Working Paper Series, Center for Fiscal Studies,
Uppsala University, Department of Economics

Abstract: This paper studies the evolution of the modern Swedish inheritance taxation from its introduction in 1885 to its abolishment in 2004. Our contribution is twofold. First, we compute annual effective inheritance tax rates for differently sized bequests and different types of inherited assets (non-firm wealth and family firm equity), ac-counting for all relevant exemptions, deductions and valuation discounts. Second, we try to account for the changes in inheritance taxation. Ideology rather than mass mobili-zation or revenue maximization appears to drive the sharp tax increases of the 1930s through the 1960s. We document increased opportunities for tax planning for the wealthy, in particular a series of drastic tax cuts on inherited family firms from the 1970s onwards. This rise of avoidance opportunities for the rich, while more and more middle-class heirs paid notable inheritance taxes, contributed to a loss of legitimacy for the tax and its ultimate repeal in 2004

Keywords: Gift tax; Inheritance tax; Estate tax; Tax avoidance; Excess burden; Entre-preneurship; Ownership transfers of family firms

JEL-codes: D31; H20; K34

43 pages, July 6, 2014

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Magnus Henrekson and Daniel Waldenström, 'Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms and Tax Avoidance', Economic History Review

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