Taxes and the Common Good

I know “real Amuricans” sneer at the notion that we might learn from the experiences of other countries. Universal healthcare? A commie plot! Decent mass transit? People who can’t afford–or don’t want– cars shouldn’t be coddled! A comprehensive social safety net? You are a commie!

Every so often, however, a “real American” finds living in a country that actually offers these and other subversive services is pretty attractive. Vox recently published an essay by one such person, whose job and that of his wife requires that they split their time between Wisconsin and “high tax” Sweden.

My wife and I have been dividing our time between jobs in Sweden and Wisconsin for the past dozen years, and I’m here to tell you that taxes in Sweden are not that high. To my surprise, I found that there are lots of things to love about the Swedish tax system. Swedish taxes are easy to pay, rational, and efficient. Best of all, rather than take away opportunities, Swedish taxes expand them.

The writer goes on to list things he loves about Swedish taxes. No kidding.

It turns out the average Swede pays less than 27 percent of his or her income in direct taxes. As I’ve written elsewhere, my wife and I pay about 22 percent of our US income in taxes. Our Swedish income tax was 31 percent. So, yes, our income taxes in Sweden were higher than in the US, but we still paid less than one-third in tax.

And you get far more for your taxes than you do in the US. In Sweden, college is free and students get a housing stipend. A colleague’s daughter, Kerstin, just completed a five-year dental program. Her family paid nothing for her education.

In Sweden, tax forms are simple, and they come already filled out. The author points out that tax-preparation services cost American taxpayers more than $32 billion per year–not to mention hours of citizens’ time and effort.

And in Sweden, there are no property taxes.

When the conservative government, favoring lower taxes, came to power in Sweden in 2006 one of its first steps was abolish the property tax and replace it with a fixed fee. The real estate fee for services is 7,112 SEK per house ($825 at current exchange rates).

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.

There are sales taxes in Sweden, and they’re high, but even then the author finds mitigating factors:

Sales taxes are high in Sweden, but you don’t see them, and that makes them easier to pay. If something costs 100 kronor, you pay the 100 kronor! Only when you look at the receipt do you see that it costs 80 kronor and 20 kronor for VAT (value-added tax). Many things are taxed at lower rates — 12 percent to have dinner out or buy groceries, 6 percent (only half a percent higher than our sales tax in Madison) for books and tickets to cultural events and in-country travel. Health related items: zero percent.

It is true that sales taxes are regressive; poor people pay a higher proportion of their income in this tax. In the US, a 25 percent sales tax would have to be offset with some kind of subsidies for our many poor. But because Sweden has a narrower income distribution, its sales tax is less regressive than in the US.

A fascinating difference between the U.S. and Sweden is that, in Sweden, if the government wants to encourage an activity, they don’t do it through the tax code.

One of the reasons US income tax preparation is so awful is that we try to reward certain activities by providing a tax deduction. If you do some good deed (like putting in a solar panel) and if you can find the receipt and documentation…, then you can list a number on Form H, line 36, that will lower your taxes.

Does this feel good? Do you feel rewarded for your solar panel?  Or is it just another damn number on a tax form?

If the Swedish government wants you to do something, they give you the money. For example: Having children is good for the society and costs parents money. In the US, you get a deduction on your income tax for dependents. In Sweden, you get a check every month and you can use it to buy shoes. For one child you get $120 a month and up to $620 for four children. Every parent gets a check.

The most persuasive argument for Sweden’s approach (at least, from my perspective) is that the taxes generate income used to provide collective goods that make life better and less costly for citizens.

Not having to pay for college gives the best and the brightest the opportunity to attend any school they choose — equalizing opportunity on merit, not parents’ wealth.

It’s not just college. Public amenities like parks and hiking trails, excellent and frequent public transportation, and–oh yes– universal health care.

Paradoxically it turns out the bloated, heavily lobbied, privatized US system spends more tax money ($4,437) per person than Sweden’s socialized health care ($3,184).

