Sweden, often referred to as a Socialist Country has a high degree of economic freedom. While they are a small country of just over 10 million (3% the size of the USA) you will recognize many of their leading corporations: IKEA, Volvo, Saab, Spotify, and Ericsson.
The following from “Bored Panda” in the words of a Middle-Class Citizen.
‘I Don’t Mean To Rub Salt In Your Wounds’: Swede Tells Americans What It’s Like To Live In Sweden And It’s Eye-Opening
“GDP per capita rose by 50 percent in Sweden between 1995–2016. In 2018, researchers at Oxfam and Development Finance International named it the most committed country to reducing inequality, and according to the World Happiness Report 2020, it’s the 7th happiest place on Earth. So I guess it’s safe to say the Swedes have it good. But what exactly is their secret?
Well, this Swedish citizen thinks it’s purposeful internal politics. In a recent Facebook post, they used their own life as an example to explain taxes, healthcare, and other vital parts of their country. The post soon went viral, making its way into personal feeds abroad, too. Foreigners — especially Americans — even got jealous.
Image credits: Fredrik Rubensson
As Elke Asen, a Policy Analyst with the Tax Foundation’s Center for Global Tax Policy, pointed out, Scandinavian countries are well-known for their broad social safety net and their public funding of services such as universal healthcare, higher education, parental leave, and child and elderly care.
Of course, high levels of public spending require high levels of taxation. In 2018, Denmark’s tax-to-GDP ratio was at 44.9 percent, Norway’s at 39.0 percent, and Sweden’s at 43.9 percent. For comparison, the same in the US was 24.3 percent.
In 2018, these three Northern European countries raised a high amount of tax revenue as a percent of GDP from individual taxes, almost exclusively through personal income taxes and social security contributions.
One way to analyze the level of taxation on wage income is to look at what experts call the “tax wedge,” a figure that shows the difference between an employer’s cost of an employee and the employee’s net disposable income.
In 2018, the tax wedge for a single worker with no children earning a nation’s average wage was 35.8 percent in Denmark, 35.9 percent in Norway, and a whopping 43.0 percent in Sweden. Although Denmark and Norway are below the OECD average of 36.1 percent, their tax wedges—and Sweden’s—are higher than the U.S. tax wedge of 29.6 percent.
By international comparison, Sweden is a prosperous country that evenly distributes wealth between its citizens. Its sociopolitical model consists of three fundamental pillars: a labor market that facilitates adjustment to change, a universal welfare policy, and an economic policy that promotes openness and stability. “
Dave here again. The primary factor that that the preceding commentary does not take into account is the excessive cost of healthcare in our country. The “extra” cost that we bare is, in fact, a tax. The average per capita cost for this service in the USA is over $11,000. The typical premium for an individual under the Affordable Healthcare Act is about $750 per month ($9,000 per year) not including co-pays and deductibles. The average per capita cost in Sweden is almost exactly ½ of what it runs here. That means that our country needs to fund an extra $5,500 for each man woman & child each year. For a young middle-class couple earning the average family income of $68,000 a year the “extra” cost of healthcare amounts to an additional 16% tax.
Who actually funds our healthcare system will be the subject of a future post.