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Swedish Labor Income Taxation (1862–2013)

Author

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  • Du Rietz, Gunnar

    () (Research Institute of Industrial Economics (IFN))

  • Johansson, Dan

    () (Örebro University School of Business)

  • Stenkula, Mikael

    () (Research Institute of Industrial Economics (IFN))

Abstract

This paper presents annual Swedish time-series data on the top marginal tax wedge and marginal tax wedges on labor income for a low-, average- and high-income earners for the period 1862 to 2013. The tax wedges were initially low and the tax system proportional. The tax wedges began to increase during World War I. The increase accelerated during World War II and through the post-war period. In the 1970s, the top marginal tax wedge was occasionally as high as 90 percent. The main explanations for this development were temporary crises that led to permanent tax increases, the expansion of the public sector and distributional ambitions, bracket creep and the introduction of employer-paid social security contributions. The 1990–1991 tax reform represents the beginning of a new and continuing period of decreasing marginal tax wedges.

Suggested Citation

  • Du Rietz, Gunnar & Johansson, Dan & Stenkula, Mikael, 2013. "Swedish Labor Income Taxation (1862–2013)," Working Paper Series 977, Research Institute of Industrial Economics, revised 10 Sep 2015.
  • Handle: RePEc:hhs:iuiwop:0977
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Marginal tax rates in Sweden
      by Economic Logician in Economic Logic on 2013-10-23 20:14:00

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    Cited by:

    1. Stenkula Mikael, 2014. "Swedish Taxation in a 150-year Perspective," Nordic Tax Journal, De Gruyter Open, vol. 2014(2), pages 10-42, November.
    2. Spencer Bastani & Jacob Lundberg, 2016. "Political Preferences for Redistribution in Sweden," CESifo Working Paper Series 6205, CESifo Group Munich.
    3. Magnus Henrekson & Daniel Waldenström, 2016. "Inheritance taxation in Sweden, 1885–2004: the role of ideology, family firms, and tax avoidance," Economic History Review, Economic History Society, vol. 69(4), pages 1228-1254, November.
    4. Bastani, Spencer & Lundberg, Jacob, 2016. "Political preferences for redistribution in Sweden," Working Paper Series 2016:13, Uppsala University, Department of Economics.
    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. Henrekson Magnus & Rietz Gunnar Du, 2014. "The Rise and Fall of Swedish Wealth Taxation," Nordic Tax Journal, De Gruyter Open, vol. 2014(1), pages 9-35, May.
    7. Du Rietz, Gunnar & Henrekson, Magnus, 2014. "Swedish Wealth Taxation (1911–2007)," Working Paper Series 1000, Research Institute of Industrial Economics, revised 10 Sep 2015.
    8. Stenkula, Mikael, 2013. "Taxation of Goods and Services in Sweden (1862 - 2010)," Working Paper Series 956, Research Institute of Industrial Economics, revised 10 Sep 2015.
    9. Lundberg, Jacob, 2017. "Analyzing tax reforms using the Swedish Labour Income Microsimulation Model," Working Paper Series 2017:12, Uppsala University, Department of Economics.
    10. Stenkula, Mikael, 2014. "Taxation of Real Estate in Sweden (1862–2013)," Working Paper Series 1018, Research Institute of Industrial Economics, revised 10 Sep 2015.

    More about this item

    Keywords

    Labor taxation; Marginal tax rate; Marginal tax wedge; Tax reforms;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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