Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1245: The Rise of Private Foundations as Owners of Swedish Industry: The Role of Tax Incentives 1862–2018

Dan Johansson (), Mikael Stenkula () and Niklas Wykman ()
Additional contact information
Dan Johansson: Örebro University School of Business, Postal: and HUI Research
Mikael Stenkula: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Niklas Wykman: Örebro University School of Business

Abstract: The tax system has at times favoured firm control through private foundations, which has been argued to inhibit high-impact entrepreneurship and economic growth. However, research has been hampered due to a lack of systematic historical tax data. The purpose of this study is threefold. First, we describe the evolution of tax rules for private foundations in Sweden between 1862 and 2018. Second, we calculate the marginal effective tax rate on capital income. Third, we examine the incentives to use private foundations as a means for corporate control by comparing the taxation of private foundations and of high-impact entrepreneurs. Tax incentives help explain why economically significant private foundations were founded between World War I and the 1960s.​

Keywords: Family firms; Foundations; High-impact entrepreneurship; Owner; Taxation

JEL-codes: D31; H32; K34; L26; N23; O43; P12; P14

74 pages, November 6, 2018

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