Moving Towards Dual Income Taxation in Europe

Abstract

The paper summarizes the arguments in favor of a shift from comprehensive to dual income taxation and complements the discussion by an overview of tax reforms, which reveals the characteristic features of a dual income tax system. The scope of our analysis is not restricted to the Nordic countries; we also include other European countries whose tax reform steps can be regarded as a move toward a dual income tax. We focus on problems of running a final withholding income tax regime under individual and household taxation, including the most recent dual-income-tax reforms in the Nordic countries, but nevertheless argue that it may be worthwhile for the EU Commission to consider dual income taxation as a blueprint for income tax coordination in the EU.