Akademik Veri Yönetim Sistemi
ESKISEHIR OSMANGAZI UNIVERSITESI IIBF DERGISI-ESKISEHIR OSMANGAZI UNIVERSITY JOURNAL OF ECONOMICS AND ADMINISTRATIVE SCIENCES, cilt.5, sa.2, ss.101-128, 2010 (ESCI)
Dual Income Taxation (DIT) model developed as a part of income taxation reforms in OECD countries gained progressively increased recognition since the early 1980s. One of the most important reasons for the wide recognition of DIT model is its defacto implementations with successive outcomes from the beginning of 1990s in Scandinavian countries. Denmark was the first country to introduce the DIT model in 1987 even though it subsequently moved to a more hybrid system with some post facto modifications. On the other hand, Norway, Sweden, and Finland continue to put into operation the DIT model with varying degrees of persistence. The distinct feature of the DIT model covers the separate taxation of the capital incomes and earned incomes. Moreover, although DIT model taxes capital income uniform low and proportional rates, it continues to tax labor incomes at high and progressive rate schedules. However, the large difference between top marginal tax rate on earned incomes and on capital incomes causes tax arbitrage, a main disadvantage of the DIT model. Therefore, Scandinavian countries have been seeking alternative approaches to reduce this tax arbitrage.