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The Taxation of Industrial Foundations in Sweden (1862–2018)

Author

Listed:
  • Johansson Dan

    (Örebro University School of Business, SE – 701 82 Örebro, Sweden)

  • Stenkula Mikael

    (Research Institute of Industrial Economics (IFN), P.O. Box 55665, SE – 102 15 Stockholm, Sweden)

  • Wykman Niklas

    (Örebro University School of Business, SE – 701 82 Örebro, Sweden and Research Institute of Industrial Economics (IFN), P.O. Box 55665, SE – 102 15 Stockholm, Sweden)

Abstract

It has been argued that the Swedish tax system has favored firm control through industrial foundations, which should have inhibited entrepreneurship and economic growth. However, research has been hampered because of a lack of systematic historical tax data. The purpose of this study is to describe the evolution of tax rules for industrial foundations in Sweden between 1862 and 2018 and to calculate the marginal effective tax rate (METR) on capital income. The results show that the METR for an equity-financed investment is typically below 20% and occasionally peaks at approximately 40%. When the requirement that industrial foundations have to donate the bulk of capital income (less capital gains) for charitable purposes is treated as a tax, the METR is seldom below 50% when financing investments with new share issues and often exceeds 100%.

Suggested Citation

  • Johansson Dan & Stenkula Mikael & Wykman Niklas, 2020. "The Taxation of Industrial Foundations in Sweden (1862–2018)," Nordic Tax Journal, Sciendo, vol. 2020(1), pages 1-14, January.
    • Handle: RePEc:vrs:notajo:v:2020:y:2020:i:1:p:1-14:n:2
    DOI: 10.1515/ntaxj-2019-0006
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    Cited by:

    1. Stevan Luković & Stefan Vržina & Milka Grbić & Miloš Pjanić, 2021. "The Neutrality Of Taxation Of Investment Projects In Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 66(230), pages 101-134, July – Se.
    2. Niklas Elert & Dan Johansson & Mikael Stenkula & Niklas Wykman, 2023. "The evolution of owner-entrepreneurs’ taxation: five tax regimes over a 160-year period," Journal of Evolutionary Economics, Springer, vol. 33(2), pages 517-540, April.

    More about this item

    Keywords

    business groups; entrepreneurs; family firms; foundations; taxation;
    All these keywords.

    JEL classification:

    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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