The Taxation of Private Foundations in Sweden 1862–2018

Dan Johansson, Mikael Stenkula and Niklas Wykman

No 1245, Working Paper Series from Research Institute of Industrial Economics

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

Keywords: Family firms; Foundations; Taxation (search for similar items in EconPapers)
JEL-codes: K34 N23 N24 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2018-11-06, Revised 2019-10-02
New Economics Papers: this item is included in nep-ent, nep-his, nep-law and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1245

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