How Sweden Balances High Taxes And Growth

How Sweden Balances High Taxes And Growth


Let’s talk about taxes. They’re a big political
issue, especially now. New York congresswoman Alexandra Ocasio-Cortez
has proposed a 70 percent marginal tax rate on wealthy
Americans as part of her Green New Deal. Today is the day that we
truly embark on a comprehensive agenda of economic, social and racial justice
in the United States of America. It sounds like a big number
but there’s another country where some workers are
paying similar taxes. Sweden. This Nordic country is often
known for its picturesque landscape, ice hockey prowess, and companies
like IKEA and Volvo. But, Sweden is also known to have
some of the highest taxes in the world and without
costing its economy. So how did a country with fewer
than 10 million people pull it off? This is Torben Andersen. He’s a professor with the
Department of Economics and Business Economics at Aarhus
University in Denmark. The short version of the story
is that Sweden and the other Nordic countries that
have high taxes. And they have fairly
good economic performance. The simple explanation is that you
cannot judge the effect of taxes without knowing what they are
financing. I mean the Nordic countries, a large part of
taxes goes to finance education, health and other things,
in various ways actually support the labor supply
and high employment rates. In other words Sweden has been
able to support both high taxes and high economic growth because of
how it spends those taxes. Tax revenue supports generous
childcare programs, gives employees vast leave of absence
opportunities and helps offer basically free higher education. Those programs in turn help
make Swedish citizens more employable. They also don’t have to
ration big portions of their paychecks or things like
daycare or student loans. that makes them
better consumers. The average tax wedge for a
Swedish worker with an average income is about 43 percent, but the income
tax can go as high as 61.85 percent depending on how high
the income is. And the corporate tax rate
lies at 21.4 percent. What’s a tax wedge,
you might ask? It’s the difference between what a
worker pays in total taxes and what it costs to employ them. Basically the difference between your
take home pay and your total pre-tax paycheck. It’s also a measure of how
taxes can drag down employment. Sweden has had pretty steady GDP
numbers since its recession in 2012 and during the 2008 crisis,
and even before that Sweden suffered a severe recession back
in the 1990s. And prudent reforms to its banking system
and regulations helped it bounce back in a big way
through the next few decades. Sweden now has the 12th highest
GDP per capita in the world. In fact other high tax
Scandinavian countries like Norway and Denmark also ranked in the top 10
countries when it comes to GDP per capita. Sweden’s tax system has,
of course, income taxes. It also has a
high level of social contributions. And the end of the
day, it’s not so important whether the taxes are collected
in one way or another. They’re still a wedge in the
labor market creating a difference between the cost of labor to
the employer and the take-home wage after taxes and all social
contributions to the workers. So for example a single
worker making roughly seven hundred twenty six thousand Swedish krona a
year in salary or about $78,000 in U.S. dollars would have a marginal
tax wedge of 69.7 percent. That percentage is nearly
what Alexandra Ocasio Cortez is suggesting. But she’s saying that this tax
rate would apply to those making over $10 million dollars a year. Where do these tax
dollars go in Sweden? They pay for things like
childcare, health care and education. But if you look at an
average family, yes they pay taxes. But then on the other
hand they don’t have any expenditures on education for the
kids and so on. So they give out a lot of
money on one hand, they also get appreciated services back. Of
course, nothing is perfect but they still get value for money.
And you can also see that politically there’s very broad support
for maintaining this system. But it’s up to Swedish politicians
to decide how to spend tax revenue. This is Johan Norberg. He’s a senior fellow
at the Cato Institute. We’ve got more revenue from
the people so the politicians can put it to work where they find it
most of interest to people or to themselves. You pay when you work
and it’s distributed to yourself when you have children or
when later on when you need more health care or
something like that. So it’s more a redistribution
within the lifecycle of people, more than redistribution between different
groups of people from the rich to the poor.
And so it means, more public services. But
it also means, we pay for it ourselves. So what’s the big
deal against high taxes? In Sweden, they get you
top-rated health care and higher education that doesn’t put people
in six figure debt. In the U.S., advocates for lower income taxes say
they stifle economic growth and consumer spending. So we have this paradox with
Sweden and the the other Nordic countries that taxes and taxes
wedges are relatively high. And at the same time
employment rates are high. So it’s hard to say that taxes or tax wedges in themselves are causing huge negative
effects of employment. That’s simply not the case. In fact, Sweden has one of
the highest employment rates with over 77 percent of working age citizens
employed as of the third quarter of 2018. To compare, the same rate clocks in
at 71 percent in the United States. A 2012 study showed that
countries with higher taxes can stifle entrepreneurial success. But that hasn’t been
the case in Sweden. Some tax dollars go into a
leave of absence program that allows a worker to take unpaid time
off while retaining job security and status. In 1998, Sweden started the right
to leave to conduct a business operation act. It gives employees the right to take
a leave of absence of up to six months to start
their own company. That is if the company won’t
be a competitor to their current employer. Now, Stockholm has its
own Silicon Valley. Several startups born there have been
valued at more than a billion dollars. Like Spotify. Candy Crush. Minecraft. and Skype. The last two of which
were bought by Microsoft. In Sweden, there are 20
startups for every 1,000 employees versus five for every
1,000 in the U.S. And for some of those entrepreneurs
who may have come into wealth along the way, there’s an absence
of other taxes they would maybe have to pay
if they lived elsewhere. Sweden is actually quite friendly
to large owners of capital. We don’t have taxes on property, no
taxes on wealth, no taxes on gifts or inheritance. But instead it comes from
income taxes but also from consumption taxes. And that’s
the major difference between Sweden and the United States. We have almost as much in
value added taxes on consumption and excise taxes on different goods, as
we get in income taxes. Somewhere between high employment rates,
high taxes and support to those with the entrepreneurial
spirit, Sweden’s economy has stayed strong. Sweden though isn’t immune to
the ongoing global growth slowdown. In fact, the Swedish krona has
been the worst performing major currency in 2019. I think the outlook, as for
many other countries, is that growth will become somewhat lower. And of course there are
many other uncertainties, also things happening outside Sweden
or Nordic countries which affect Sweden. But they are sort
of pretty OK compared to other countries.

