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Sara Torregrosa Hetland . Photo

Sara Torregrosa Hetland

Senior lecturer

Sara Torregrosa Hetland . Photo

Income tax progressivity and inflation during the world wars

Author

  • Sara Torregrosa Hetland
  • Oriol Sabaté

Summary, in English

This paper studies the impact of inflation on income taxes in Sweden, the UK, and the United States during the world wars. As tax reforms were rising top marginal rates and reducing exemption thresholds, extraordinary levels of inflation eroded the real value of exemptions, brackets, and deductions. The micro-simulation of actual and alternative scenarios shows that inflation made the tax less progressive, particularly in Sweden during World War I and the UK during World War II. Nevertheless, its redistributive effect increased due to the related growth in tax revenue. Inflation contributed to transform a “class tax’’ into a “mass tax”.

Department/s

  • Department of Economic History
  • Growth, technological change, and inequality

Publishing year

2022-08-01

Language

English

Pages

311-339

Publication/Series

European Review of Economic History

Volume

26

Issue

3

Document type

Journal article

Publisher

Oxford University Press

Topic

  • Economic History

Status

Published

Project

  • Taxing for the welfare state: public finances and progressivity in the rise of social spending (1910-1970)

ISBN/ISSN/Other

  • ISSN: 1474-0044