Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms, and Tax Avoidance

27 Pages Posted: 18 Oct 2016

See all articles by Magnus Henrekson

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Daniel Waldenström

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2016

Abstract

This article studies the evolution of Swedish inheritance taxation since the late nineteenth century to its abolition in 2004. The contribution of this article is twofold. First, the annual effective inheritance tax rates are computed for different sizes of bequests and asset types, accounting for all relevant exemptions, deductions, and valuation discounts. Second, an attempt is made to explain changes in inheritance taxation over time. Ideology appears to be the main driver of the sharp tax increases of the 1930s to the 1960s. Wartime economies with higher pressures on the people induced politicians to raise inheritance taxes on the wealthy, primarily during the First World War. Increased opportunities for tax planning for the wealthy are also documented, most notably a series of tax cuts on inherited family firms in the 1970s. This rise in avoidance opportunities for the rich, while middle‐class heirs faced growing inheritance tax rates, undermined the legitimacy of the tax and led to its repeal.

Suggested Citation

Henrekson, Magnus and Waldenström, Daniel, Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms, and Tax Avoidance (November 2016). The Economic History Review, Vol. 69, Issue 4, pp. 1228-1254, 2016, Available at SSRN: https://ssrn.com/abstract=2853800 or http://dx.doi.org/10.1111/ehr.12280

Magnus Henrekson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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Daniel Waldenström

Research Institute of Industrial Economics (IFN) ( email )

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Stockholm, SE-102 15
Sweden

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