-pub
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