Taxation and inequality: A revisionary study of changing income inequality in Finland, 1961–2005

Saska Heino

Scandinavian Economic History Review, 2024, vol. 72, issue 2, 89-108

Abstract: Income inequality rose rapidly in Finland in the late 1990s and early 2000s. The prevailing discourse attributes this increase to a major tax reform in 1993. However, using time-series analysis and a novel profitability–pay-out metric, the present article argues that a correlation exists between profitability and the income share of the top 1 percent, the latter having been a driver of inequality. The article covers a 45-year period during which profitability and inequality first declined and then rose. The study demonstrates that while taxation has exerted an impact, profitability may also have been a fundamental factor behind changing inequality.

Date: 2024
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DOI: 10.1080/03585522.2023.2170459

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