Working paper no. 2/2001

02-07-2008

Summary of Danish tax policy 1986-2002

The paper reviews the content and results of 1½ decade of tax reform in Denmark. By means of microeconomic indicators it is demonstrated how the reforms have affected household incentives and contributed to increased private sector savings as well as increased labour supply. The impact on income distribution indicates that the reforms have succeeded in reducing distortions without compromising distributional objectives. Lower marginal tax rates on labour and capital income have been balanced by tax base broadening. Possible future tax reforms will involve significantly harder trade-offs between efficiency and distributional objectives, as the scope for broadening the tax base further is limited.

Summary of Danish tax policy 1986-2002

Author: Arne Hauge Jensen