Grace:
Thanks for an outstanding post. I shook my head at Raymond's virulent class envy and then moved on, knowing he is irredeemable.
Your point about leaving money in private hands to earn a greater return, adding more to the nation's capital stock than it would in government hands, was excellent. I would also add that the estate tax is fundamentally unfair as it is a blatant case of double taxation - i.e. estates acquired with after tax income are then punitively taxed again.
I have a deeper concern about the kind of attitudes Raymond so ably represents. Democratic economies are composed of citizens who are either net taxpayers or net tax consumers. It is possible for an economy to reach a sort of critical mass whereby tax consumers outnumber taxpayers. At that point the game is over, as the tax consumers vote themselves an ever-bigger slice of the taxpayers' wealth. The end point of this process is a sclerotic, senile economy that looks a lot like Sweden, for example, where 20% of the workforce are on government-paid disability, primarily because they feel they "deserve" an open-ended government-paid vacation.
Welfare system makes Swedish citizenry sick
REUTERS
Thursday, Dec 04, 2003
"[High taxes are] a strong disincentive to get an education and work extra and Swedes respond by working less and less."......Krister Andersson, tax policy director for the Confederation of Swedish Enterprise
Clean air, safe streets, good transport, caring employers and subsidized childcare: Sweden should be a stress-free zone for workers.
Instead, an epidemic of sick leave and "burn-out" is draining its workforce and finances and causing anxiety to a country more used to being a role model than a problem case.
By October more than 800,000 people, or a fifth of the workforce, were on sick leave or had been pensioned off early, according to the National Insurance Board. The cost from January to October was 86.5 billion crowns (US$11.45 billion) or 15 percent of spending.
Those rates are the worst in the EU and have doubled in two years, despite the healthy lifestyle of a people who smoke and drink less than other Europeans, do more sport and have the world's third highest standard of living in UN rankings.
The debate dominates the media: Are Swedes driven too hard, are the world's highest taxes driving them to their sick bed or is sick leave just a new way of saying unemployment?
"It's a terrible waste of energy, paying people for not doing anything," said Aleksander Perski, who runs a pioneering stress clinic at Stockholm's renowned Karolinska hospital.
He does not believe the 200 to 300 burnt-out cases he sees each year are faking it, saying Sweden's Lutheran roots survive in a strong work ethic "so the lack of work is a tragedy."
Those on sick leave write to the press complaining of "spying" by inspectors who, given the task of halving sick-leave rates by 2008, have increased house calls to catch out abusers.
"Stop setting traps for those of us on sick leave, we have already paid the price with our ill health. Help us instead to return to the workplace," said a letter to one newspaper.
It is a long way from the halcyon days of the 1970s, when the "Swedish model" of cradle-to-grave welfare for all was held up to the world as an example of modernity and progress.
A decade after a severe economic crisis forced a re-think of that model, Sweden is still no sweatshop. Unemployment is way below the EU average and firms bend over backwards for staff. At framing chain Gallerix, employees can drop their kids at school or collect them on company time.
"We get less people sick and changing jobs. If you have an hour more to spend on the family you will be a better person and a better help at work," said owner Thomas Sonesson.
He believes high taxes make Swedes quicker than others to say "the system must take care of me when I don't feel good."
High-earners pay 60 percent income tax compared with a 40 percent top rate in much of Europe, plus taxes on wealth and housing that make it hard to put something by for a rainy day.
"This is a strong disincentive to get an education and work extra and Swedes respond by working less and less," said Krister Andersson, tax policy director for the Confederation of Swedish Enterprise, the main business lobby.
He estimates that for three quarters of workers, the gap between net wages and welfare is only 100 crowns (US$13.24) a day, so some choose to stay at home in what he calls a "tax revolt."
High wage costs mean even well-paid professionals cannot afford a cleaner or painter, or to get groceries delivered -- which self-consciously classless Swedes would frown on anyway.
"I spent the whole summer painting houses," said Andersson. "First my mother's house, then my own house. If I hired a painter it would cost me my entire salary."
The lingering utopia of the Social Democrats, in power for six of the last seven decades, is that the state as "folkhem" (home of the people) should supervise citizens, whether at the day-care centre or via a paternalistic liquor monopoly.
But since the 1992 currency crisis, public services have declined and Swedes increasingly have to pay for them in cash or in kind, such as parents helping to clean their kids' schools.
"Isn't this a municipal park? So why are we cleaning it up?" grumbled one father as he shovelled sodden leaves into a plastic bag in a kindergarten playground one chilly Saturday morning.
Perski says Swedes find it hard to adapt because the "folkhem" has eroded informal social networks like the family, meaning that "in Sweden people are lonely without the state."
If the economy is competitive -- the World Economic Forum ranks it third in growth prospects and efficiency -- Andersson says decades of depreciation have helped by making the workforce cheaper, with a subsequent drop in relative per capita income.
The state, overwhelmed by the cost of sick leave, wants employers to shoulder more of the financial burden.
Perski says it would be better to invest in rehabilitation. Six months' treatment at his state-funded clinic costs 45,000 crowns (US$5,958) -- "the cost of one-and-a-half months on sick leave." |
