Main Research Areas

• Capital Taxation and the Open Economy

  Capital Taxation and the Open Economy

  Capital Taxation and the Open Economy

  The taxation of capital income is a core topic in public finance. The increasing openness of economies and free capital mobility now challenge the existing system of capital taxation on the individual and the corporate level.

  Tax planning and tax avoidance techniques pose specific challenges to corporate taxation. For example, several governments have reduced tax rates on corporate income with the aim to attract investments and jobs. At the same time, multinational firms shift profit to low-tax jurisdictions by manipulating intra-firm prices, and shift debt to high-tax countries to create greater tax deductions. Therefore, an objective of NoCeT is to analyze and quantify the consequences of such tax avoidance and evasion strategies, and to evaluate policy reactions. This involves analyzing of how tax policies and tax reforms affect firm behavior and the consequences for tax revenues.

  Increasing global mobility has also contributed to a more volatile economy. This challenges the traditional welfare state, partly because individuals face a greater income risk, and partly because traditional social insurance becomes more expensive with more mobile tax bases. In the area of personal capital income taxation, NoCeT focuses on the design of optimal tax policies, taking into account that individuals face income risk, and that human capital investment provides an alternative to saving in physical capital.

• Law and Economics

  Law and Economics

  Law and Economics

  Traditionally, there has been a gap between the fields of law and economics. Professionals with a law degree undertake the execution of Norwegian tax law, while economists have focused on the underlying principles for the tax system, its design and purpose. NoCeT offers excellent scope for cooperation and synergy by hosting a large environment of tax lawyers and economists. The focus of this research area is on issues in which economics and law have a natural intersection.

  Central research topics are related to the purpose of the tax, its design and the practice of law. Law evolves over time based on court decisions, which eventually, however, might turn out to be at odds with the original intentions of the tax system as laid out by the Parliament. The detection and analyses of areas where this is the case has huge spinoffs to the society, with implications for court trials as well as for the writing of law itself.

  Special emphasis is put on international legal topics related to capital taxation. In particular, research is done on pricing of intangible assets in international relations; questions related to the taxation of business and capital income within the Norwegian shipping industry (e.g., the tonnage tax scheme); and the taxation of derivative financial instruments.

• Behavioral Economics and Compliance

  Behavioral Economics and Compliance

  Behavioral Economics and Compliance

  Behavioral economics studies the implications of limited rationality and non-selfish motivation for economic choice. Over the last decades behavioral economics has accumulated overwhelming evidence that economic agents are sometimes irrational and that they not only are motivated by self-interest. The issue of tax compliance is closely related to the core issues of behavioral economics, but the implications of behavioral economics for tax policy have yet to be systematically explored. As a result, important issues of tax policy are poorly understood.

  NoCeT is very well positioned to contribute to this promising new field since behavioral economics and experimental economics has a strong position at NHH. Together with the Norwegian tax authorities and international collaborators, NoCeT plans to conduct economic experiments both in the lab and the field to study the role of social preferences and the role of limited rationality in tax compliance. Creating insights to the following issues is particularly of interest:

  1. What is the relative importance of the expected probability of detection and the expected penalty if detected for tax evasion?
  2. What is the relationship between moral motivation and tax compliance?
  3. How do expectations (reference points) about own income and income distribution affect tax compliance?
  4. What role does cognition and intuition play in tax compliance?