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 sys...

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Main Authors: Thornton Matheson, Pall Kollbeins
Format: Report
Language:unknown
Subjects:
Iceland
Online Access:http://www.imf.org/external/pubs/cat/longres.aspx?sk=40078
id ftrepec:oai:RePEc:imf:imfwpa:12/263
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spelling ftrepec:oai:RePEc:imf:imfwpa:12/263 2024-04-14T08:13:27+00:00 Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland Thornton Matheson Pall Kollbeins http://www.imf.org/external/pubs/cat/longres.aspx?sk=40078 unknown http://www.imf.org/external/pubs/cat/longres.aspx?sk=40078 preprint ftrepec 2024-03-19T10:26:56Z 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. Corporate taxes;Income taxes;Iceland;Labor;Taxation;Dual income tax, small business taxation, wage, wages, labor income, minimum wage, tax rate, Dual income txa, Business Taxes and Subsidies Report Iceland RePEc (Research Papers in Economics)
institution Open Polar
collection RePEc (Research Papers in Economics)
op_collection_id ftrepec
language unknown
description 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. Corporate taxes;Income taxes;Iceland;Labor;Taxation;Dual income tax, small business taxation, wage, wages, labor income, minimum wage, tax rate, Dual income txa, Business Taxes and Subsidies
format Report
author Thornton Matheson
Pall Kollbeins
spellingShingle Thornton Matheson
Pall Kollbeins
Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland
author_facet Thornton Matheson
Pall Kollbeins
author_sort Thornton Matheson
title Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland
title_short Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland
title_full Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland
title_fullStr Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland
title_full_unstemmed Allocating Business Income between Capital and Labor under a Dual Income Tax; The Case of Iceland
title_sort allocating business income between capital and labor under a dual income tax; the case of iceland
url http://www.imf.org/external/pubs/cat/longres.aspx?sk=40078
genre Iceland
genre_facet Iceland
op_relation http://www.imf.org/external/pubs/cat/longres.aspx?sk=40078
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