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Allocating Business Income between Capital and Labor under a Dual Income Tax :, The Case of Iceland, Thornton Matheson, Pall Kollbeins

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
Table Of Contents
Cover; Abstract; Contents; I. Introduction; II. Capital-Based vs. Labor-Based Allocation Methods; Figures; 1. Marginal Tax Rates for GAM and MWM; 2. Average Tax Rates for GAM and MWM; 3. Evolution of Income Tax Rates, Iceland 1990-2010; III. Iceland's Dual Income Tax; A. The Minimum Wage Allocation Method; 4. Number of Businesses by Type, Iceland 1999-2010; Tables; 1. Evolution of Statutory Minimum Wages for CHBs in Iceland, 2000-10; B. The 20/50 Allocation Method; 2. CHB Wages and Dividends 2000-09; 3. Simulation of Shift from MWM to 20/50 Method for Tax Years 2000-09
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (28 p.)
Specific Material Designation
Form Of Item

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