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Whenever high marginal tax rates are discussed, the example of Sweden is brought forward. And typically the episode where they where close to 100% on labor income. But this has not always been so high, and it is certainly not the case now. What is the history of tax rates in Sweden?
Gunnar Du Rietz, Dan Johansson and Mikael Stenkula look back at 150 years and reconstruct marginal tax wedges for top and average earners. Tax wedges are different from tax rates in that they also incorporate other contributions, such as for social security and payroll taxes. I learned from this study that Sweden was in fact a very low tax country at the start of the 20th century, but this all changed with WWII, a succession of crises and the push for the welfare state that culminated in the 1960s. This change of attitude towards taxation and redistribution was relatively quick, and may have lead to excesses that have been built down since the 1990's. The paper also has a very detailed description of the tax system in Sweden over this period.
Gunnar Du Rietz, Dan Johansson and Mikael Stenkula look back at 150 years and reconstruct marginal tax wedges for top and average earners. Tax wedges are different from tax rates in that they also incorporate other contributions, such as for social security and payroll taxes. I learned from this study that Sweden was in fact a very low tax country at the start of the 20th century, but this all changed with WWII, a succession of crises and the push for the welfare state that culminated in the 1960s. This change of attitude towards taxation and redistribution was relatively quick, and may have lead to excesses that have been built down since the 1990's. The paper also has a very detailed description of the tax system in Sweden over this period.
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