Author: Kennedi Daugherty

100 thoughts on “How Sweden Balances High Taxes And Growth

  1. Search for Henrik Jönsson’s video ”the truth about Swedish socialism” and you will hear another side to the story.

  2. Sweden is in debt 100k for each citizen compared to the US which hovers around 65k per person. Yet the military spends so much but per capita we are better off. If everyone has the same education then the education becomes useless as you dont stand out amongst your peers

  3. I have been hearing for decades about how the Swedish/German/Danish/Norwegian system with high taxes works fine and takes care of every citizen. I am not sure how it applies to the US though. Basically all these countries live under the US security umbrella so there is that. Next is a mostly homogeneous population that has had a high level of education for decades. In the case of Sweden and Norway you have large countries with fairly small populations meaning lots resource wealth. The list goes on and on but the AOCs and Bernie Sanders of the world will keep insisting that if it works fine there it can be imported and applied here. I think we will have to have higher taxes on high income people here in the coming years but that money won't go to creating cradle to grave security. Rather it will go to closing our massive federal budget deficit.

  4. Ouu gosh! Skype was developed by Estonians.
    I like your videos, but this one was very biased and one sided.

  5. The X-factor not discussed in the video but in books by Acemogolu and Fukuyama is social cohesion. If a country has a high level of social cohesion than its citizens will likely offer to pay high taxes. If a state has low cohesion, its citizens will see the taxes as a cash grab by an opposing group. This is why Japan, Iceland, and Sweden do well and the US, Brazil, and South Africa are total messes.

  6. Correction: Sweden's population has exceeded 10 million since at least 2017 (if not as early as 2016).

    Those statistics come straight from the Swedish Central Statistics Bureau, whose job it is to keep track of national statistics like these.

  7. Ikea based in Switzerland, low tax Canton. Volvo owned by Chinese who are making them in China and bought it for it's technology.

  8. Sweden does have 1 glaring advantage compared to the US….they dont waste $$ fighting in constant wars..the US spends over 600 billion a year on its military..and its funny that Sweden has great child care programs yet their birth rate sucks? maybe they need to encourage and reward native Swedes who have 4+ kids

  9. I will refrain from reading the comments but it is safe to assume its a bunch of butthurt americans crying about freedom, socialists and taxes. The single greatest meaure in a society is health and well being. You could have all the money in the world but it wont bring you happiness. Where does the US rank in happiness???

