During the early 1990s the Nordic countries undertook a series of sweeping tax reforms. These reforms combined ambitious base-broadening measures with the introduction of the so-called dual income tax which systematically separates the taxation of labour income from the taxation of capital...

Atkinson and Stiglitz (Journal of Public Economics 1976) show that when the government has access to non-linear income taxation and consumer preferences are separable between consumption and leisure, there is no need for differentiated commodity taxation. This paper examines the empirical...