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Marginal taxation on labour income in Sweden from 1862 to 2010

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  • Mikael Stenkula
  • Dan Johansson
  • Gunnar Du Rietz

Abstract

This paper presents annual Swedish time series data on the top marginal tax wedge and marginal tax wedges on labour income for a low-, average- and high-income earner for the period 1862-2010. These data are unique in their consistency, thoroughness and timespan covered. We identify four distinct periods separated by major tax reforms. The tax system can be depicted as proportional, with low tax wedges until the Second World War. Next follows a period featuring increasing tax wedges. During the third period, starting with the 1971 tax reform and continuing throughout the 1980s, the efforts to redistribute income culminated and tax wedges peaked. The high-income earner started to pay the top marginal tax wedge which could be as high as almost 90%. The main explanations for this development are temporary crises leading to permanent tax increases, expansion of the public sector, distributional ambitions, increased local taxes, bracket-creep and the introduction of social security contributions paid by employers. The 1990-1991 tax reform represents the beginning of a new and still continuing period with decreasing marginal tax wedges.

Suggested Citation

  • Mikael Stenkula & Dan Johansson & Gunnar Du Rietz, 2014. "Marginal taxation on labour income in Sweden from 1862 to 2010," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 62(2), pages 163-187, June.
  • Handle: RePEc:taf:sehrxx:v:62:y:2014:i:2:p:163-187
    DOI: 10.1080/03585522.2013.836985
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    File URL: http://hdl.handle.net/10.1080/03585522.2013.836985
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    References listed on IDEAS

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    1. Alan T. Peacock & Jack Wiseman, 1961. "The Growth of Public Expenditure in the United Kingdom," NBER Books, National Bureau of Economic Research, Inc, number peac61-1.
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    Cited by:

    1. Stenkula Mikael, 2014. "Swedish Taxation in a 150-year Perspective," Nordic Tax Journal, Sciendo, vol. 2014(2), pages 10-42, November.
    2. Donal Mac Géidigh & em. Friedrich Schneider & Matthias Blum, 2016. "Grey Matters: Charting the Development of the Shadow Economy," CESifo Working Paper Series 6234, CESifo Group Munich.
    3. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    4. Andersson, Fredrik & Heyman, Fredrik & Norbäck, Pehr-Johan & Persson, Lars, 2016. "Has the Swedish Business Sector Become More Entrepreneurial than the U.S. Business Sector?," Working Paper Series 1147, Research Institute of Industrial Economics, revised 19 Nov 2018.
    5. Henrekson, Magnus & Stenkula, Mikael, 2015. "Swedish Taxation since 1862: An Overview," Working Paper Series 1052, Research Institute of Industrial Economics, revised 10 Sep 2015.
    6. Johansson, Dan & Stenkula, Mikael & Wykman, Niklas, 2018. "The Rise of Private Foundations as Owners of Swedish Industry: The Role of Tax Incentives 1862–2018," Working Papers 2018:10, Örebro University, School of Business.
    7. Weinschenk, Philipp, 2017. "Working conditions and regulation," Labour Economics, Elsevier, vol. 44(C), pages 177-191.
    8. repec:kap:empiri:v:45:y:2018:i:3:d:10.1007_s10663-017-9375-5 is not listed on IDEAS
    9. Magnus Henrekson, 2014. "Entrepreneurship, innovation, and human flourishing," Small Business Economics, Springer, vol. 43(3), pages 511-528, October.

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