  10. 70% tax rate
    You all are out of your f-ing minds. 70%
    You all have gone cray cray.😳😱🤭😵
    Every $100 I make I can only keep $30
    That’s indentured servitude
    Plus sales tax every time I make purchases,
    Tolls, tax on phone service gas tax, etc. in the end Not even 30%
    It’s madness if anyone thinks this is good idea.
    Common Sense is common anymore.

  11. The swedish tax system doesn't work. it has never worked. our welfare system is in total collapse. people are dying while waiting in line for their free cancer treatment. The swedish crown has been falling for years. in fact the times when the swedish economy has grown the most has been when we had lower taxes.

    relevant informative video: https://www.youtube.com/watch?v=udqrpYbArCI

  12. Not a very objective report. Every system has pros and cons. The short documentary called "Sweden: Lessons for America?" covers this topic with much more nuance and objectivity.

  13. So they have a very high income tax and low corporate tax, no estate tax, inheritance tax. Doesn't that make the gap between rich and poor even wider, contrary to what the left says

  14. But they rely on US and NATO when in need of military defense. Let the swedish government defend itself. STOP SUBSIDIZING SWEDEN

  15. There are too many factors to compare in this video. First the size of Sweden is the size of just 1 state in the United States yet Sweden charges a 60 percent plus on income tax. In the United states the highest tax rate is 37 percent but majority of the population have an effective rate of 25 to 32 percent at the most and making probably 200k to 250k plus a year. Also in the United States most of the employers provide health insurance and cover between 70% to 80% of health insurance coverage and deductibles are not bad. Wages in USA are much higher than Sweden and there are more economic opportunities and growth in the USA. I guess I am missing where " free" is coming from and who is paying it for it? The citizens are paying for it.

  16. "How Sweden's center-right leadership rolled back disastrous social democrat polices that almost ruined the country" FTFY

  17. 75% tax lol. Why don't they just call themselves thieves. I would never pay that much. I will have no choice but to move.

  18. Taxing the super rich in big country isn't always a solution. Leads to tax evasions, migrations to tax heavens, and decreases motivation of "poor" class to earn more and be responsible for own conditions.

  19. I don't know if it's a sound editing thing, but this narrator's S's are really grating on the ear. Please fix this. The rest of the video is great.

  20. …they don't have to ration pay check for student loans or daycare……..just the rest: housing, food, water, etc. You know the necessities!

  21. Let's be clear about something, Sweden works because the rick KNOW IT'S FAIR that they pay more to have a better society… It will never happen in America

  22. The democrats cant point to this as why their policies will work, these seem like moderate libertarian policies, not like American liberal policies

  23. High taxes, low taxes, doesnt matter just as long as the people running it isnt putting it inside their pockets and really giving it back to the people. Simple as that.

  24. It's the workers, aka middle class that pay the taxes in Sweden. NOT the rich, although of course they pay taxes, they are not taxed really high. Nor are the corporations.
    So do Americans really want a 25% VAT on everything they buy and around 11-13% VAT on food? Then of course have a tax rate from 30% up to 60% on top of that in income tax.
    YES, you read that right, ultimate out of a 100 Swedish Krona earned, some 75% + is ultimately going to taxes in one form or another.

    It isn't socialism either, in case anyone wonders. Sweden is a capitalist country, with "social" welfare programs. EVERYTHING is privatized, even schools to some extent.
    Swedish people along with Canadians are some of the most indebted people in the world. You can live nicely there though.

    Sweden's biggest problem now is their politics and so many Swede's hell-bent on killing themselves and their future off via mass invasion of muslims and African migrants.
    Which in turn means 80% of ALL violent crimes are done by Migrants and kids born in Sweden to migrants. I am NOT kidding you. When it comes to assault rapes it's 19 out of 20 done by migrants.

    So how does that "southern US border" sound like now? At least you have better, for the most part migrants in latinos instead of Muslims and Africans…

  25. What AOC doesn't understand is that you CANNOT tax the rich that way. They just leave or come up with loop holes in the tax system. This is WHY Sweden does not tax the rich or corporations really hard. It is the normal middle worker class that pay the taxes in Sweden and then high VAT everyone pay on goods.

