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.




Comments
  1. Im swedish and we drown in bureaucracy, and papers everything takes times, the gas cost a lot (16 SEK a litre for the time being). Healthcare is a shadow of what it once was, one usually gets sent home cause it cost to much for the system to have tou there, have some friends that where about to be sent home when their kid actually had a burst appendix doctors said it probably will go over try som aspirin, thank god they fought it and got the doctors to check again. Just one of the thousands of other examples, the healthcare system really is on the knees, but yeah it’s probably cheaper but then again you will get the cheapest treatment to save money. Food costs a lot and the politicians spend our tax money really bad, for example a road in the Jonsered are near where i live will is closed because of a hole(maybe 2times5 meters) in the road that they say will cost 50 million SEK. At the same time we now are going to get to pay 8,5 billion SEK for the state owned radio and television regardless if you use the services, they should have put the money in building affordable housing as that also is impossible to find for the moment.So yeah sweden is a ok country but it’s far from the utopia this video wants make it out to be.

  2. Homogenous population + small population = inbuilt trust
    The last few years demographics have changed = much higher civil unhappiness

  3. Where do you think taxes money go to ? It goes to the economy. Governments spend the money they collect, they don´t put it in a Fiscal Paradise and watch it grow like billionaires do. They pay doctors, teachers, they improve infrastructure with it. They make the economy go on. How is that so hard to understand ?

  4. Make corporate America pay taxes, slash the military budget by at least half and we could have universal healthcare, a clean environment and tuition free college not to mention have funds to pay off debt and infrastructure. Vote Trump out. Bernie 2020🙌🏻

  5. Ok explain me this how every red States doing well when blue state's aren't ? New York and California have the highest taxes and yet people are moving out.

  6. Like it or not you will pay for education & healthcare. No matter if through taxes or directly. In the end this will be right pocket vs left pocket type of situation but you will pay. The question is how to spend this money effectively?

  7. i think if you are living a country like the sweeden that have high living standart it doesnt matter how taxes you pay for goverment because end of the day , you can see that these taxes are used for you

  8. You guys don't f*cking know anything as usual, our "crowns" are overvalued over 20% which is f*cking crazy since all our small "counties" are going back millions of crowns yearly due to the immigration policies as of right now. We're gone to sh*t and all of us hate it since we have no f*cking rule over our own politics such as most.

  9. As someone who's grown to like a more fiscally conservative view, it's oddly comforting to see how Sweden has an "efficient" tax and welfare system, though I'd like to hear whether or not there are some parts of their healthcare system that can bottleneck healthcare delivery.

  10. I’m from nyc. Yeah I’m noticing at 25 years old people from countries like Sweden Norway Finland Germany they don’t move here to the USA. I wanna leave the USA I’m tired of this toxic lifestyle

  11. Putting my money in the hands of the politicians hoping they will spend that money to make our lifestyles better? And that too American politicians? A big NO! For all I know, they will spend that money on more military power

  12. There are trade offs for taxes. Usually the people paying taxes don’t get anything. In the USA we assume the moral superpower which doesn’t pay a return on investment to the rich

  13. Europeans never learn, when you rely on government for safty and security, you will soon have neither, Sweden is a time bomb and will eventually become just like France. No thanks I'll take care of my own affairs and my own security, at least in America we can make our own decisions.

  14. Shouldn't the question be would you be willing to pay less money for better health-care, as Americans pay more than any country for health-care per person?

  15. In Canada the public sector for a comparable job lives way better than the private sector teachers firefighters and police officers make over a hundred thousand a year and after 30 years they can get between 60 and 70 thousand a year for the rest of their life in pension most private sectors have got rid of defined pension plans and just have rsp retirement Savings Plan

  16. A good government system makes it possible for woman to live without a dependence on a good man. Unfortunely good man are no longer have an incentive to work hard.

  17. Sweden is big brother society. It looks good in paper, but if you think you are better then others, do not move in Sweden. I lived in Sweden for 24 years, i moved out and i feel free again.

  18. and don't forget all the economic refugees we support.
    And more are coming:)

    Taxes are rising but who cares.

    If we raise the taxes we can take in even more refugees 🙂

    Maybe up to 2 millions. 2 millions that can live on our taxes. It is great

  19. Right wingers hate that this is true, so they look at every other way to attack Sweden because the tax argument doesn't work.

  20. Denmark has higher taxes than us in Sweden…Sweden has been at peace 200 years. That's our method for growth and progress.
    Try that USA, just 10 years? You need less wars not just more taxes…

  21. I think you forget they are racially and culturally homogenous. Their security and medical / pure research and technological access is subsidizing by the current world order (mainly the U.S.). They also only have a population of 10M. If the US did the same, these Nordic countries would collapse.

  22. Denmark have the higher taxes, the question is how they deal with it. Also the US have a ton of other things Sweden doesnt have, like fees and small taxes and the things you have to pay for because the taxes doesnt cover it. So at the end of the day Swedes still have money in their pocket.

  23. You have to scale this up to the population of the US, having 10m people is different than having 350m+.

  24. Would you pay more in taxes for better health-care or more social services?
    We would all pay more to get these low IQ minorities out of here.

  25. The recession in the 90’s was because of high regulations, high taxes and “social democratic” policies. The government ran out of other people’s money. We bounced back because we took away those high regulations. But now we are running out of other people’s money again.

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

  27. 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

  28. 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.

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

  30. 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.

  31. 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.

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

  33. 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

  34. 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???

  35. 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.

  36. 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

  37. 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.

  38. 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

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

  40. 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.

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

  42. 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.

  43. 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.

  44. 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.

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

  46. 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

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

  48. 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.

  49. 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…

  50. 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.

  51. 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.

  52. 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.

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

  54. 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.

  55. 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!!

Leave a Reply

Your email address will not be published. Required fields are marked *