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Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2012 (English)Report (Other academic)
Abstract [en]

This paper analyzes the evolution of tax progressivity in Sweden from both annual and lifetime perspectives. Using a rich micro panel with administrative records of incomes, taxes and benefits over the period 1968–2009, we calculate tax rates across the income distribution accounting for different tax bases as well as the role of transfers. The uniquely long time span also allows us to compute tax progressivity as realized over a cohort’s entire life cycle. Our main finding is that taxes are considerably less progressive over the lifetime than in any single year. In fact, life cycle taxes are close to proportional, bearing a redistributive effect of only a few percent. Intragenerational income mobility seems to be driving this result, although the Swedish economic crisis of the 1990s and the tax reforms of 1971 and 1991 are also important. Labor income taxes contribute less to progressivity in recent years, whereas transfers to unemployed and old-age pensioners have become increasingly important. These findings are robust to the use of different tax rates, tax bases, sample populations, rates of discounting and controls for reranking.

Place, publisher, year, edition, pages
Uppsala: Uppsala universitet, 2012. , 56 p.
Series
Working paper / Department of Economics, Uppsala University (Online), ISSN 1653-6975 ; 2012:11
Keyword [en]
Tax progressivity, Income distribution, Lifetime income, Redistributive effect
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:uu:diva-176181OAI: oai:DiVA.org:uu-176181DiVA: diva2:534553
Available from: 2012-06-18 Created: 2012-06-18 Last updated: 2012-06-27Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
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Language
  • de-DE
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  • en-US
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  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
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