(Sweden:) Wealth tax abolition widely welcomed

www.thelocal.se ^ | 03/28/2007 | AFP

[Army Air Corps]

Huzzah for Sweden.

Could this move eventually lead to tax reductions for "the average Joe" in Sweden?

[Psycho_Bunny]

So, they're just moving the tax. Not abolishing it.

[Disambiguator]

The measure will be compensated by a decrease in the tax break granted to private pension savings.

Governments always have to "pay" for tax cuts somehow, even though it's proven to be not necessary. Zero-sum economics at its worst.

[lormand]

WTF?

Socialism is not mathematically sustainable?

Where is the "consensus" of scientist refuting this?

[Obie Wan]

"The powerful Confederation of Swedish Trade Unions, LO, which has close links to the opposition Social Democrats, said it was "unacceptable""

Ha,ha, the unions don't like it. Now there's a shock !!!

[WesternCulture]

Sweden has enjoyed good finances and high GDP growth before in history.

Sweden has experienced governments that have spoken about tax reductions before.

However, these two things haven't coincided too often since Sweden became a true democracy in the beginning of the twentieth century, but now they have.

For a long time, the typical pattern has been one of Social Democrats (The 'Socialists' to keep it simple) maintaining high taxes when the economy has performed well, handing out all kinds of government goodies and launching all sorts of new welfare projects, followed by a period of weaker economic development when different right wing government constellations sometimes - often the Socialists have remained in power - have been able to overthrow Socialist governments, only to find the state of the economy so poor that tax reductions have seemed to hazardous to them.

Today, neither of these two situations is at hand. The Swedish economy is VERY healthy, but we do NOT have a government who wishes to maintain our traditional high levels of taxation.

Apart from getting rid of the Wealth Tax, PM Reinfeldt is determined to lower income taxes by and by if the high GDP growth continues. One such reduction has already been enforced, resulting in an average Swede having appr $145 more to spend on a monthly basis and another reduction will soon follow.

This is getting interesting.

[rocksblues]

No Sweden is so Politically Correct that they are done.

Stick a fork in them!

[Obie Wan]

Geez,you guys might even get to keep some of your own money huh ???

[Southack]

Reinfeldt has done a marvelous job in his environment. Bravo!

[Army Air Corps]

One such reduction has already been enforced, resulting in an average Swede having appr $145 more to spend on a monthly basis and another reduction will soon follow.

Baby steps in the right direction. I am genuinely happy for the Swedish people.

[WesternCulture]

Could this move eventually lead to tax reductions for "the average Joe" in Sweden?

- The main argument for the abolishment is to encourage wealthy people to stay in Sweden and continue investing here and furthermore making Sweden a more attractive country to live and invest in for wealthy foreigners.

If such a development occurs at a greater level, it will, naturally, contribute a lot to the development of our economy and will allow us to lower taxes.

World economy goes up and down and Sweden, being a country of many large export industries, is heavily dependent on the state of the global economy at large, but presently I see no storms on the horizon. Asia is still booming, The US economy is growing steady but at somewhat more modest pace than one or two years ago and the largest economy on earth, the European one, is looking stronger day by day.

[WesternCulture]

In this case, like in many others, a government launches a tax cut/tax abolishment but wishes to avoid appearing 'irresponsible'.

Now, two lines of development are possible.

Scenario A:

If all goes according to plan, the economy will continue to develop nicely and this alone will finance the tax cut to a great degree. A lot of 'moving around' in the budget won't be needed.

Scenario B:

However, if the economy weakens rapidly and unexpectedly, a government will be able to raise taxes or whatever they earlier said they would do in order to 'finance' the earlier tax cut (in order to maintain budget disciple) while simply getting away with reminding everyone they've been saying this latter measurement was going to be necessary all along.

Let's hope for the best. There actually have been politicians in history that have had the guts to lower taxes. Reagan was such a politician - and Reinfeldt and other Swedish Conservatives of his generation grew up admiring him.

[AdrianR]

Could this move eventually lead to tax reductions for "the average Joe" in Sweden?

This "wealth tax" could be actually affecting a lot of people. The threshold for it is 1.5 million kronor in wealth which is just about $200,000. That's how Swedish Social Democrats define "rich"...

[Psycho_Bunny]

Yes, but the article specifically states that the government is offsetting the funds with a reduction of the exemption on pensions.....they're just shifting the tax.

[Army Air Corps]

Geez, their definition of rich and my definition differ widely.

[WesternCulture]

"Baby steps in the right direction. I am genuinely happy for the Swedish people."

Not a revolution, but I wouldn't call it baby steps either.

- $145 is $1740 on an annual basis. Now multiply this with the number of workers. Even though Sweden is a small country, you could easily imagine all the fun our politicians deliberately refrain from - like sending money to corrupt Socialist Regimes in Africa that end up on a Swiss bank account, calling it 'foreign aid', etc, etc.

[Army Air Corps]

True enough. That is $1,740 that Swedes can put in the bank or spend on goods and services or a combination thereof. Anytime that politicians have less money with which to commit mischief is a good thing.

[WesternCulture]

In Sweden, $200 000 will buy you, for instance, an ordinary house or three well equipped Volvo XC90 SUV's.

If you can afford this, which a lot of middle class people can (although few would buy three Volvo XC90's instead of being satisfied with one such car) the system views you as 'rich.'

The logic is therefore, in one way, that anyone who COULD afford to live a typical middle class life, but chooses to live very frugally although having a lot of money on a bank account ought to be punished. It's not the basic intention of the tax, but it's a somewhat bizarre side effect.

[WesternCulture]

"Anytime that politicians have less money with which to commit mischief is a good thing"

- Cheers to that!