<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>It has been argued that the Swedish tax system has favored firm control through industrial foundations, which should have inhibited entrepreneurship and economic growth. However, research has been hampered because of a lack of systematic historical tax data. The purpose of this study is to describe the evolution of tax rules for industrial foundations in Sweden between 1862 and 2018 and to calculate the marginal effective tax rate (METR) on capital income. The results show that the METR for an equity-financed investment is typically below 20% and occasionally peaks at approximately 40%. When the requirement that industrial foundations have to donate the bulk of capital income (less capital gains) for charitable purposes is treated as a tax, the METR is seldom below 50% when financing investments with new share issues and often exceeds 100%.</p>
</abstract>

It has been argued that the Swedish tax system has favored firm control through industrial foundations, which should have inhibited entrepreneurship and economic growth. However, research has been hampered because of a lack of systematic historical tax data. The purpose of this study is to describe the evolution of tax rules for industrial foundations in Sweden between 1862 and 2018 and to calculate the marginal effective tax rate (METR) on capital income. The results show that the METR for an equity-financed investment is typically below 20% and occasionally peaks at approximately 40%. When the requirement that industrial foundations have to donate the bulk of capital income (less capital gains) for charitable purposes is treated as a tax, the METR is seldom below 50% when financing investments with new share issues and often exceeds 100%.

The Taxation of Industrial Foundations in Sweden (1862–2018)

Nordic Tax Journal

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"The Taxation of Industrial Foundations in Sweden (1862\u20132018)"}

It has been argued that the Swedish tax system has favored firm control through industrial foundations, which should have inhibited entrepreneurship and...

The Taxation of Industrial Foundations in Sweden (1862–2018)

Article Category: Article

Publié en ligne: 11 mars 2021

Pages: 1 - 14

Reçu: 10 mai 2019

Accepté: 06 oct. 2019

DOI: https://doi.org/10.1515/ntaxj-2019-0006

Mots clés
business groups, entrepreneurs, family firms, foundations, taxation

© 2019 Dan Johansson et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The Taxation of Industrial Foundations in Sweden (1862–2018)

Article Category: Article

Publié en ligne: 11 mars 2021

Pages: 1 - 14

Reçu: 10 mai 2019

Accepté: 06 oct. 2019

DOI: https://doi.org/10.1515/ntaxj-2019-0006

Mots clésbusiness groups, entrepreneurs, family firms, foundations, taxation

© 2019 Dan Johansson et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Mots clés
business groups, entrepreneurs, family firms, foundations, taxation