Swedish Capital Income Taxation (1862–2013)

69 Pages Posted: 25 Feb 2014 Last revised: 30 Apr 2018

See all articles by Gunnar Du Rietz

Gunnar Du Rietz

Research Institute of Industrial Economics (IFN)

Dan Johansson

Örebro University School of Business

Mikael Stenkula

Research Institute of Industrial Economics (IFN)

Date Written: February 25, 2014

Abstract

This paper describes the evolution of capital income taxation in Sweden between 1862 and 2013, including corporate, dividends, capital gains, interest income, and wealth taxation. To illustrate this evolution, we present annual time series data regarding the marginal effective tax rates on capital income (METR) for a marginal investment financed with new share issues, retained earnings or debt. The METR is low and stable and does not exceed five percent until World War I, when it begins to drift somewhat upward and vary depending on the source of finance. The outbreak of World War II begins a period during which the magnitude and variation of the METR sharply increase. The METR peaks during the 1970s and 1980s and often exceeds 100 percent. The 1990–1991 tax reform and decreased inflation reduce the magnitude and variation of the METR, which varies between 15 and 35 percent at the end of the period examined.

Keywords: cost of capital, marginal effective tax rates, marginal tax wedges, tax reforms

JEL Classification: H21, H31, N44

Suggested Citation

Du Rietz, Gunnar and Johansson, Dan and Stenkula, Mikael, Swedish Capital Income Taxation (1862–2013) (February 25, 2014). IFN Working Paper No. 1004, Available at SSRN: https://ssrn.com/abstract=2400938 or http://dx.doi.org/10.2139/ssrn.2400938

Gunnar Du Rietz

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Dan Johansson

Örebro University School of Business ( email )

School of Business
Örebro, SE-70182
Sweden

Mikael Stenkula (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
Stockholm, 102 15
Sweden

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