`Norwegian tax system benefits the wealthiest´

NHH Professor Petter Bjerksund, Senior Researcher Arnt Ove Hopland (SNF), and NHH Professor Guttorm Schjelderup.
The paper The Taxation of Norway’s Richest concludes that changes to the Norwegian tax system have disproportionately benefited the wealthiest, further cementing inequality. The study is published in Nordic Tax Journal, by NHH Professor Petter Bjerksund, Senior Researcher Arnt Ove Hopland (SNF), and NHH Professor Guttorm Schjelderup.
By Sigrid Folkestad

6 December 2024 14:26

`Norwegian tax system benefits the wealthiest´

The very wealthiest benefit from a far lower effective tax burden compared to those earning slightly less, a new study shows.

The paper

The Taxation of Norway’s Richest (2024) is published in Nordic Tax Journal, by Professor Petter Bjerksund, Department of Business and Management Science, Arnt Ove Hopland, Senior Researcher at Centre for Applied Research (SNF) at NHH, and Professor Guttorm Schjelderup, Department of Business and Management Science.  Bjerksund and Schjelderup are both researchers at Norwegian Centre for Taxation (NoCeT).

A new study from NHH sheds light on the underlying factor contributing to the regressive nature of Norway´s system at higher income levels.

Favor capital over labor income

Professor Petter Bjerksund, Senior researcher at SNF Arnt Ove Hopland and Professor Guttorm Schjelderup analyze how various aspects of the Norwegian tax code might contribute to the low average effective tax rate among the 1 percent richest.

Read the paper: The Taxation of Norway’s Richest

Associate Professor Floris Zoutman is managing editor of the Nordic Tax Journal. 

The paper, building on earlier findings by Rolf Aaberge and colleagues who found that

  • The richest 1 percent in Norway paid, on average, around 22 percent in tax between 2004 and 2018.
  • Meanwhile those in the top 90 to 99 percent income group paid an average of 33 percent

tax rate for the richest 

In their paper, Bjerksund, Hopland, and Schjelderup use a case study of a rich investor to identify which elements of the Norwegian tax system contribute to the low taxation of the wealthiest individuals.

Using well known statistical facts about the richest in Norway, they find that the average effective tax rate for the richest falls within the range of 14–21 percent.

These findings align with global studies, which demonstrate how tax systems that favor capital over labor income exacerbate wealth concentration at the top. The findings point to a system where the very wealthiest benefit from a far lower effective tax burden compared to those earning slightly less.

Cementing inequality

Bjerksund, Hopland and Schjelderup present a detailed case study of an investor who generates income solely from ownership and capital gains. This example serves two purposes, according to the researchers at the Department of Business and Management Science:

First, to align their findings with the conclusions of Aaberge and colleagues, and secondly, to provide a nuanced understanding of why the tax system becomes regressive at the highest income levels.

The study concludes that changes to the Norwegian tax system have disproportionately benefited the wealthiest, further cementing inequality.