Stabsseminar ved Kristian Rydquist

Professor Kristian Rydquist fra BI holder stabsseminar ved Institutt for foretaksøkonomi på fredag.

22.11.2000 - Elin F. Styve

Tema er Global Stock Market and Local Tax Policy

Tid og sted:
Fredag 24. november kl. 1215-1330 i Aud. B

Abstract
Imputation of Corporate Tax and Stock Trading: Evidence from Norway

In an integrated tax system, corporate income tax is imputed to investors through the distribution of a tax credit. In Norway, capital gains are taxed and dividends are tax ex-empt. Therefore, the tax credit goes along with the retained earnings. When investors sell the stock, they must add a number equal to the retained earnings per share to their bases. The ownership right to stepping up the basis is distributed to the stockholders at the turn of the year. This right has no value to investors who do not pay tax in Norway. Therefore, these investors want to temporarily sell their shares over the distribution to investors who can use the tax credit to shield personal tax. We find predictable, negative stock returns down to -10% over the distribution of the tax credit, as well as abnormal trading volume. The negative stock return reflects half the value of the tax credit. The findings imply significant loss of tax revenue as a result of stock trading.

Key words: Double taxation, imputation, stock trading, tax loss.

Kontaktperson: Hans K. Hvide (tlf. 9283)