  26. Don't forget Sweden have 10.4 million people and they came out of being for a little while a socialist country that quickly changed in the 90's to capitalism, but kept the welfare programs.
    You simply cannot fundamentally change a country like USA with almost 33 times larger population of 330 million, 50 separate states that are more "autonomous" in certain ways than counties in Sweden. It wouldn't be easy to flip a whole economy like USA into this and have citizens accept it.

  27. It's quite easy actually, the high taxes are pad by the citizens not the corporations. Here the corporate taxrat average is about 21% and is about to get lowered. Tell that to Bernie Sanders will ya.

  28. America isn't Sweden or Denmark. We shouldn't manage our gigantic nation like it's a tiny northern European country.

  29. Like many, really advanced nations…Sweden and Germany made those decisions years ago and dont have resources to waste. Yes I would pay more taxes for better healthcare, free education, and a better standard of living which reduces the overall cost of living. I might live longer as a result.

  30. Sweden and US are not the same.. Sweden has a homogenous population with a shared history which makes politics and consensus building fairly easy unlike in the US,where the states from early on had fairly independent autonomy in what is a federal structure with their own laws and constitutions etc…US should evolve its own model of social security and welfare,tax systems etc tht suits them rather than copy what's working for other countries which is a sure sign of failure!!

  31. Ikea and volvo are not Swedish companies, not anymore. Ikea almost does not have even the workers. All are on the recruitment company workers and can be fired instantly without any brand damage. They do not pay any tax

  32. What is not to mention is that there is harsh criticism of the high taxes in Sweden from economists and from the political opposition. and two of the government's co-operation parties are demanding that they lower the tax. and funny enough of parties calling themselves liberals. the difference may be that Swedish liberals say we are not socialists

  33. Stop saying taxes would be 70%. NOBODY is going to be paying 70% in taxes on their income, but it gives the right a talking point and some people will change their mind based off of the lie anyways.

  34. It all works well if the educated people go to work, but now, with the dumbing down of the population by migrants, that just has added something which has hitherto been absent.

  35. Eliminate all consumption taxes. Increase marginal taxes on the rich up to 90 percent over 50 million. (50 percent over 1 million, 55 percent over 3 million, 60-65 percent over 5-7 millio, 70 percent over 10 million etc). End the wars (drug war included). Shrink the CIA. Nationalize the oil companies and the banks

  36. If we just gut military spending we could have free university for everyone thrice over. International students could study tuition free and you'd still have billions to spare!

  37. Sounds great.You have enough money to take care of a large amount of immigrants.How long will that work?How much time before you lose your country to a foreign culture that doesn't share your values?.Please wake up before it's too late.

  38. Its not "how much higher" the taxes are, its "how its destributed". The US destributes taxes to fuel wars and sell guns, Sweden destributes taxes to allow health care and education.

  39. In small highly developed nation like Sweden this will work , but it will be nightmare to apply in some big ass country …

  40. Just stop waisting money in Defence… (Attack) and US will thrive! Convert the defence company’s to space exploration or more productive areas!
    The hole word will benefit from that!

  41. Here's a story from a small town in Sweden called Filipstad. Population: under 10 000. It already had a substantial immigrant ie. muslim population before the year 2015 and the economic prospects and future for the town wasn't looking very bright. In 2015 thousands upon thousands of welfare leechers, I mean invaders, I mean muslims, I mean "refugees" (poor little children ie. 95% bearded muslim men) came to Sweden. Filipstad took in over a 1000 of these "poor little Syrian children" who happened to be men from Afghanistan, Somalia, Iraq, Morocco etc. And why wouldn't they take those criminals to live there (yes they are criminals by default since they entered the country without proper paperwork and the asylum treaties clearly state you have to apply for an asylum in the first safe country and EU rules state you have to apply an asylum in the first EU country. Well I guess Sweden is the first EU country if you go through 6-8 other EU countries first.