This is due to Swedish efficiency rather than poor service. I do get to choose my doctor, have high-quality care a short walk from my home, same-day appointments and short waits when I walk in unannounced.

Keep chanting “We’re number one! We’re number one.” Maybe we’ll convince someone besides ourselves..

25 thoughts on “Taxes and the Common Good

  1. I have asked before but will try again; can someone please point out any actual conservative issue or goal in this current administration?

  2. Our “conservative” politicians prefer to spend billions on our bloated military budget that rewards weapons manufacturers with lucrative contracts. Weapon mfr lobbyists have dramatically increased the population count around the perimeter of DC. The revolving doors between gov and lobbying jobs keep spinning.

  3. JoAnn, the ultimate goal of this administration is to reward the wealthy elite with lower taxes while destroying our environment. Oh, and to cut off any form of financial aid to the poor and disabled.

  4. Every time an American politician mentions the high taxes in Europe, I cringe. It’s a red herring. How many taxes one pays is not important – relatively speaking. Everyone knows that taxes can be used for the common good like universal healthcare, affordable public transportation etc. The only thing that counts is one’s SPENDABLE INCOME.

  5. I guess conservative in Europe may NOT be the same as Tea Party Bat Shit Crazy.
    Good for them.
    Very interesting story. Thanks Prof K

  6. Reminds me of Michael Moore’s film, Where To Invade Next. Moore goes in search of better policies in foreign countries to bring back to America.

    I wish every American would watch it. Especially the section where American school lunches are compared against public school lunches in France.

    Having said that,not only are we not number one,we’re not Great! As some would have us think!

  7. “But because Sweden has a narrower income distribution, its sales tax is less regressive than in the US.”

    What is the rate of “income distribution” in Sweden? Does it compare with our 1% or 2% wealth vs. 98* or 99% of the rest of this nation? And “vs.” is the proper terminology in this matter. What does Sweden consider a poverty level income and what is that percentage vs. middle-income level? Does Sweden tax utilities and have multiple taxes for different services subscribed to on cable providers…or is “cable level” media provided as a basic information/entertainment source?

    Chanting “We’re number one!” appears to changing to “Shame on you!” at Republican Town Hall meetings these days. But; is anybody listening who has the capacity to feel shame for their actions only during the past week? Before they take another recess and Trump disappeared into the protection of another of his golf courses. The latest Executive Order signed by Herr Trump to protect religious freedom included the U.S.Treasury Department’s freedom of speech. I will try to print out a hard copy to attempt to understand exactly what has been done to us with this EO along with the House vote to repeal ACA and enact Trump’s callous AHCA.

  8. Now you know why millions fought to elect Bernie Sanders, the democratic socialist, over the Wall Street owned Hillary Clinton. This isn’t a matter of conservative or liberal, it’s capitalism. Einstein called capitalism, “Evil” in the 40’s and he was only in the country for a few years.

    He didn’t call it a Kleptocracy, but he did refer to how the Oligarchs control our countries press, universities, political parties, and many institutions.

    It’s hilarious watching Hoosiers elect “conservative lawmakers” who have literally stolen $2 billion in taxes and hold the money in banks while cutting taxes on the richest Hoosiers. Instead of using those taxes hoarded to pave roads and improve our infrastructure, they apply a user tax at the pump causing unequal pain for working Hoosiers.

    Sadly, when you live in a state or country where the majority are uneducated or undereducated rubes, guess what happens?

    They’ll elect a Trump, or an establishment shill like Hillary. Either way, we all lose.

    And if you want to protest, there are laws hitting the books in Koch run states like Oklahoma where organizations who promote protests or provide communication support, receive heavy fines. We are rapidly reaching authoritarian rule.

