InDepth – US vs Sweden Post #6 – Taxes & Closing Thoughts

The obvious question to close off this series is “How can Sweden afford those benefits?” Of course a part of that answer it through relatively high taxes. But how high is that? Sweden does have the highest top marginal rate among OECD countries at about 56%.

In The US

The highest marginal tax rate in the US is about 35% but there are many tax loopholes that push that rate down below 25% for the most afluent. Americans in the most common income bracket earned an adjusted gross income between $50,000 and $75,000 in 2018, and paid an average income tax of $4,688. 

The “average” tax rate of 16% for the top 50% of taxpayers, just 4% for the bottom 50%, and an average of 14.6% overall. Property taxes are an average of about $2,500/year across the fifty states. Long term capital gains is 0-15-20%

Total US tax revenue equaled 24 percent of gross domestic product

In Sweden

Sweden has the highest top marginal rate among OECD countries at about 56%. Swedes earning under $53,700 a year (2017 numbers) pay no national tax; if they earn more, the salaries/wages from $53,700 up to $78,000 are taxed at 20 percent, and income over that is taxed at 25 percent. The top 5% of Swedes do pay 50% or more of their income to taxes.

Swedes don’t pay property taxes. Long term Capital gains is taxed at a straight 30%. Swedish total taxes is about 43% of GDP.

I am going to finish out this category with a quote from my primary source for this series. https://www.thenation.com/article/archive/sweden-welfare-state-benefits-popular/

And despite relatively high taxes, Swedes aren’t exactly suffering. How can this be? According to political scientist Stranne, since the government picks up the tab for essentials, they have a lot left in their pockets. They enjoy four to seven weeks of vacation a year and drive late-model, high-end European cars (such as Mercedes, Volvo, and Audi), which cost about the same as in the United States, while gas costs about $6 a gallon. 
Stranne says, “I feel rich, since I have a lot of money left to spend for my comfort, as do others. In 2017, 60 percent of Swedes vacationed, for a total of 11.7 million trips. Spain was the most popular destination, but over 300,000 went to Thailand.” 


They also live longer than people in the United States; in 2018, life expectancy was 82 years, against 79 here. 


While some Swedes grumble about their taxes, a 2017 OECD public opinion poll (based on Gallup/World Bank data) found that 50 percent trust their government, while the figure is only 30 percent for Americans. Worse, a 2014 CNN poll found that only 13 percent of Americans thought the federal government would “do what is right at least most of the time.” And 10 percent said they “never trust the government to do what is right.” 


Stranne says, “We don’t have to worry about how we’ll pay for insurance, medical bills, preschool programs, and our kids’ child care and education. This is how I define true freedom. 
“When I visit the US, I hear people worrying about how they’ll pay for these things—even those with good incomes. You don’t hear this here. Swedes might complain about taxes, but it feels good not to have to depend on a relative’s or friend’s goodwill when you need help.” 

The Nation Magazine – Even Conservatives Support Sweden’s Welfare State. Here’s Why

Final Thoughts

I think the quote above pretty much describes my thoughts about comparing Sweden to the US when it comes to quality of life issues. It seems that everyone in the US is constantly complaining about one life issue or another.

  • If I get sick, will I lose my job?
  • Will medical bills bankrupt me?
  • I don’t trust the government!
  • If I lose my job will I be homeless?

We certainly have a lot to worry about in the US. But, I kinda think we bring most of the worries on ourselves by our distrust for almost everything. Our “you’re on your own” attitude puts too many barriers in the path of life.

The Swedes take life issues very differently than we do. That is probably why they are frequently rated as the “happiest” people on earth. They trust their government and each other much more than we do. They know that if/when hard times happen that their government doing the people’s business will “have their back”.

While I don’t expect the US to give up their bravado attitude or fixation on wealth any time too soon, I do hope that we can learn some lessons about trust that will alleviate many of our constant worries in life. Part of that possible solution is to recreate a government that we can trust to have our backs. Our current version of government simply is not working for us. But, the big question is given our current environment is that degree of change even possible right now?

2 comments

  1. “But, the big question is given our current environment is that degree of change even possible right now?” I vote for not a chance. Americans may think they are self-sufficient and independent but they are delusional. Without two government programs the vast majority of us would be destitute in old age, Social Security and Medicare. If SS did not exist I think we can be quite confident our employers would not have willingly given us their share of SS contributions. Only government intervention would have made this possible and we certainly would not want that. How many would have done better than SS on their own. I would submit very few. Without Medicare there would be little healthcare for seniors. Insurance for seniors would be nonexistent. No insurance company would sell an affordable policy to a senior without government intervention. That would be more government intervention that we certainly would not want. As long as so many of us remain delusional we cannot even begin a reasonable conversation.
    Thanks for the informative series RJ. It is nice to see a rational country with reasonable solutions.

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  2. Thanks for the thoughts Fred. I think it comes down to trust. When people finally figure out that politics is actually doing the people’s business and they start electing their representatives likewise then trust will increase. On the insurance thing, over half of us are already on government provided healthcare. One thing that can happen quickly is that they will be able to leverage that percentage to bring down costs, particularly drug costs. I don’t imagine I will be around by the end of this decade, but it would be interesting to see the mentality of citizens at that time.

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