Friday, April 18, 2008

Exactly How Over-Taxed is Sweden?

Our Swedish correspondent LN took exception to my most recent post about Sweden:

Dear Baron,

Comments by Skalman on “Proposed Suppression of Sweden’s Bloggers” is one thing, but “Demographic Genocide” by “Skalman and Baron Bodissey” is a bit too much.

Today I am no expert on Swedish taxation, but as far as I can see Skalman’s version is highly slanted, if not incorrect.

For example:

Every dollar I make costs my employer (at least) two dollars because he has to pay a fee (tax) to the state that is just about equal to what I earn.

This is obviously not true. The employer fee is 32% — not 100%, as stated!

Sociala avgifter 2007

Procent av årslönen Arbetare Tjänstemän
Arbetsgivaravgifter enligt lag    
    Ålderspensionsavgift 10,21 10,21
    Efterlevandepensionsavgift 1,70 1,70
    Sjukförsäkringsavgift 8,78 8,78
    Arbetsskadeförsäkring 0,68 0,68
    Föräldraförsäkringsavgift 2,20 2,20
    Arbetsmarknadsavgift 4,45 4,45
Delsumma lagstadgade avgifter 28,02 28,02
Allmän löneavgift 4,40 4,40
Totalt 32,42 32,42
- - - - - - - - -
Of course Swedish taxation is totally abnormal; however, it does not differ that much, as far as I know, from the Danish one.

A rigorous matter-of-fact presentation would have been a big thing, but this emotional version of poor Skalman’s difficulties and his not being able to afford a third child with a wife who is a pediatrician is jum-jum.

What about your or rather GoV’s credibility?

In a way you are our voice to the world, and now and again you through gullibility are risking giving it up. With a lost credibility you are just ridiculous — the Baron and his Baroness, as the “the happy family”, or in Swedish: Löjliga familjen.


Also incorrect is — still — your illustration:

Sweden Umma

…with some 65% infection of mo-mould instead of realistic some 15% (really realistic would have been 85% red socio-mould, that like house-mould you never can be 100% rid of).

I’m no expert on Swedish taxation, either, so I’ll let our Swedish readers weigh in on whether Skalman was guilty of distorting the tax situation in his country.

As for the illustration — I told LN that it represents not the present, but Sweden’s future, if things continue in the direction they are going now.


Lugundum said...

Well, this is a bit troubling issue but I think skalman hasn't suggested that the Swedish state is taking all money from his wife (100% taxation). I think we are talking about 66% taxation - state takes 66% and leaves his wife with 33%. This is an estimate I find feasible: in my case Czech state takes roughly 50% of all my income.

roger said...

I am Swedish and happily living outside Sweden. When I lived there I was shareholder of a small consulting business so I know what I talk about. What LN says about the employer's fee is right, but after the employer has payed it the employee has to be a progressive income tax that's usually around 40% in total. Nothing in the Swedish tax system is different from the average western country except the parameters, most notably the threshold under which you don't pay income tax. I think in Sweden it's around 2000 dollars/year, which is around 10% of what you need to survive. Above the threshold, the basic rate is 30% so the lowest income earners pay (very close to) 30% plus the employer's fee, which is quite a lot compared to other countries.

There have been many negative posts about us Swedes here on Gates of Vienna, and as a Swede I can confirm that all the negative comments are just and fair. Swedes have their own way of looking at some things like immigration, islam, prostitution and even strip bars. When you opine internationally normal on this, the Swede becomes very aggressive and treats you like an enemity of humanity.

But nevertheless, I strongly recommend a visit to Sweden. The nature and many cities are beautiful and if you want to know about immigration and Islam, go to the immigrant suburbs and many people there will speak honestly from the heart and tell you what it's like. The native Swedes will only reproduce government lies, talk to them about other things.

Skalman said...

So. As having been pointed out as if not outright but likely a liar and a whiner I guess I will have to correct LN in his serving of "facts".

I may have been incorrect in the fact of the cost for the employer. Fine. I admit my mistake in that.

