Capital Income Taxation of Swedish Households, 1862–2010

Johansson, Dan, Stenkula, Mikael and Du Rietz, Gunnar (2015). Capital Income Taxation of Swedish Households, 1862–2010. Scandinavian Economic History Review, 63(2): 154–177.

25 Pages Posted: 20 Apr 2021

See all articles by Dan Johansson

Dan Johansson

Örebro University School of Business

Mikael Stenkula

Research Institute of Industrial Economics (IFN)

Gunnar Du Rietz

Research Institute of Industrial Economics (IFN)

Date Written: April 6, 2014

Abstract

This study describes the evolution of capital income taxation, including corporate, dividend, interest, capital gains and wealth taxation, in Sweden between 1862 and 2010. To illustrate the evolution, we present annual time-series data on the marginal effective tax rates on capital income (METR) for a marginal investment financed with new share issues, retained earnings or debt. These data are unique in their consistency, thoroughness and time span. We identify four tax regimes separated by shifts in economic policy. The first regime stretches from 1862 until the Second World War. The METR is low, stable and does not exceed 5% until the First World War, when the METR begins to drift upwards and varies depending on the source of finance. The outbreak of the Second World War establishes the second regime, when the magnitude and variation of the METR sharply increase. The METR peaks during the third regime in the 1970s and 1980s and often exceeds 100%. The 1990–1991 tax reform represents the beginning of the fourth regime, which is characterised by lower and smaller variations in the METR. The METR varies between 15% and 40% at the end of this period.

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

JEL Classification: H21, H31, N44

Suggested Citation

Johansson, Dan and Stenkula, Mikael and Du Rietz, Gunnar, Capital Income Taxation of Swedish Households, 1862–2010 (April 6, 2014). Johansson, Dan, Stenkula, Mikael and Du Rietz, Gunnar (2015). Capital Income Taxation of Swedish Households, 1862–2010. Scandinavian Economic History Review, 63(2): 154–177. , Available at SSRN: https://ssrn.com/abstract=3821035

Dan Johansson (Contact Author)

Örebro University School of Business ( email )

School of Business
Örebro, SE-70182
Sweden

Mikael Stenkula

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
Stockholm, 102 15
Sweden

Gunnar Du Rietz

Research Institute of Industrial Economics (IFN) ( email )

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

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