10  BIS Review 15/2010  Property taxes account for about two per cent of GDP in OECD countries. In Norway, the share is slightly higher than a half per cent. 5 It would be reasonable to introduce property tax rates and revenues on a par with that of other countries. This would generate additional annual tax revenues of around NOK 35 billion. 6  5  The tax on housing can be regarded as neutral when the return on housing investment relative to other investments is the same as it would have been without tax. In that case, mortgage interest deductibility must be matched by taxation of ownership and use of a dwelling. With a tax rate of 28 per cent and a mortgage rate of 7 per cent, this requires an annual tax that at the margin comes to about 2 per cent of the value of the dwelling. Denmark has a property tax at about this level. 6  A fully neutral taxation of property in relation to other capital will generate considerably higher tax revenues, cf. National Budget for 2010, Table 4.8, p. 124. BIS Review 15/2010  11  When evaluating the tax system, an increase in property taxes will be matched by a reduction in the tax on labour and entrepreneurship. As shown in the menu of options in the chart, an increase in property taxes will provide a basis for reducing the tax on ordinary income.
A businessman who owes more than he owns should be honest about it, she says. “… But what do you want [the businessman] to do?” asks Tjælde. “ To lay all his cards on the table, and so ruin both himself and the others? … In that case we should see a thousand failures every year, and fortunes lost one after the other everywhere! No, you have a level head, Valborg, but your ideas are narrow.” And this play by Bjørnson was written in 1875. Three imbalances in the world economy The financial crisis triggered the largest decline in output in advanced economies since the Second World War. The financial crisis erupted after a period of substantial debt accumulation among households and banks, combined with a real estate boom in the US and in some European countries. There were numerous examples of creative accounting as practised by Bjørnson’s businessman, Tjælde. The bubble burst, but extensive government measures helped put banking systems more or less back on their feet. Interest rates are close to zero in advanced economies, and governments have increased purchases of goods and services and reduced taxes. Many emerging market economies are exhibiting vigorous growth. But imbalances are building up, making the recovery fragile. 1  Bjørnstjerne Bjørnson, Three Dramas. The Editor – The Bankrupt – The King. 2009. This eBook is for the use of anyone anywhere at no cost and with almost no restrictions whatsoever.