Lifetime Versus Annual Tax Progressivity: Sweden, 1968-2009

58 Pages Posted: 3 Jul 2012

See all articles by Niklas Bengtsson

Niklas Bengtsson

Uppsala University

Bertil Holmlund

Uppsala University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Daniel Waldenström

Research Institute of Industrial Economics

Date Written: June 29, 2012


This paper analyzes the evolution of tax progressivity in Sweden from both annual and lifetime perspectives. Using a rich micro panel with administrative records of incomes, taxes and benefits over the period 1968–2009, we calculate tax rates across the income distribution accounting for different tax bases as well as the role of transfers. The uniquely long time span also allows us to compute tax progressivity as realized over a cohort’s entire life cycle. Our main finding is that taxes are considerably less progressive over the lifetime than in any single year. In fact, life cycle taxes are close to proportional, bearing a redistributive effect of only a few percent. Intragenerational income mobility seems to be driving this result, but the Swedish economic crisis of the 1990s and the tax reforms of 1971 and 1991 are also important events. Labor income taxes contribute less to progressivity in recent years, whereas transfers to unemployed and old-age pensioners have become increasingly important. Our findings are robust to using different tax rates, tax bases, sample populations, discount rates and re-ranking controls.

Keywords: tax progressivity, income distribution, lifetime income, redistributive effect, Kakwani index, transfers

JEL Classification: D310, H200

Suggested Citation

Bengtsson, Niklas and Holmlund, Bertil and Waldenstrom, Daniel, Lifetime Versus Annual Tax Progressivity: Sweden, 1968-2009 (June 29, 2012). CESifo Working Paper Series No. 3856. Available at SSRN:

Niklas Bengtsson

Uppsala University ( email )

Bertil Holmlund (Contact Author)

Uppsala University - Department of Economics ( email )

SE-75120 Uppsala
+46 18 471 1122 (Phone)
+46 18 471 1478 (Fax)


CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Daniel Waldenstrom

Research Institute of Industrial Economics ( email )

P.O. Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15


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