Decentralizing Sweden – Part 3: Taxes

Taxation is a big business in Sweden, world-champion in the art for decades. According to Forbes, about 2/3 of the ordinary citizen’s paycheck goes to the government coffers. The Swedish state is a hungry beast and its rulers are inventing new taxes and fees to keep the beast growing.  Can we lower them locally to let people keep their hard earned money away from the beast’s paws? Yes, yes we can.

Taxes By Ludvig Von Mises

Income tax is arguably the largest chunk of taxes you pay as a Swede and the calculation variables for that is two-fold: How much do you make? Where do you live?

Making $2000 or less per year? Congratulations, you are taxfree.

How about $47000 or less per year? You sadly get taxed by your local commune and county. Depending on where you live, this is between 28% to 35%.

What if you make more than $47000 yearly? Well, I have bad news for you. Not only are the local commune and county getting “their” piece of your paycheck, but the central government also swoops in and nibble up an additional 20% tax on everything above the first $47000/year.

That the central government has a tax of 20% is sadly out of our theoretical hands as “rulers” over a Commune, it will stay for high-income earners no matter what we do. The County part of the local income tax is a part that is decided in the County Council boardrooms and is bureaucratically separated from the Commune as well. Out of the 28% to 35%, the County Tax is on average 10.5% of that number  – Leaving us in charge of the last 18.5-25.5%, a considerable chunk of a private citizens income.

Can we lower that number of 18.5 to 25.5% to zero? The short and sweet answer is: No.

In Part 2 of this article series, I outlined what the commune has to provide, by law, so how big of a shrinking you can make to the communal income tax is dependent on how much overhead and upkeep costs there is in the neighborhoods public goods. A heavy part of most communes upkeep costs is the mountain of debt of unpaid pensions – A debt that is so varied depending on municipality its is bizarre, the highest is $6000/citizen compared to the lowest that has a debt of $54/citizen, a considerable difference.

Any lowering of income taxes must be done in harmony with expense cutting in public spending, so the more autonomous the people living in the commune the lower you can go on taxes – By making plenty of the functions privatized, you can lower the living expenses as well.

stefan

If the government didn’t build your house, it has no claim on it either…

There is one tax we can lower to 0%, though: The Property Taxes.  Property taxes are collected by the central government and then given to the communes where the inhabitants are registered, giving the communes 100% control over how the Property Tax is used.

The most reasonable use of the property tax is to give it back to the property owners that had to pay it in the first place. Call it a “Reward for contributing to local society by being a property owner” and the reward just happens to be what the person had to pay in property taxes. A sprinkle of bureaucracy magic and nobody in “our” commune needs to pay the state for owning a house anymore.

 

An interesting side-note on how Rich communes compensate for “poor” communes

A semi-new invention is the concept of Tax Equalization – A sort of balancer between the communes. where the ones that can’t balance their budgets get a cut from the state coffers as compensation for doing a bad job. Yes, you read that right. This is real life.

The Tax Equalization is sometimes called, unironically, for the Robin Hood tax, to make it sound cuter. In the richest commune of Sweden, Danderyd, every taxpayer paid $1700 not to get services for themselves, but to cover for badly balanced budgets elsewhere. The receivers? Well, Malmö, as one of the cities that repeatedly fumbles with their budget, got $500 million last year from “Robin Hood” to glue the frames back together.

By keeping a tight ship running on nothing but fumes, you avoid having to participate in this ridiculous tax equalization in the first place and that’s the goal. Right?

In the next installment of this series, we are going to take a look on and introduce some radical ideas to the concept of “freeing” a commune, taking a look at similar projects around the world and see how the solutions can be implemented in the kingdom of Sweden.

“If taxation without consent is not robbery, then any band of robbers have only to declare themselves a government, and all their robberies are legalized.” – Lysander Spooner

 

Missed the first 2 parts of the series?

Decentralizing Sweden – Part 1: The basics

Decentralizing Sweden – Part 2: Laws

 


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