Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009

Niklas Bengtsson (), Bertil Holmlund () and Daniel Waldenström

No 6641, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the evolution of tax progressivity in Sweden from both annual and lifetime perspectives. Using a rich micro panel with administrative records of incomes, taxes and benefits over the period 1968–2009, we calculate tax rates across the income distribution accounting for different tax bases as well as the role of transfers. The uniquely long time span also allows us to compute tax progressivity as realized over a cohort's entire life cycle. Our main finding is that taxes are considerably less progressive over the lifetime than in any single year. In fact, life cycle taxes are close to proportional, bearing a redistributive effect of only a few percent. Intragenerational income mobility seems to be driving this result, although the Swedish economic crisis of the 1990s and the tax reforms of 1971 and 1991 are also important. Labor income taxes contribute less to progressivity in recent years, whereas transfers to unemployed and old-age pensioners have become increasingly important. These findings are robust to the use of different tax rates, tax bases, sample populations, rates of discounting and controls for reranking.

Keywords: Kakwani index; redistributive effect; lifetime income; income distribution; tax progressivity; transfers (search for similar items in EconPapers)
JEL-codes: D31 H20 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2012-06
New Economics Papers: this item is included in nep-ltv, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published - published in: Scandinavian Journal of Economics, 2016, 118 (4), 619-645

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Related works:
Working Paper: Lifetime versus Annual Tax Progressivity: Sweden, 1968-2009 (2012)
Working Paper: Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009 (2012)
Working Paper: Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009 (2012)
Working Paper: Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009 (2012)
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