Why I love Swedish taxes
vox.com
vox.com
Martin Borgs made a movie about swedish taxes: Somebody Else Pays. It's watchable on youtube, with english subtitles: https://www.youtube.com/watch?v=vdi-Lg9pwkY
I really recommend watching it.
In purely disposal income terms, ignoring crime and violence in the U.S., if you are above the median then you are better off in the U.S.
Denmark tops the list, at 50.8%. Sweden comes in 4th, with 45.8%. The US is fairly far down and lower than almost all developed countries, at 26%.
Welfare Spending USD/Capita: https://data.oecd.org/chart/4Ons
Yet it's the UK that has healthcare free at the point of use. Where does that social spending go in the US? Why is it so inefficient?
I think dogmatic belief that laissez-faire capitalism is always more efficient, has prevented them from looking for efficiencies elsewhere.
Tax dollars are not burned — they are used to provide collective goods
that are beyond the reach of any individual and benefit everyone.
In the US I pay multiple taxes (federal, state, local, property, sales, etc.), then pay again to put 3 kids through college, then pay again for health insurance, then pay again for all the medical bills the insurer doesn't cover.Our household income is about 4x the US median, and it looks like we'd be better off in "high tax" Sweden.
I can only imagine that households with lower incomes would benefit even more.
As a consequence, the welfare system is as much of a transfer between rich and poor as it is between different parts of life. And I suspect the willingness to pay higher taxes is that (almost) everyone "benefits" from the it at some point (putting it in citation marks since there's no free lunch obviously).
In contrast, US has far more means tested programs like SNAP etc, and the things that the wealthy benefits from are things like mortgage interest deductions, which are not seen as gov't spending in the same way. Which I think goes a long way explaining the tax adversity in the US.
It also doesn't create a "marginal tax" trap where if poor people get a higher income, they can lose 100% or more of it to lost benefits.
This is an important insight. It is the reason the US social security system is presented as an "insurance scheme" that "everyone pays into" rather than what it actually is in practice: payroll taxes and payments to various people. Medicare pays out regardless of income.
I used to wonder why social security wasn't means tested (i.e why they should send Bill Gates, or even me, a check). Well, there's a lot of literature on how benefits are distributed and their popularity (hint: make it look like you're handing out to the middle classes). Without it, you get the US's punitive approach to much of welfare, the modern day equivalent of Victorian poorhouses.
Social Security takes this theatre to absurd lengths, by the way, even sending out letters purporting to show how much is "in your account", printing out the bonds that it purchases in putting them in physical file cabinets (I'm not kidding) and generally maintaining the fiction in full movie style. I can't tell you how many otherwise intelligent people I've spoken to who have been taken in by this ruse, and support social security despite opposing "welfare." I wish the government did more of it!
The progressiveness of a universal system still exists, whereby lower income persons benefit more than higher income persons, it’s just expressed via a progressive tax system, and not means testing.
Surprisingly, there are also fewer visitors to a wilderness island in the middle of Lake Superior in the sparsely populated northern Wisconsin area than to Stockholm, the capital of Sweden.
Stockholm, Sweden, metro area population 2.3 million: https://en.wikipedia.org/wiki/Stockholm
Unsurprisingly, the capital city of a country during a vacation is nicer than your boring home town during a regular work week.
Disclaimer... DC is my hometown so I am blase about all the museum and monuments.
In the US the capital is Washington, and that's interesting to some extend, but you've got the big tier cities - NY and LA, and the next tier of touristy cities like Philly/Boston (for 'history'), San Francisco, Vegas and maybe Seattle and Chicago.
If you were to have the historical, financial, political and entertainment capital all in Washington, which is what you have with France, UK, Sweden etc, then that would be a far more exciting destination than just the political capital.
It is like the IRS pre-calculating your taxes or US society as a whole taking meaningful action on climate change: change would threaten a large number of people's jobs and those people are very motivated to resist it.
Edit: grammar, numbers ...
