Allocating Business Income between Capital and Labor under a Dual Income Tax The Case of Iceland

In contrast to most Scandinavian countries, Iceland allocates the income of closely held businesses (CHBs) between capital and labor based on administratively set minimum wages rather than an imputed return to book assets.  This paper  contrasts the relative tax burdens of the current minimum wage s...

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Bibliographic Details
Main Author: Matheson, Thornton
Other Authors: Kollbeins, Pall
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2012
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:In contrast to most Scandinavian countries, Iceland allocates the income of closely held businesses (CHBs) between capital and labor based on administratively set minimum wages rather than an imputed return to book assets.  This paper  contrasts the relative tax burdens of the current minimum wage system with asset-based allocation methods, and finds that switching to an asset-based method could increase tax revenues from CHBs in a generally progressive manner.  Predictably, the shift would also raise the tax burden of skilled labor-intensive industries more than it would that of capital-intensive industries
Physical Description:27 pages
ISBN:9781475515411