Swedish Capital Income Taxation (1862–2013)

Gunnar Rietz, Dan Johansson and Mikael Stenkula

Chapter Chapter 3 in Swedish Taxation, 2015, pp 123-178 from Palgrave Macmillan

Abstract: Abstract Taxation affects many economic decisions, including those related to labor supply, household savings, corporate investment, and entrepreneurial activity. In this chapter, we study the incentives provided by capital income taxation to invest. Capital income taxation affects the incentives to invest through its effect on the cost of capital, that is, the minimum rate of return that an investment must yield before taxes to provide the saver with the same net of tax return that (s)he would receive from lending at the market interest rate. Investment projects worth pursuing require that the profitability is higher than the cost of capital. The total effect of capital income taxation depends on the system of corporate taxation, personal income taxation, and wealth taxation, in addition to the interaction between these taxes and inflation.

Keywords: Capital Gain; Share Issue; Capital Income Taxation; Depreciation Allowance (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1057/9781137478153_3

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