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

Dan Johansson, Mikael Stenkula and Wykman Niklas ()
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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

Nordic Tax Journal, 2020, vol. 2020, issue 1, 1-14

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%.

Keywords: business groups; entrepreneurs; family firms; foundations; taxation (search for similar items in EconPapers)
JEL-codes: K34 N23 N24 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:vrs:notajo:v:2020:y:2020:i:1:p:1-14:n:2

DOI: 10.1515/ntaxj-2019-0006

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