Some will be able to easily re-apply those skills. Some won't. Even the ones that will are going to be scared of the transition because losing your job is scary.
Of course, much of this would be offset by setting up services like the UK's 111 (medical advice hotline) and by being employed by companies like the one my sysadmin-for-the-federal-government father has always wanted to start but can't in case his cancer comes back. But those are both much more abstract and distant hypotheticals that don't yet have voters behind them.
The top tax rate in Sweden is 57.10%.
For 4% more tax money, they get socialized education, healthcare, public transit, childcare, public parks and a litany of other services.
This comparison excludes payroll taxes / medicare, social security and sales taxes since I believe the Swedish numbers exclude those too.
Which is superior?
http://www.nationmaster.com/country-info/compare/Sweden/Unit...
I can't see a single scientific measure supporting the statement that the US has a better health system than Sweden
http://www.commonwealthfund.org/publications/fund-reports/20...
In Sweden the top bracket kicks in $88,000 USD.
That's a big difference.
It seems rather apologetic. Income taxes aren't that much higher! But for some reason taxes are 23% of GDP in the US, but 43% in Sweden. So obviously taxes are much higher in Sweden.
Yes, there is a steep sales tax, but it's rolled into the price, so you don't really know what it is, so it's all good.
The argument is that we have the wrong mindset about taxes here in the US.
For example, I have no idea on what basis one could argue that a fixed "real estate fee" is more rational, effective or fairer than conventional property taxes.
> This is the same for everyone no matter what the assessed value of the dwelling. The fee is $12 a month for our co-op apartment in Stockholm. If we owned the same property in Madison, our taxes would be $18,000 a year.
Is their co-op apartment worth $2mm USD or something?
The argument that Sweden achieves better outcomes overall is valid, but that doesn't make every thing they do perfect.
As expats in Sweden, they might not live in Wisconsin often enough for it to be considered their "primary residence" or homestead, and might have to pay a higher tax rate because of that.
I don't know about Wisconsin, but in Michigan if you can't claim primary residency exemption, your property taxes automatically jump up by roughly 50%
But IMHO it does limit your freedom, in the sense that you have to pay for those on that path no matter what life choices you make.
I am from The Netherlands and as a freelancer I am quite sure I pay more than 50% in taxes, when including VAT from goods bought in a store, property taxes, etc... And I also know I have less choices, less financial freedom. Last year I had to pay over 30.000 EUR income tax. Money that I believe I could spent much better.
A big problem in The Netherlands (and perhaps the same is true for Sweden) as that if you're single, you live alone, don't have kids, then a huge tax burden is put upon you. And you miss out on a lot of benefits (if you have kids, every 3 months the government sends you some money; if you have a wife, you are able to add both incomes and divide by 2 which will usually allow the highest earner to enter a lower income tax bracket, etc...).
And then there is the fact that I believe my government is spending a huge amount of money in the wrong way. But with regards to voting, I seem to be in a minority. I can't change the system with my votes.
I will be looking to emigrate from Europe and to pay tax in another country. A country with a much lower maximum income tax bracket (37% above ~115.000 EUR). This compared to 52% when earning above ~67.000 EUR in The Netherlands.
And obviously without any public service to justify it.
Edit: I feel like I should expand here. I live in São Paulo, Brazil. Rent is through the roof if you want to get two work in less than 1 hour. The goods are very expensive, everything is taxed 100% when imported, plus there are a lot of taxes added to the local products price.
I have a good salary for the place and even so, if my wife wasn't working we wouldn't be able to afford our two bedroom apartment within a 30 minute commute to the city center.
I live in Canada for a while, then moved to the US. Even paying for property taxes, health care, college, I had a lot more money in my pocket. I would say my tax rate was almost 1/2 of what it was in Canada (obviously I took advantage of a lot of tax deductions in the US).
The VAT just means I can deduct way more VAT than normal salaried employees.