  9. Sssh! Please don’t call this to the attention of draconian Republicans:
    About health care, as a 91-year old WW2 disabled veteran of combat in Asia, I receive health services in a remarkably efficient government program available to all veterans without regard to race, religion or orientation.
    A postcard will inform me about an automatic periodic appointment. A city dweller, I drive to a remote parking lot where a free shuttle bus takes me to the VA hospital. I check in by typing my SS# into a computer terminal. I’m paged in a few minutes and go to a suite of rooms where blood Is drawn for testing. After the fasting blood draw I buy coffee and a snack at the café down the hall. I walk to the various clinics. I consult with my Primary Physician who has a computer screen where my entire medical history can be reviewed and where items are tagged for discussion. I magically receive a printout of the blood test results. Then I proceed to appointments in any applicable clinics. Most recently these have been the pacemaker clinic where I received a printout reporting the life expectancy of the pacemaker battery. An attendant, noticing from his screen that I am diabetic, recommended a retinal scan from which the optical clinic discovered the start of macular degeneration and where my vision was tested and spectacles were ordered, and where I received a printout of the prescription. The physician ordered medication for retinal health which I received in mail from the VA pharmacy. On another day I received shots for influenza and pneumonia.
    It boggles my mind to realize how the VA is managed to monitor my healthcare needs saving me multiple appointments to various offices around town. I try to imagine the exquisite care afforded to my comrades in arms who have much more serious conditions than mine.
    I hope you will always support the VA and ultimately universal healthcare by this model.

  10. Todd; let us here in Indiana never forget Messiah Trump rushing to the rescue of 1,000 plus Carrier employees to save their jobs, prior to the election. He quickly negotiated with Carrier and the state of Indiana (Pence) to reach an agreement announcing the salvation of those 1,000 plus positions which were in actuality 300 TEMPORARY jobs as most were soon after lost to technical replacements. The Carrier fake salvation and loss of jobs did not negate the Indiana $2 million tax dollars to save those known to be lost jobs. There was also a news item which quickly disappeared from publication; an interview with a business negotiator from the town in Mexico where the Carrier plant was moving to. He stated that the low wages to be paid to workers would NOT benefit the town’s economy and most did not want the Carrier plant to locate there.

    That situation was another of Trump’s campaign lies and the cheering and votes he garnered helped to elect him so he could destroy our health care system – among other things. Has Sweden – or Wisconsin for that matter – had the privilege of the benefit of Trump’s salvation efforts?

  11. Todd Smekens +1
    OMG +1

    Wish there was a more direct way to respond to the generally excellent comments on this blog. How about “agree” and “disagree” buttons? And maybe a “meh” one as well. 😉

  12. Krause Bernpainter wrote an article called “The truth about Swedencare”. He works at the Mises Institute in Sweden. A shocking read and the commentary following it.

  13. Greetings OMG. Not yet 90 but damn fast approaching it. I also am fortunate to be enrolled in the V-A H/C System. Have you noticed that the monthly rate for your drugs has been reduced. Or at least mine have been. Irvin

  14. In 1975 when Sweden was more socialistic, my wife and I and my mother in law flew to Sweden “to hunt relatives” of my mother in law who I found, to my surprise, spoke Swedish. One of the relatives we “found” was a multi-millionaire fellow lawyer, the head of a 7-member law firm in Stockholm. He had no car, opting instead of going to work on his bicycle due to environmental concerns, taking a cab in the rough Stockholm winters. He had a condo in Majorca and a chalet in the Swiss Alps where he and his wife Ingrid could fly down for a weekend of sking or sunning in the Mediterranean. He lived at 1 Kungsgarten, Stockholm, and had a beautiful condo loaded with art, jade etc. We sometimes received cards from Karl and Ingrid from Hong Kong or wherever on one of the around the world trips. I engaged him in conversation and assumed the role of right wing Republican in order to draw him out in re Sweden’s socialistic government at that time.
    I told him (Karl) that I understood one paid some 50 percent of his or her income in taxes and asked if that were not “a little high.” I will never forget his reply (in British English): He said: “Well, Jerry, that depends on what you get for your money.” He then laid out a litany of things that such taxation paid for in the Swedish scheme of things, including free education, single payer health care, childcare etc. etc. etc., and by the time he was done I told him then and believe now that I think we pay more money for services rendered by the private sector in our sheme of things than the Swedes do in taxes for payment of services, and at a profit to such private sectors, an unnecessary additional expense to consumers of these services.

