Reports 2013/29

Redistributional effects of the Norwegian tax system 2005–2013

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We apply recently developed methods for closer identification of tax policy changes over time on overall redistributional effects. Tax redistributional effects are measured in terms of a “common base” approach, which means that a benchmark is established which facilitates identifying how the redistributional efforts of policy-makers develop over time. We find that the changes of the dual income tax system of the 2006 reform have improved the redistributional effect of the schedule, and that the personal tax schedule of 2013 is more redistributive than the schedule of 2005. The new dividend tax which is levied on individual dividend incomes above a rate-of-return allowance contributes to this, whereas the reduced tax on top wage incomes reduces redistribution. The changes in the wealth tax over the time period have also contributed to more redistribution.

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