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Income Taxes and Redistribution in the Early Twentieth Century

Sara Torregrosa Hetland () and Oriol Sabaté ()
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Sara Torregrosa Hetland: Department of Economic History, Lund University, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden
Oriol Sabaté: Department of Economic History, University of Barcelona, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden

Authors registered in the RePEc Author Service: Sara Torregrosa-Hetland ()

No 224, Lund Papers in Economic History from Lund University, Department of Economic History

Abstract: This paper studies the developments in the income taxes of Sweden, the United Kingdom, and the United States during the first half of the twentieth century. We present the evolution of marginal and average effective tax rates, number of taxpayers, and income tax due over the whole income distribution, and calculate the corresponding indices of progressivity and redistribution. Our results show that redistribution through the income tax increased during the period, but with varying intensity and mechanisms. During World War I this was a joint effect of increases in the amount of revenue collected (average effective tax rate) and progressivity, whereas during World War II revenue increased again but progressivity diminished, as the tax incorporated more low- and middle-income taxpayers. The income tax in the United Kingdom was always the most redistributive of the three, and after 1945 also the one that remained most progressive.

Keywords: taxation; redistribution; progressivity; income tax; world wars (search for similar items in EconPapers)
JEL-codes: H23 H24 N42 N44 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2021-06-30, Revised 2022-09-05
New Economics Papers: this item is included in nep-acc, nep-his, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:luekhi:0224

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