Open Access
Income tax progressivity and inflation during the world wars
(Oxford University Press, 2021-10-05) Torregrosa Hetland, Sara; Sabaté, Oriol; Economía; Ekonomia
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".
Open Access
Income taxes and redistribution in the early twentieth century
(Wiley, 2025-06-26) Torregrosa Hetland, Sara; Sabaté, Oriol; Economía; Ekonomia
This paper examines the distributive effects of personal income taxation in Sweden, the United Kingdom, and the United States during the first half of the 20th century. We estimate the evolution of marginal and average effective tax rates across the income distribution and calculate the corresponding indices of progressivity and redistribution. Our results show that redistribution through income taxation increased during the period with varying intensity and mechanisms. During World War I, this was a joint effect of increases in the amount of revenue collected and progressivity. In contrast, during World War II, revenue increased again but progressivity diminished.

Torregrosa Hetland, Sara

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