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Political Preferences for Redistribution in Sweden

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  • Spencer Bastani
  • Jacob Lundberg

Abstract

We examine preferences for redistribution inherent in Swedish tax policy 1971–2012 using the inverse optimal tax approach. The income distribution is carefully characterized with the help of administrative register data and we employ behavioral elasticities reflecting the perceived distortionary effects of taxation. The revealed social welfare weights are high for non-workers, small for low-income earners, and hump-shaped around the median. At the top, they are always negative, especially so during the high-tax years of the 1970s and 80s. The weights on non-workers increased sharply in the 1970s fell drastically in the late 80s/early 90s, and have since then increased.

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  • Spencer Bastani & Jacob Lundberg, 2016. "Political Preferences for Redistribution in Sweden," CESifo Working Paper Series 6205, CESifo.
    • Handle: RePEc:ces:ceswps:_6205
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    Cited by:

    1. Johannes Hermle & Andreas Peichl, 2018. "Jointly Optimal Taxes for Different Types of Income," CESifo Working Paper Series 7248, CESifo.
    2. Dingquan Miao, 2022. "Optimal Labor Income Taxation - The Role of the Skill Distribution," LIS Working papers 823, LIS Cross-National Data Center in Luxembourg.
    3. Mayerhoffer, Daniel & Schulz-Gebhard, Jan, 2023. "Social segregation, misperceptions, and emergent cyclical choice patterns," BERG Working Paper Series 186, Bamberg University, Bamberg Economic Research Group.
    4. de Boer, Henk-Wim & Jongen, Egbert L. W. & Koot, Patrick, 2023. "Too Much of a Good Thing? Using Tax Incentives to Stimulate Dual-Earner Couples," IZA Discussion Papers 16702, Institute of Labor Economics (IZA).
    5. Felix J. Bierbrauer & Pierre C. Boyer & Andreas Peichl, 2021. "Politically Feasible Reforms of Nonlinear Tax Systems," American Economic Review, American Economic Association, vol. 111(1), pages 153-191, January.
    6. Spencer Bastani, 2023. "The Marginal Cost of Public Funds: A Brief Guide," CESifo Working Paper Series 10322, CESifo.
    7. Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
    8. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute of Labor Economics (IZA).
    9. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," Working Papers hal-02878153, HAL.
    10. Lundberg, Jacob, 2017. "Analyzing tax reforms using the Swedish Labour Income Microsimulation Model," Working Paper Series 2017:12, Uppsala University, Department of Economics.
    11. Boadway,Robin & Cuff,Katherine, 2022. "Tax Policy," Cambridge Books, Cambridge University Press, number 9781108949453.
    12. Miao, Dingquan & Selin, Håkan & Söderström, Martin, 2022. "Earnings responses to even higher taxes," Working Paper Series 2022:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    13. Asplund, Disa & Pyddoke, Roger, 2018. "Can increases in public transport supply be justified by concern for low-income individuals?," Working papers in Transport Economics 2018:7, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 30 Mar 2020.

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    More about this item

    Keywords

    redistribution; social welfare weights; optimal taxation; inverse optimal taxation; social preferences;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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