I do have a wife an kids, but the money I get for the kids isn't that much in comparison to my income, and I assure you that kids are far more expensive than that. My wife's income is slightly higher than mine, so that has no impact on the tax bracket I end up in.
Netherland isn't perfect (I'd really like to see a left-wing government here for a change; we'd been having right-wing or centrist governments for decades, and the current trend is even more right-wing as well as xenophobic), but I'm not sure where I'd want to emigrate. Sweden is among the top contenders, though.
And because of it, something else happened that was unheard of in the US: Republicans voted insatiably for more of it. Every single vote they put on a ballot was thrusting the system further and further into red country...places where republicans win over democrats with 90% of the vote or more. And they all passed.
This is why I can't get on board with any part of the left in the US, despite ideologically identifying more with the Western European green parties. The left wants more, but won't address the gigantic fucking elephant in the room, the fact that we suck at government and aren't doing anything to fix it. And because of it, I don't blame the right at all for feeling the way they do. The government sucks, and they have never experienced anything better, so why should we vote for more of it? Fix the government and they'll be begging for more.
Utah really does have a strange political balance -- maybe a unique one. Very ideological and partisan on some issues, and yet extremely pragmatic and practical on others, willing to get behind compromises that would be dead on arrival in most places in America's hyperpartisan climate, especially Republican-controlled ones.
Everywhere I've lived has really felt like the opposite - you're on your own. Of course, a strong social support network works better - but we don't have that kind of culture in the US.
I'm really not sure what America spending their infrastructure tax dollars on highways and roads instead of buses and trains has to do with tax rates. Sweden could have lower taxes and still spend their money better.
It would be much more apt to compare Madison with e.g. Malmo or Uppsala and middle-of-nowhere Wisconsin wilderness with the same in Sweden. I'm sure he'll find remote areas of Sweden just as inaccessible as the remote areas of the US he is using as a comparison point.
I've been to Seattle (didn't drive, but rode along in cars a couple of times), and NYC (drove from downtown Manhattan to middle of nowhere Pennsylvania and back to Newark). Even the freeways around NJ and PA were in a sorry state.
So if the US spends money on their roads, I'd hate to see what happens with things they don't spend money on...
The reception publicly amongst people in the trial program was that it was very helpful. Hopefully one day we can see more states try this out for a nationwide push in the future.
But the American hostility to taxes is rooted in a pretty strong failure to see their useful results. If someone is in California, paying nearly Europe-level taxes, but don't have nearly Europe-level public healthcare, roads, and transit, something's wrong.
Basically, the government keeps all the money. Swedes have no money. I lived there for 10 years. Swedes are always struggling paycheck to paycheck. There is less income inequality than in the U.S. The medical system is very bad. People have no desire to work because it is difficult to get ahead because of the high taxes.
The VAT isn't 25% on everything. 6% is on books, magazines and newspapers, culture evens, national transport. 12% on food, restaurants, hotel and artwork sold by the artist.
https://www.verksamt.se/starta/skatter-och-avgifter/moms/oli...
Effective income tax isn't as high as the picture you paint. http://www.economist.com/blogs/dailychart/2011/09/effective-...
IMHO the market is a good tool but it is very far from perfect. Its main weakness is the strength it gives to the signal price. The market is a global race to the lowest price and highest ROI. "Things" like infrastructure, health, environnement are expensive with a low (short/mid term) ROI. The market will never favor them.
That's the belief that underpins your opinion but that is far from a fact. It's also a belief that tends to be self-fulfilling -- you get the government that you believe you should have.
Let's bomb some more kids in the middle east for no reason, shall we?
You believe your means of production are entirely self-contained which is entirely false. You need all of civilization for your production to be useful. It's not unreasonable to have to pay for that civilization.
To believe otherwise is absurdly individualistic and self-centred. We are a social species and everything good we have done come through collective effort.
A big component of the founding of this country was as a reaction to taxes. In general taxes have lead to many wars and revolutions in the past.
