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Preliminary figures show that NOK 348 million in extra payroll tax was calculated last year on high incomes in Norway. The additional tax is popularly referred to as the "bigwig" tax. This is an increase of all of 21 per cent from the year before.
Briefly put, the "bigwig" tax rule means that if an employee receives salary and other taxable benefits totalling more than 16G (16 times the social security baseline figure) from the same employer, the employer must figure an additional payroll tax of 10 per cent of the excess amount. In the revised national budget presented last year, a proposal was made to raise the rate to 15 per cent. 16G was equivalent to NOK 672,000 in 1997.
More employees with top salaries
When the "bigwig" tax was introduced in 1993, it netted NOK 216 million. Around 10,200 people in Norway had a salary of more than 16G that year. From then until 1996 the number of people subject to the "bigwig" tax grew steadily. From 1996 to 1997, however, the number of high earners surged. Around 14,000 people received a salary higher than NOK 672,000 from the same employer. An average of NOK 920,000 in salary and other taxable benefits was paid to high earners.
Weekly Bulletin issue no. 21, 1998