The Rise and Fall of Swedish Wealth Taxation

Nordic Tax Journal, Vol. 1, No. 1, pp. 9-35, 2014

27 Pages Posted: 18 May 2014

See all articles by Magnus Henrekson

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Gunnar Du Rietz

Research Institute of Industrial Economics (IFN)

Date Written: May 17, 2014

Abstract

We study the evolution of modern Swedish wealth taxation from its introduction in 1911 until it was abolished in 2007. The rules concerning valuation of assets, deductions/exemptions and tax schedules to characterize effective wealth tax schedules are described. These rules and schedules are used to calculate marginal and average wealth tax rates for three differently endowed owners of family firms and individual fortunes corresponding to a large, medium-sized and small firm. The overall trend in the direct wealth tax was rising until 1971 for owners of large and medium-sized firms and for individuals of equally-sized wealth consisting of non-corporate assets. Average direct wealth tax rates were low until 1934, except for 1913 when a progressive defense tax was levied. There were three major tax hikes: in 1934, when the wealth tax was more than doubled, in 1948 when tax rates were doubled again and in 1971 for owners of large firms and similarly sized non-corporate fortunes. Effective tax rates peaked in 1973 for owners of large firms and in 1983 for individuals with large non-corporate wealth. Reduction rules limited the wealth tax rates from 1934 for fortunes with high wealth/income ratios. The wealth tax on unlisted net business equity was abolished in 1991. Tax rates for wealthy individuals were decreased in 1991 and in 1992 and then remained at 0.5-1 percent through 2006, depending on whether the reduction rule was applicable. Tax rates for small-firm owners and small individual fortunes were substantially lower. Aggregate wealth tax revenues were relatively small: they never exceeded 0.4 percent of GDP in the postwar period and amounted to 0.16 percent of GDP in 2006

Keywords: Wealth tax, Tax avoidance, Entrepreneurship

JEL Classification: H20, K34, D31

Suggested Citation

Henrekson, Magnus and Du Rietz, Gunnar, The Rise and Fall of Swedish Wealth Taxation (May 17, 2014). Nordic Tax Journal, Vol. 1, No. 1, pp. 9-35, 2014. Available at SSRN: https://ssrn.com/abstract=2438201

Magnus Henrekson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
Sweden
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)

HOME PAGE: http://www.ifn.se/mh

Gunnar Du Rietz

Research Institute of Industrial Economics (IFN) ( email )

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

Register to save articles to
your library

Register

Paper statistics

Downloads
80
Abstract Views
646
rank
301,447
PlumX Metrics