It's Not That Bad In Sweden
As usual, when he discusses non-monetary issues, Alan Reynolds latest column was good and interesting.
Except that -with the risk of being regarded as nitpicky- he overestimated just how bad (i.e. socialist) things are in Sweden. He claims, quote:
"Ordinary Swedish workers face a payroll tax of 40 percent, a national and local income tax of at least 50 percent in Stockholm (the rich pay 5 percent more) and a 35 percent value-added tax on everything they buy."
Actually, the payroll tax is "merely" 33%, the general value added tax is "merely" 25% (It is lower on some items like food and news papers, but higher on alcohol, tobacco and gasoline). The marginal income tax for most workers is actually just 31.5% (differes between different Swedish municipalities, generally somewhat lower than that in the Stockholm area and some Southern Swedish areas, but higher in northern Sweden. Workers earning above-average income also pay a 20% extra tax to the central government in Sweden . And workers which is considered particularly well-off, they pay an additional 5% of their income).
While is indeed far too socialist (social democratic), it's not really as bad as Alan Reynold's claim it is.
Except that -with the risk of being regarded as nitpicky- he overestimated just how bad (i.e. socialist) things are in Sweden. He claims, quote:
"Ordinary Swedish workers face a payroll tax of 40 percent, a national and local income tax of at least 50 percent in Stockholm (the rich pay 5 percent more) and a 35 percent value-added tax on everything they buy."
Actually, the payroll tax is "merely" 33%, the general value added tax is "merely" 25% (It is lower on some items like food and news papers, but higher on alcohol, tobacco and gasoline). The marginal income tax for most workers is actually just 31.5% (differes between different Swedish municipalities, generally somewhat lower than that in the Stockholm area and some Southern Swedish areas, but higher in northern Sweden. Workers earning above-average income also pay a 20% extra tax to the central government in Sweden . And workers which is considered particularly well-off, they pay an additional 5% of their income).
While is indeed far too socialist (social democratic), it's not really as bad as Alan Reynold's claim it is.
posted by stefankarlsson at 10:20 PM
3 Comments:
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Alan, the 7% "pension fee" was originally applied as an extra income tax during a pension reform in the 1990s. However, in the last few years, the Social Democratic government have made more and more of it deductable and now we get a tax reduction equivalent to the entire pension fee.
So, in other words, the payroll tax have never (not in recent years anyway) been higher than 32.7%.
The flat municipal income tax does indeed vary between about 29% to 37%, but the weighted average is only 31.5% because taxes are the lowest in municipalities with the largest population, particularly in the Stockholm area.
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