However, with your argument what choice do I have when it comes to paying Federal or State (where applicable) Income Tax? None. I pay it, or else get thrown in a cage/have my property stolen.
If you don't want to pay taxes any more, move to somewhere where they don't have taxes. Alternatively, run for office and eliminate taxes in your jurisdiction.
https://taxfoundation.org/how-scandinavian-countries-pay-the...
Sweden itself would be marked by much higher VAT/Sales taxes -- which collect about 9% of GDP in SWE vs 2% of GDP in the US -- as well as higher income taxes, collecting 22% of GDP vs 15% in the US. Also, despite much higher corporate statutory tax rates, the US does not raise a larger % of GDP from corporate taxes. I was also surprised to see the top income tax rate in SWE phase in at only 1.5x the median income vs 8.5x in the USA. They also have higher income taxes on middle and low earners. Because of this, more of the difference in total tax burden seems to fall on the middle class than is commonly thought.
1) The mixed demographics means racists don't want to have their taxes going to provide services for "those" people.
2) Uncritical reverence of the military means they get too much funding.
It breeds shitty attitudes.
> It turns out the average Swede pays less than 27 percent of his or her income in direct taxes.
I have no idea where this number came from. Maybe you can get it by including children and others who are not part of the workforce. The average income tax in Sweden is 43%, according to [1], which looks a lot more plausible; county taxes alone (paid by all workers) are in the range 30-35% [2], and that does not include mandatory payments for social security etc, which are handled by the employer. You get to see the full impact as a business owner. Sole proprietors end up forking over roughly 2/3 of their bottom line.
Living off investments? Capital gains tax is 30%, independent of holding period, and even currency exchange is taxable (which is a problem because the chronically falling Swedish krona makes it a "gain" to just hold e.g. dollars or euros in an interest-free trading account).
> Tax forms come already filled out
If you are a salaried employee living and working in Sweden, don't run a business (or even have an occasionally income-generating hobby) and have no investments, then you can probably just sign the thing and be done. In that case, the government knows everything about your finances, and if you think that's a good thing... good for you.
> There is no property tax
The "conservative" government which abolished it is gone, the current socialist one is raising taxes again and is widely expected to eventually reinstate a wealth tax, which would also act as a property tax unless property is explicitly excluded - which is unlikely, given years of hand-wringing over the high level of real estate prices and related household indebtedness.
> Sales taxes in Sweden are higher — but less noticeable
Sales taxes in Sweden are insane: if you sell a good for X, you need to add 25% of X to the price and hand it over to the Swedish state. It's "less noticeable" by law, just like the mandatory contributions to social security handled by employers, because it would be unwise to keep reminding tax payers how much they are being charged. If you consider this a good thing... I consider you a paternalistic jerk.
> We get cash instead of deductions
This is just plain false. Deductions for home improvements, recycling, investments in special business categories, depreciation of equipment for hobby or business use... I could go on. It's all there. My most benevolent guess: the author doesn't know Swedish and simply doesn't have a clue.
> High taxes give me more choices and freedoms
Author is a socialist. He may not be wrong on a personal level - it is quite possible that he, in particular, gets more from the system than he pays into it - but that simply means that others are being made to pay for his choices and freedom.
[1] https://www.va.se/nyheter/2016/12/29/siffrorna-avslojar-vi-s...
[2] http://www.scb.se/hitta-statistik/statistik-efter-amne/offen...
And? It's not the dirty word you think it is.
>After lunch, the Minister of Finance proposes the next year's national budget [...] The presentation is followed by a cycle of parliamentary debates on the budget. [...] It is the most important moment for parliamentary policy making, as MPs can amend the budget to finance specific plans.
The government also provides material for schools to present to kids during class [2] where it's usually discussed the different budget chapters.
[1] https://en.wikipedia.org/wiki/Prinsjesdag
[2] https://www.rijksoverheid.nl/onderwerpen/prinsjesdag/inhoud/...