    Anyway the Swedish taxpayers' money was pouring into Filipstad since it was the average Swedish taxpayer who paid for those people living in Filipstad, not just the people in Filipstad. For 3 years life was good for those money hungry hotel owners and social workers etc. who now had those poor little children to take care of with the help of the taxpayers' money. Well the government and the taxpayer only agreed to give money for 3 years and after that it was time for the town of Filipstad to start paying for unemployment benefits etc. (over 95% of those muslim men are unemployed. Well some are hired by the town to do some useless crap and act as a mascot but it's nothing productive and it's just a cost done to hide the fact almost all would be unemployed)
    The social benefits the town of Filipstad has to pay has doubled in the past few years and the cost is rising constantly. The native Swedish people, mainly younger people are moving out instantly if and when they just get the chance and at the same time they are being replaced by new, fresh muslim men pouring in (and being born of course). I could also tell how the once peaceful town had massive fights between the native Swedish youths and the muslim men and how girls are being molested (by muslim men) but that's nothing new.

    And this is just a one single small town in the middle of Sweden and there are many many small towns like it in Sweden running out of money.

    Things are not looking great in Sweden no matter what lies the media is trying to tell you.

    Here's a graph depicting the money spent on welfare in Flipstad over the past few years.
    https://www.morrissey-solo.com/proxy.php?image=https%3A%2F%2Fwww.svtstatic.se%2Fimage%2Fwide%2F650%2F23437722%2F1566904563%3Fquality%3D70%26format%3Dauto&hash=c8f45d2d6ac945836d5a4d4d48fe44f3

    Personally, I'm not Swedish nor am I British or American either. It's just a shame a functinal and a civilized country is being destroyed with the decision of a handful of people while the majority of people don't want that.

  42. Sweden is not full Socialism. They started more socialism and then relaxed it when it was not working. The US is not full capitalism. We have medicare, medicaid, public schools up to 12th grade including technical schools. We started as the opposite of Sweden where they were more socialism and came more to the center and US was more capitalism and came more to the center. To get taxed more for temporary life expenses is not the way in my opinion. Average wage for a college grad in US is around $50k a year and taxed at 12%. Paying 10 years of student loans and medical from your employer, you will bring home roughly $38k a year. That same person if taxed around 60% will only bring home $20k. 40% tax rate that person will bring home only $30k a year. One of these options seems to give you more "freedom". Which would you pick?

  43. I stopped watching because the music was so bad and distracting and I could hardly hear the speakers CNBC i hope ur see this ; please use better BG music 🙂

  44. A. They only have 10 million people. B. They used to have lower taxes. C. Debt to GDP is 38% – Unemployment is 7.1% – Double the US rate…

    Bad economics kicks the can down the road… Just wait

  45. If I was a high tax payer, I wouldn't mind more going towards taxes…. provided I could choose where that money would go towards re: public services e.g. more on education rather than military spending or state welfare.

  46. Yea. And those taxes goes increasingly to handouts for a growing population of migrants getting used to be fed and cared for by the government. Without participating in the workforce. House of cards.

  47. No wonder migrants are not working in Sweden. Why work with that great welfare system and if you can earn money tax-free illegally? The system will collapse one day and Sweden will be a mess. Soon boomers will retire 😉

  48. Volvo is owned by China and you didn't mention everyone pays taxes, even if you only make $20,000 a year. In the 70s through the 80s, Sweden moved away from socialism to capitalism. Schools work on a voucher system (like Pres. Trump implemented in America). Sweden also has privatized insurance that everyone is moving to private insurance because of the long wait lines. Sweden is 9 million compared to Americans 327 million. Sweden has also been writing on America's coattails and not paying America for using its military…

  49. Johan Norberg mentions the value added tax and it is very high, higher than the highest sales tax in the US, and even food is taxed. Skype comes from Estonia not Sweden. Amazing no taxes on property. Unfortunately for AOS, there aren't enough rich people to tax, and in order for the U.S to pay the bills for what social programs we do have and if we want to expand it, and unpopular as it would be, I believe that the only way is a Value Added Tax.

  50. The problem with socialism in America or any other Western country is that the middle class ends up paying the majority of taxes. The idea that the wealthy is gonna pay everything is a fairytale.

  51. Too many liberals,too many no go zones,too much immigrants and crime.Bad place to live,period!I Want to see how they are going to pay for their social services,when economy goes into recession

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