Abstract
This article studies the evolution of Swedish inheritance taxation since the late nineteenth century to its abolition in 2004. The contribution of this article is twofold. First, the annual effective inheritance tax rates are computed for different sizes of bequests and asset types, accounting for all relevant exemptions, deductions, and valuation discounts. Second, an attempt is made to explain changes in inheritance taxation over time. Ideology appears to be the main driver of the sharp tax increases of the 1930s to the 1960s. Wartime economies with higher pressures on the people induced politicians to raise inheritance taxes on the wealthy, primarily during the First World War. Increased opportunities for tax planning for the wealthy are also documented, most notably a series of tax cuts on inherited family firms in the 1970s. This rise in avoidance opportunities for the rich, while middle‐class heirs faced growing inheritance tax rates, undermined the legitimacy of the tax and led to its repeal.
Highlights
The evolution of inheritance, gift and estate taxation across different economic systems addresses central questions regarding the trade-offs between egalitarian ambitions and incentive effects in the welfare state
Most studies of long-run trends in inheritance taxation base their analysis on statutory top marginal tax rates, i.e., the marginal rate paid by heirs of the largest inherited fortunes despite the amount of inheritance required to reach that rate or the number of heirs affected
We present a new long-run series of effective average inheritance tax rates computed on the basis of the full spectrum of institutional factors affecting the final tax payment
Summary
Suggested Citation: Henrekson, Magnus; Waldenström, Daniel (2014) : Inheritance Taxation in Sweden, 1885-2004: The Role of Ideology, Family Firms and Tax Avoidance, IFN Working Paper, No 1032, Research Institute of Industrial Economics (IFN), Stockholm. Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms and Tax Avoidance Magnus Henrekson and Daniel Waldenström. Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms and Tax Avoidance*
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