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Nordic Dual Income Taxation of Entrepreneurs

Seppo Kari, Vesa Kanniainen and Jouko Ylä-Liedenpohja

No 415, Discussion Papers from VATT Institute for Economic Research

Abstract: The paper shows how entrepreneurial taxes interact with the career choice of individuals, the quality of entrepreneurs, and their investment behavior. It is particularly relevant to differentiate the early effects on start-up enterprises with substantial uncertainty from the tax effects on mature firms where the uncertainty is resolved. Conditions are derived for the Nordic dual income tax to be neutral and they are found to be stringent. Profit expectations matter. The Nordic dual encourages (discourages) the establishment of new enterprises by entrepreneurs who anticipate high (low) profitability.

Keywords: Dual income taxation; enterprise taxes; Taxation; Verotus; Taxation and Social Transfers; Julkisen talouden rahoitus ja tulonsiirrot; H250 - Business Taxes and Subsidies including sales and value-added (VAT) (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ent, nep-pbe and nep-pub
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Citations: View citations in EconPapers (14)

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https://www.doria.fi/handle/10024/148401

Related works:
Journal Article: Nordic dual income taxation of entrepreneurs (2007) Downloads
Working Paper: Nordic Dual Income Taxation of Entrepreneurs (2005) Downloads
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