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Taxation and inequality: A revisionary study of changing income inequality in Finland, 1961–2005

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  • Saska Heino

Abstract

Income inequality rose rapidly in Finland in the late 1990s and early 2000s. The prevailing discourse attributes this increase to a major tax reform in 1993. However, using time-series analysis and a novel profitability–pay-out metric, the present article argues that a correlation exists between profitability and the income share of the top 1 percent, the latter having been a driver of inequality. The article covers a 45-year period during which profitability and inequality first declined and then rose. The study demonstrates that while taxation has exerted an impact, profitability may also have been a fundamental factor behind changing inequality.

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  • Saska Heino, 2024. "Taxation and inequality: A revisionary study of changing income inequality in Finland, 1961–2005," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 72(2), pages 89-108, May.
    • Handle: RePEc:taf:sehrxx:v:72:y:2024:i:2:p:89-108
    DOI: 10.1080/03585522.2023.2170459
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