Headlines 2018

Researchers: Lower tax on income and raise taxes on capital

2018-01-17


Daniel Waldenström, IFN, chairman of the SNS Economic Policy Council, presented the 2018 Council Report at a seminar January 19. Co-authors have been Åsa Hansson, Associate Professor, Lund University.and Spencer Bastani, Associate Professor, Linnæus University. The Researchers suggest that the tax on income should be lowered but that the tax on capital should be higher. “Our suggestions to not alter the total burden of taxation” said Daniel Waldenström when the report was presented at SNS.

In the policy recommendation of the report, the researches state that “for the sake of equal treatment all income of capital should be taxed with the same general tax rate. This reduces the risk of adverse socio-economic effects due to distortions of investment, tax arbitrage and unpredictability." They suggest a tax rate of 25 percent. This is somewhat lower than the overall tax rate on capital, currently 30 percent, but somewhat higher than the tax paid on profit from house sales and the dividend on closely-held corporation (fåmansbolag). The change would probably mean that ISK and capital insurances would cease to exist.

 

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The authors from the left, Spencer Bastani, associate professor in Economics, Linnaeus University, Åsa Hansson, associate professor, , Lund University and affiliated to IFN, and Daniel Waldenström, professor in economics, IFN and visiting professor at the Paris School of Economics.

 

What tax on capital can bring to the public treasury should not be overestimated, said Åsa Hansson. “The taxation of capital is only 10 percent of total taxes.”

The researchers suggest that the inheritance and gift tax possibly should be reinstated, at least the possibility should be considered. The same goes for new ways to simplify savings in funds. The researches also argue for a new tax on property.

 

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The seminar was jam-packed with an audience that asked numerous insightful questions.

 

“Tax on property is fancied by economists and hated by the people”, joked Daniel Waldenström at the seminar.

In the report the researches explain that property does not move when being taxed, which differentiate it from almost any other tax base and makes it a socio economical effective tax. In the report they suggest that all property should be taxed in relation to its market value and propose a tax of 1 percent of the tax value (taxeringsvärde), which is higher than today’s level.

Currently the difference in taxes between owning you own house or a condominium is unreasonable, the researchers argue, suggesting that this difference should be done away with:

 

 

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The report was commented on by Elisabeth Svantesson, economic-political spokesperson for moderaterna (the moderate party) and Leif Jakobsson, secretary of state for the Minister of Finance, Magdalena Andersson. “We says no to the inheritance tax” said Svantesson and  Jakobsson explained that the government today have no plans to reinstate either the inheritance tax nor the property tax.

Video from the seminar (SNS website)

Read the report (in Swedish)

Read an article about the report at DN Debatt

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