The tax bias in favour of debt finance under the corporate income tax means that corporate debt ratios exceed the socially optimal level. This creates a rationale for thin-capitalization rules limiting the amount of debt that qualifies for interest deductibility. This paper sets up a model of...

A Norwegian tax reform committee recently proposed a personal tax on the realized income shares after deduction for an imputed risk-free rate of return. This paper describes the design of the proposed shareholder income tax and shows that it will be approximately neutral in several important...

The theory of optimal taxation has often been criticized for being of little practical policy relevance, due to a lack of robust theoretical results. This paper argues that recent advances in optimal tax theory has made that theory easier to apply and may help to explain some current trends in...