FOR11 Business Taxation

• Topics

  The course will use economic theory to investigate how taxes affect the decisions of investors, firms, employees, and consumers. We also investigate how taxation may distort or enhance economic efficiency. The latter relates in particular to taxes as an instrument to internalize external effects (e.g. pollution) and thereby promote a sustainable approach to the use of public resources. Moreover, we study how the burden of taxation is shared between producers and consumers in the economy.

  The topics covered in this course will be closely related to pressing policy questions that are discussed by tax practitioners, managers, politicians, special-interest groups and policy consultants. For example, how are international companies taxed? How do they respond to tax policy? An interesting policy example is tax reductions for corporate income from intangible assets such as patents. The rationale is that lower tax rates on the output of research activity will increase corporate investment in R&D and generate positive externalities within the economy. Is this a useful policy to foster innovative activity? Under what circumstances would such policies be welfare-improving in small open economies such as Norway?

• Learning outcome

  Upon successful completion of the course the student

  Knowledge

  • Understands how the government can use taxation to redistribute resources from the rich to the poor.
  • Understands how taxes on negative externalities (e.g. air pollution) contribute to a sustainable use of public resources (e.g., clean air, environment etc.)
  • Understands how governments compete for mobile capital using fiscal policy instruments.
  • Knows how the international tax system works and can assess how tax policy changes. affect firms that are part of multinational enterprises (MNEs).

  Skills

  • Is able to analyze how taxes affect economic decisions made by firms, workers and consumers.
  • Is able to analyze how different forms of taxation affect the trade-off between economic efficiency and equality.

  General Competence

  • Is able to weight the cost and benefits of changes in tax policy.
  • Understands how changes in tax policy and policy experiments can be used to quantify the economic effects of taxation.
  • Is able to apply economic theory to real-world issues faced by governments, consumers and businesses.

• Teaching

  Lectures and exercises, partially online (streaming of sessions and short video recordings for self study). Physical meetings on at least 3 separate days.

• Credit reduction due to overlap

  100 % credit reduction towards VOA048.

• Compulsory Activity

  None.

• Assessment

  The final grade is based on a digital school exam, 2 hours, which counts 60 %. Excel will be available during the exam. One term paper with re-submission after feedback (max. 6 pages, in groups of 2-4 students), which counts 40 %. The students will work on the term paper between week 3 and week 7. Answers must be written in English. All elements have to be taken in the same semester.

• Grading Scale

  Grading scale A - F.

• Computer tools

  None

• Literature

  Jonathan Gruber, Public Finance and Public Policy, 5th edition, Worth Publishers.

  Recommended readings: To be decided

• Permitted Support Material

  One bilingual dictionary (Category I).

  Calculator (Category I).

  All in accordance with Supplementary provisions to the Regulations for Full-time Study Programmes at the Norwegian School of Economics Ch.4 Permitted support materialhttps://www.nhh.no/en/for-students/regulations/https://www.nhh.no/en/for-students/regulations/and https://www.nhh.no/en/for-students/examinations/examination-support-materials/https://www.nhh.no/en/for-students/examinations/examination-support-materials/