However LN has forgotten some numbers.

If you read the lines further you will see some more costs that has not been told of:

Grupplivförsäkring (TGL) 0,30 0,20
Avtalsgruppsjukförsäkring (AGS) 1,49
Omställningsförsäkring* 0,21
Trygghetsförsäkr. vid arbetsskada (TFA) 0,20 0,01
Trygghetsrådet** 0,30
Pensionspremie*** 3,50
Premiebefrielseförsäkring**** 0,60
ITP***** 12,40

Delsumma avtalsförsäkringar 5,70 (6,30) 12,91

Skatt på pension
Särskild löneskatt på pensionskostnad 0,85 3,00
Arbetsgivarens totala avgifter 38,97 48,33

Allmän pensionsavgift 7,00 7,00

If you add these numbers to the ones presented by LN you get an increase to not 32,42% but to 45,97% and 55,33% respectively for blue collars and white collars.

As I mentioned it is my mistake. I should have checked the numbers better before whining but those were the costs I have been told by friends who run their own companies with employed labour and as I know them to be honest people I´ve had no reason to question them. Now, thanks to LN, I know that i should have done it.

About LN:s sarcasms I just let it talk for itself and also, when it comes to the credibility of GoV I believe it will survive minor mistakes such as mine.

Nevertheless the rest of the numbers are correct, including the total tax pressure.

Evan said...

I defer to other commenters on precisely how high Swedish taxes are. But by the standards of other seriously globalized and modern countries I think it is fair to say that they are high. This matters, because one of Skalman's basic points - that high taxes and fees to support the welfare state lower fertility - is increasingly supported by the research. Go here for a technical paper (pdf) on the relation between the size of state pensions and fertility. A more casual discussion at Cato of this research is here.

If society buys into the premise that my retirement (or my health care) is the responsibility of other people's children, I naturally want to leave it to other people to have the children.

Félicie said...

I was under an impression that there is a small-scale baby boom going on in Sweden among native Swedes. I may be wrong on that. But when my youngest was born (in 2002), I heard a report on TV that said that more people were born that year in Sweden than the number that died. And this happened for the first time in some years (don't remember how many).

My observation of many native urban Swedish families led me to conclude that while it was the norm in the 90-ies to have 2 children per family, it became the norm in 2000-s to have 3 children. I see 3-children families on the street all the time - a sight that was not as common 10 years ago. I don't know if it possible to check my hunch by looking at the Statistical Bureau data, because it does not distinguish between native Swedes' birth and muslim births (I think).

Rich Rostrom said...

If I read the table correctly, the taxes in question are payroll taxes, and as in the United States, are assessed on the employer and employee. The rate is 32.42%.

That is, 32.42% of the employee's nominal wages are withheld in taxes, and the employer also pays 32.42% of the wage amount.

So the total payroll taxes assessed, for each 100 kroner of nominal wages, is 64.84 kroner. The employee is paid 67.58 kroner (before income taxes). The employer's total wage expense is 132.42 kroner.

Thus for each kroner received by an employee (before income taxes), the employer delivers 0.96 kroner in payroll taxes to the state. Which is effectively the 1-to-1 ratio originally asserted.

Anonymous said...

Perhaps we Westerners should give up just a little of our much vaunted individuality and think about surviving in a strategic way by combining with others who are like-minded? Perhaps Skalman could find another family to rent or buy a house with and therefore cut housing costs so he could afford another child? I keep thinking of how we conquered the American frontier. A lot of it had to do with teamwork -- the communal barn-raisings, the quilting bees, the communal funding of the schoolteacher etc. Our own governments are making war on us and our current ways are not working for this new, incomprehensible era. Perhaps we can look to the past for new ideas?

Carl T said...
This comment has been removed by the author.
Carl T said...

Alas, the only baby boom Sweden is experiencing is that of muslims, Arabs and Blacks. Native Swedes do not have many children, although we fare much better than Italians or Spaniards.

The fact that immigrants actually can make such an imprint on the statistics says a great deal about the situation Sweden faces.