Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009
AbstractThis paper analyzes the evolution of tax progressivity in Sweden from both annual and lifetime perspectives. Using a rich micro panel with administrative records of incomes, taxes and benefits over the period 1968–2009, we calculate tax rates across the income distribution accounting for different tax bases as well as the role of transfers. The uniquely long time span also allows us to compute tax progressivity as realized over a cohort's entire life cycle. Our main finding is that taxes are considerably less progressive over the lifetime than in any single year. In fact, life cycle taxes are close to proportional, bearing a redistributive effect of only a few percent. Intragenerational income mobility seems to be driving this result, although the Swedish economic crisis of the 1990s and the tax reforms of 1971 and 1991 are also important. Labor income taxes contribute less to progressivity in recent years, whereas transfers to unemployed and old-age pensioners have become increasingly important. These findings are robust to the use of different tax rates, tax bases, sample populations, rates of discounting and controls for reranking.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6641.
Length: 59 pages
Date of creation: Jun 2012
Date of revision:
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Other versions of this item:
- Niklas Bengtsson & Bertil Holmlund & Daniel Waldenström, 2012. "Lifetime versus Annual Tax Progressivity: Sweden, 1968-2009," CESifo Working Paper Series 3856, CESifo Group Munich.
- Bengtsson, Niklas & Holmlund, Bertil & Waldenström, Daniel, 2012. "Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009," Working Paper Series, Center for Labor Studies 2012:13, Uppsala University, Department of Economics.
- Bengtsson, Niklas & Holmlund, Bertil & Waldenström, Daniel, 2012. "Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009," Working Paper Series, Center for Fiscal Studies 2012:8, Uppsala University, Department of Economics.
- Bengtsson, Niklas & Holmlund, Bertil & Waldenström, Daniel, 2012. "Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009," Working Paper Series 2012:11, Uppsala University, Department of Economics.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-LTV-2012-06-25 (Unemployment, Inequality & Poverty)
- NEP-PBE-2012-06-25 (Public Economics)
- NEP-PUB-2012-06-25 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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