DN Debate. Lower marginal tax and raise the tax on capital and real estate

in 1991, the reform in the Swedish tax system in the foundation. One of the reform's load-bearing tanks was lower in the 1980's very high marginal tax rates on income. In the context of the economic crisis of the 1990s and the subsequent budget cuts, raised income taxes again.

in The last two decades, marginal tax rates for middle-income earners to a significant extent, been reduced, but the reductions in the marginal tax rate for high earners has been conspicuous by its absence. High-income earners have of course taken advantage of the recent reforms (for example, the earned income tax credit) then they have scored on average lower taxes, but the driving force to work depends on the marginal tax, that is the answer to the question ”How much of an additional earned penny I get to keep after taxes?”. This driver has not been improved for people with high incomes since the mid 1990s tax increases. Grundackordet have been the same regardless of the colour of governments.

A specialist who serves 59.000 dollars a month, and who are looking to work more hours or accept a more högavlönad services, may, for example, to date, only retaining 40% of an additional earned dollar. Income tax, state income tax, and avtrappning of the earned income tax credit together to create a marginal tax rate of about 60%. Take also into account the more invisible taxes that affect the difference between what the employer pays for an employee and the employee can actually consume, becomes the effective marginal tax than higher – around 75 per cent of a wage increase goes away in taxes.

today, There are several empirical findings that indicate that the current Swedish marginal tax rates are so high that tax revenue from high income earners would actually increase if marginal tax rates were lowered.

today, There are several empirical findings that indicate that the current Swedish marginal tax rates are so high that tax revenue from high income earners would actually increase if marginal tax rates were lowered. The logic is that people tend to work more if they get to keep more of a wage increase after taxes. If the tax base grows enough will this effect to exceed the mechanical loss of tax revenue resulting from a lower tax rate.

At a monthly income of 42.000 kronor, more than half of it away in taxes. It is also striking that the marginal tax greatly jumps at the breakpoint for state income tax, which makes it you get to keep at the margin differ significantly between the two people who earn, say, 35,000 sek and 45,000 dollars a month.

We publish tomorrow, Wednesday, the ESO report ”Difference at the margin – an ESO report on the reform of the taxation of income”. The report discusses the Swedish fiscal policy in the light of modern skatteforskning, with particular focus on marginal tax rates. Grundtesen is that the state must take in tax to finance the common concerns which the police and defence, but also to redistribute between the rich and the poor. Redistribution, however, has an inevitable cost: the high marginal tax rates make people work or make the effort smaller, which leads to lost tax revenue.

Regardless of ideological basis, one can easily concluded to be made: If the marginal tax for high-income earners exceed the tax rate that maximizes tax revenues means a reduction in taxes that there are more resources to redistribute in the community.

In our report, we have, with the help of numerical models studied the optimal inkomstskatteskalor on Swedish data, for example, under the assumption that the state wishes to reallocate as much resources as possible to those who are the most deprived. Somewhat simplified it can be said that the optimal tax bracket was not flat – the marginal tax should be higher for high - than for low-income households. But the current gap in the marginal tax rate between medium - and high-income earners appear to be, however, as unjustifiably large.

the Proposals are designed in accordance with the fiscal policy framework's requirement that the tax cuts should be fully funded (without taking into account the ”dynamic effects”), and avoids at the same time that the poor groups in the short term, given the improvements paid by the more resource-poor groups. Therefore, the proposals to reduce the tax on work and increase taxes on other things that correlate with high earned incomes.

We find that dividends and tax assessment value on småhusfastigheter are highly concentrated among those with the highest earned income. At the same time, is dividends and capital gains from closely held companies and real estate in the current situation favourably taxed compared with other forms of capital. The central sources in our reformskisser is thus higher taxes on capital income from fåmansaktiebolag (from 20% to 25%) and a progressive property tax. The first action would not – in contrast to a reformed bostadsbeskattning – require significantly additional investigative work.

In connection with the reform of 1991 separated the taxation of labour income and capital income. Since then, people with high earned incomes often served to transform labour income into lower taxed capital income by conducting business in the corporate form. For this reason, the so-called 3:12 rules had been in place. But with the dividend and corporate taxes have been lowered, and the taxation of high earnings have been tightened, the gap between the taxation of labor income and capital income increased (at the same time as the 3:12 rules become more generous). Today, it is different over 30 percentage points in the marginal tax rate on dividends and employee income for the fåmansbolagsägare.

We do therefore consider that it is by simple means possible to increase the höginkomsttagares drivers to work in a way that even in the short term would be perceived as fördelningspolitiskt legitimate. This should be relevant information for all who are interested in how the tax system can be reformed, not least, political decision-makers.