    The problem is that the private sector with its Reagan enunciated “Government is the problem” nonsense and support of the private sector and Koch Brothers’ nihilist libertarianism have very successfully poisoned the well of public confidence by persuading us that all government is bad and that we must depend upon the private sector and its view of free market economics for provision of services to the consuming public. We do not trust government to spend our tax dollars for education and health care although spending our money for “defense” contracts and tax reductions for the rich and corporate class seem to be exempted from such scrutiny.

    Piketty treats the Danish experience in his landmark book of a few years ago. Denmark currently has the highest taxes in the world and the people are prospering, thus proving that high taxes per se have nothing to do with prosperity; rather it’s how such public funds are spent. Thus if the only bills I have are for groceries and shoes, I will gladly pay 50 percent of my income in taxes for payment of my other expenses and will have a surplus to spend on other goods and services, thus creating greater demand in the free side of the market so that all prosper.
    Unfortunately, the well of public confidence in government has been poisoned by the moneychangers and paper shufflers on Wall Street and libertarian nihilism. Our long term task is to remove the poison from the well and truly make America great again by way of providing an environment in which America’s people live prosperously in a democracy attuned to their needs, where poverty is literally illegal, where bankruptcy courts have few if any cases to
    ponder, where bullet trains relieve urban congestion etc. It is a daunting task, to be sure, amidst all the propaganda from the status quo exponents who are disproportionally rewarded by the present skewed view of who “should” prosper in a “free market” economy. We have work to do, especially with the superrich and corporate class currently in control of our executive and legislative branches, so let’s get on with it.

  15. Well said, Gerald. I have long thought that local government was the level at which to start the poison removal process, but then I learned about Indiana’s home rule limitations on cities, which is only getting worse. The challenge is considerable.

  16. Clearly many Americans cannot think clearly and dispassionately about government or business or religion or even science.

    They’ve allowed their cognitive abilities to be numbed by pervasive mass media entertainment and extremest memes designed to create fear; the same process used by military brain washers all over the world; delivered for free right into our living rooms.

    Our minds, emptied of knowledge but ripe with fear are available for a fee to oligarchs everywhere.

    Democracy isn’t broken, thinking is. Politics isn’t broken, the electorate is. The threat isn’t them, it’s us.

    We are lost until we can think clearly and dispassionately again.

  17. Great comment to a hopeful presentation by Sheila. Maybe instead of looking at what we don’the have we could work on figuring out a way to bring our society and country around to thiking how to inspire other, more sustainable systems which benefit more people. There seem to be a lot of programs out there already operating in the US if we find and support them recaps we could turn this ship around.

  18. Insightful essay by Dr. K and excellent comments by readers. I can’t think of any additional wisdom to add, simply glad that I’m 72 and may not have to suffer from the current American mindset for many more years

  19. “Democracy isn’t broken, thinking is. Politics isn’t broken, the electorate is. The threat isn’t them, it’s us.”

    Pete, may I use this quote to share with others on Women4Change Discussion Page? IMO, it summarizes our dilemma perfectly. Having identified the problem, we can move to solutions. At least, I hope so.

  20. Maybe drawing pictures like Reich does would help.
    One of my old lady friends who voted for Trump said she’s not that impressed with Trumpcare. I said keep reading. It just takes necessities from old and children and gives more tax cuts to the super rich. I quit while I was ahead.

  21. Those countries do not fund an expensive military or/and pay countries to rebuild after war destruction or pay them to keep a military base on tbeir land. The question is, what do we want to do with our tax money?

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