Taxation of Swedish Firm Owners: The Great Reversal from the 1970s to the 2010s
| Jun 12, 2017
About this article
Article Category: Article
Published Online: Jun 12, 2017
Page range: 26 - 46
Received: Feb 03, 2017
Accepted: Mar 31, 2017
DOI: https://doi.org/10.1515/ntaxj-2017-0002
Keywords
© 2017 M. Henrekson
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.
Sweden’s wealthiest families in 1963/64 and Sweden’s wealthiest persons and families in 2016, in billion SEK and as a share of GDP.
| 1963/1964 | Billion SEK | Percentage of | 2016 | Billion SEK | Percentage of |
|---|---|---|---|---|---|
| GDP | GDP | ||||
| Fam. Broström | 0.165 | 0.180 | Ingvar Kamprad | 655 | 15.0 |
| Fam. Bonnier | 0.130 | 0.141 | Stefan Persson | 208 | 4.8 |
| Fam. Wallenberg | 0.125 | 0.136 | Hans Rausing | 102 | 2.3 |
| | Jörn Rausing | 57 | 1.3 | ||
| Fam. Wehtje | 0.100 | 0.109 | Antonia Ax:son Johnson | 55 | 1.3 |
| Fam. Söderberg | 0.095 | 0.104 | Melker Schörling | 55 | 1.3 |
| | Finn Rausing | 54 | 1.2 | ||
| Fam. Ählén | 0.080 | 0.087 | Kirsten Rausing | 54 | 1.2 |
| Fam. Ax:son Johnson | 0.080 | 0.087 | Fredrik Paulsen | 53 | 1.2 |
| | Ane Uggla | 47 | 1.1 | ||
| Fam. Kempe | 0.065 | 0.071 | Dan Sten Olsson | 45 | 1.0 |
| | Bertil Hult | 40 | 0.91 | ||
| Fam. Edstrand | 0.065 | 0.071 | Fredrik Lundberg | 34 | 0.78 |
| Fam. Bergengren | 0.050 | 0.054 | Carl Bennet | 24 | 0.55 |
| Fam. Kockum | 0.040 | 0.044 | Liselott Tham | 22 | 0.50 |
| Fam. Klingspor | 0.035 | 0.038 | |||
| Fam. Mark/Carlander | 0.025 | 0.027 | |||
| Fam. Stenbeck | 0.010 | 0.011 | |||
| Fam. Ericsson | 0.010 | 0.011 | |||
Effective marginal tax rates for different combinations of owners and sources of finance, 1991,1994, and 2005 (10 percent real pre-tax rate of return at actual inflation rates).
| Debt | New share issues | Retained earnings | |
|---|---|---|---|
| Households | 31.7 | 61.8 | 54.2 |
| Tax-exempt institutions | -9.4 | 4.0 | 18.7 |
| Insurance companies | 14.4 | 33.3 | 31.6 |
| Households From 1991 onwards, unlisted corporate shares were exempt from wealth taxation, which reduces effective marginal tax rates on debt, new share issues, and retained earnings to 27, 18, and 27 percent, respectively, in 1994 and to 23, 48, and 33 percent, respectively, in 2005. | 32.0 | 28.3 | 36.5 |
| Tax-exempt institutions | -14.9 | 21.8 | 21.8 |
| Insurance companies | 0.7 | 32.3 | 33.8 |
| Households From 1991 onwards, unlisted corporate shares were exempt from wealth taxation, which reduces effective marginal tax rates on debt, new share issues, and retained earnings to 27, 18, and 27 percent, respectively, in 1994 and to 23, 48, and 33 percent, respectively, in 2005. | 27.9 | 58.1 | 42.7 |
| Tax-exempt institutions | -1.2 | 23.2 | 23.1 |
| Insurance companies | 18.2 | 44.6 | 42.6 |
Effective marginal tax rates for different combinations of owners and sources of finance in 1970 and 1980 (10 percent real pre-tax rate of return at actual inflation rates).
| Debt | New share issues | Retained earnings | |
|---|---|---|---|
| Households | 51.3 | 122.1 | 57.1 |
| Tax-exempt institutions | -64.8 | 15.9 | 32.7 |
| Insurance companies | -45.1 | 42.4 | 41.2 |
| Households | 58.2 | 136.6 | 51.9 |
| Tax-exempt institutions | -83.4 | -11.6 | 11.2 |
| Insurance companies | -54.9 | 38.4 | 28.7 |
Effective owner-level taxation in 2015 for a firm having equity of SEK 60 million and a 10 percent real rate of return before tax when all profit accrues to the owner in the form of dividends.
| SEK | |
|---|---|
| Net worth/equity of firm | 60,000,000 |
| Nominal return on equity | 6,000,000 |
| Real return on equity before tax | 6,000,000 |
| Corporate tax (22 percent) | 1,320,000 |
| Dividend to owner | 4,680,000 |
| Dividend tax (20 percent) | 936,000 |
| Dividend after tax | 3,720,000 |
| Wealth tax on the net worth of the firm | 0 |
| Total tax payments | 2,256,000 |
| Total tax payments as a share of real return | 37.6 percent |
Inheritance taxation when deceased's own child inherits individually owned listed stock having a market value of SEK 200 billion according to the 1973, 1979, and 2015 tax code.
| 1973 | 1979 | 2015 | |
|---|---|---|---|
| Inheritance tax (65 percent of market value on death date) | 130 | 130 | 0 |
| Capital gains tax (10 percent of sales if sold at market value on death date) | 7.8 | 27.84 | 0 |
| Capital gains tax on sales to pay inheritance plus capital gains tax | 11.0 | 50.2 | 0 |
| Total | 141.0 | 180.2 | 0 |
Effective owner-level taxation in 1973 for a firm having equity of SEK 10 million and a 10 percent real rate of return before tax when all profit accrues to the owner in the form of dividends.
| SEK | |
|---|---|
| Net worth/equity of firm | 10,000,000 |
| Nominal return on equity | 1,700,000 |
| Real return on equity before tax | 1,000,000 |
| Corporate tax (52 percent) | 884,000 |
| Dividend to owner | 816,000 |
| Dividend tax (75 percent) | 612,000 |
| Dividend after tax | 204,000 |
| (Wealth tax on the net worth of the firm) | 240,000 |
| Wealth tax when reduction rule applicable | |
| (Total tax payments, full wealth tax | 1,736,000) |
| Total tax payments, reduced wealth tax | 1,616,000 |
| Total tax payments as a share of nominal return | 95.1 percent |
| Total tax payments as a share of real return | 161.6 percent |
Effective owner-level taxation of individually owned listed stock with a market value of SEK 200 billion and a dividend ratio of 3 percent according to the 1973 and 2015 tax code.
| 1973 | 2015 | |
|---|---|---|
| Market value of stock | 200 | 200 |
| Dividend | 6 | 6 |
| Dividend tax (78 percent in 1973; maximum 30 percent in 2015) | 4.7 | 0-1.8 |
| Wealth tax (halved because of reduction rule) | 2.5 | 0 |
| Net | -1.2 | 4.2-6 |
| Tax payments as a share of dividend payout (percent) | 120 | 0-30 |