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Swedish Inheritance and Gift Taxation, 1885–2004

  • Du Rietz, Gunnar

    ()

    (Research Institute of Industrial Economics)

  • Henrekson, Magnus

    ()

    (Research Institute of Industrial Economics)

  • Waldenström, Daniel

    ()

    (Uppsala Center for Fiscal Studies)

This paper studies the evolution of the modern Swedish inheritance taxation from its introduction in 1885 to its abolishment in 2004. A thorough description is offered of the basic principles of the tax, including underlying ideas and ambitions, tax schedules, and rules concerning valuation of assets, liability matters and deduction opportunities. Using these rules, we calculate inheritance tax rates for the whole period for a number of differently endowed family firms and individuals. The overall trend in inheritance tax burden exhibits an inverse-U shape for all firms and individuals. Up until the end of World War I, inheritance tax rates were very low (never above four percent). Tax rates began to increase in the interwar period with tax hikes in 1918, 1920 and 1934. After World War II tax rates increased rapidly for both inherited firms and individual fortunes. Effective tax rates peaked in the mid-1970s. Valuation reliefs were introduced in the 1970s, which sharply reduced tax rates for inherited family businesses. Tax rates for deceased individuals having non-corporate wealth were first cut in 1987 and then significantly reduced in 1991–1992. Finally, inheritance and gift tax revenues were relatively small, typically 0.1 to 0.2 percent of GDP.

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File URL: http://ucfs.nek.uu.se/digitalAssets/157/157776_12012_11_ucfs_updated-version.pdf
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2012:11.

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Length: 52 pages
Date of creation: 06 Nov 2012
Date of revision: 04 Aug 2015
Publication status: Published in Swedish Taxation: Developments since 1862, Henrekson, Magnus, Stenkula, Mikael (eds.), 2015, chapter 5, pages 223-265, Palgrave Macmillan.
Handle: RePEc:hhs:uufswp:2012_011
Contact details of provider: Postal:
Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden

Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
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