In 2004, Sweden repealed its inheritance tax. However, with the growing importance of wealth and concerns about wealth inequality, there is renewed interest in inheritance taxation. Its advocates see it as a means of promoting equality of opportunity and raising revenue. Its opponents, on the other hand, point out several potential problems associated with the tax. For instance, it may distort labour supply and savings decisions. It may also make transitions of family firms more difficult and lead to transfers of capital to countries where taxes are lower.
This report studies the Swedish inheritance tax, before the repeal in 2004. It answers questions such as to what extent people under-reported inheritances to evade taxation, how government revenues were affected by under-reporting and which groups managed to under-report most. Evasion, such as under-reporting, is an important response to the tax, as the possible positive features of the tax depend on the tax agency’s ability to collect it. The answers to these questions thus give us an understanding of the workings of the Swedish tax and the scope that exists for inheritance taxation.