How Should Capital Be Taxed? Theory and Evidence from Sweden

79 Pages Posted: 2 May 2018

See all articles by Spencer Bastani

Spencer Bastani

IFAU - Institute for Labour Market Policy Evaluation; Linnaeus University - Department of Economics and Statistics; Research Institute of Industrial Economics (IFN)

Daniel Waldenström

Research Institute of Industrial Economics (IFN)

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Abstract

This paper presents a comprehensive analysis of the role of capital taxation in advanced economies with a focus on the Swedish experience. We synthesize the existing theoretical literature, present facts about the capital stock and its distribution, review current capital tax practices and empirical findings regarding their effects on economic activity. The paper also examines the political feasibility of capital taxation by presenting results from a unique attitude survey targeted to a large representative sample of the Swedish population. Finally, we tie together our findings and discuss their implications for tax policy.

Keywords: optimal taxation, capital taxation, wealth tax, inheritance tax, corporate tax, income inequality, wealth inequality, political economy, preferences for redistribution

JEL Classification: D31, F38, H21, H24

Suggested Citation

Bastani, Spencer and Waldenström, Daniel, How Should Capital Be Taxed? Theory and Evidence from Sweden. IZA Discussion Paper No. 11475, Available at SSRN: https://ssrn.com/abstract=3170264

Spencer Bastani (Contact Author)

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Linnaeus University - Department of Economics and Statistics ( email )

Växjö, 351 06
Sweden

Research Institute of Industrial Economics (IFN) ( email )

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

Daniel Waldenström

Research Institute of Industrial Economics (IFN) ( email )

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

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