Bjorn Borg come home

Those on the left who have long sought economic guidance from egalitarian Sweden need a new role model. Stockholm is spouting heresy these days by talking up the benefits of lower taxes, says the Wall Street Journal.

The latest tax to bite the dust is the 1 per cent property tax for houses and 0.5 per cent for apartments. The centre-right coalition government announced last week that it is replacing it with a small, flat fee. That move comes amid the looming demise of the wealth tax, which the government also says it will abolish this year.

This tax on the "rich" dates back to 1947 and is imposed on assets – the family Volvo, house, bank accounts – above 1.5 million kronor ($215,000) for singles and three million kronor for couples.

The current rate is 0.75 per cent, down from 1.5 per cent last year; that's on top of income taxes, which range between 29 per cent and a top marginal rate of about 60 per cent.

Wealth taxes used to be de rigueur in Europe, where there are only a few holdouts:

France's is between 0.5 per cent and 1.8 per cent on assets above $1 million.

In Spain, it's 0.2 per cent to 2.5 per cent on assets above $223,000.

But rather than transferring wealth, wealth taxes transfer the wealthy. In Sweden, tennis star Björn Borg, ABBA's Björn Ulvaeus and Ikea founder Ingvar Kamprad are among the mega-rich who have fled the country, taking their money with them.

Getting rid of the wealth tax is "a step on the way back toward making Sweden an entrepreneurial country," says Finance Minister Anders Borg. That's sound capitalist advice from the cradle of welfare socialism, says the Journal.

Source: Editorial, Björn Borg, Come Home, Wall Street Journal, April 11, 2007.

For text: http://online.wsj.com/article/SB117623826351365490.html

For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26

FMF Policy Bulletin 17 April 2007