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Income Taxes and Redistribution in the Early Twentieth Century

Torregrosa Hetland, Sara LU and Sabaté, Oriol (2021) In Lund Papers in Economic history
Abstract
This paper studies the developments in the income taxes of Sweden, the United Kingdom, and the United States during the first half of the twentieth century. We present the evolution of marginal and average effective tax rates, number of taxpayers, and income tax due over the whole income distribution, and calculate the corresponding indices of progressivity and redistribution.
Our results show that redistribution through the income tax increased during the period, but with varying intensity and mechanisms. During World War I this was a joint effect of increases in the amount of revenue collected (average effective tax rate) and progressivity, whereas during World War II revenue increased again but progressivity diminished, as the tax... (More)
This paper studies the developments in the income taxes of Sweden, the United Kingdom, and the United States during the first half of the twentieth century. We present the evolution of marginal and average effective tax rates, number of taxpayers, and income tax due over the whole income distribution, and calculate the corresponding indices of progressivity and redistribution.
Our results show that redistribution through the income tax increased during the period, but with varying intensity and mechanisms. During World War I this was a joint effect of increases in the amount of revenue collected (average effective tax rate) and progressivity, whereas during World War II revenue increased again but progressivity diminished, as the tax incorporated more low- and middle-income taxpayers. The income tax in the United Kingdom was always the most redistributive of the three, and after 1945 also the one that remained most progressive. (Less)
Please use this url to cite or link to this publication:
author
and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
Taxation, Redistribution, Progressivity, Income tax, World Wars, H23, H24, N42, N44
in
Lund Papers in Economic history
issue
2021:224
pages
47 pages
project
Taxing for the welfare state: public finances and progressivity in the rise of social spending (1910-1970)
Taxing for the welfare state: progressivity in the rise of social spending (1910-1970)
language
English
LU publication?
yes
id
40b6bcfa-6b85-4e4e-8e71-bed1a3c618d1
date added to LUP
2021-06-30 10:47:40
date last changed
2022-10-24 14:25:55
@misc{40b6bcfa-6b85-4e4e-8e71-bed1a3c618d1,
  abstract     = {{This paper studies the developments in the income taxes of Sweden, the United Kingdom, and the United States during the first half of the twentieth century. We present the evolution of marginal and average effective tax rates, number of taxpayers, and income tax due over the whole income distribution, and calculate the corresponding indices of progressivity and redistribution.<br/>Our results show that redistribution through the income tax increased during the period, but with varying intensity and mechanisms. During World War I this was a joint effect of increases in the amount of revenue collected (average effective tax rate) and progressivity, whereas during World War II revenue increased again but progressivity diminished, as the tax incorporated more low- and middle-income taxpayers. The income tax in the United Kingdom was always the most redistributive of the three, and after 1945 also the one that remained most progressive.}},
  author       = {{Torregrosa Hetland, Sara and Sabaté, Oriol}},
  keywords     = {{Taxation; Redistribution; Progressivity; Income tax; World Wars; H23; H24; N42; N44}},
  language     = {{eng}},
  note         = {{Working Paper}},
  number       = {{2021:224}},
  series       = {{Lund Papers in Economic history}},
  title        = {{Income Taxes and Redistribution in the Early Twentieth Century}},
  url          = {{https://lup.lub.lu.se/search/files/126601277/LUPEH_224.pdf}},
  year         = {{2021}},
}