Rising Disparity Could Sap Growth Even in These Welfare Utopias Making Sweden Great Again With Tax Hikes and Even More Welfare
To be sure, even Sweden has its limits when it comes to taxes. While the Social Democratic-led government has raised levies over the past four years, that came after almost a decade of tax cuts from the previous center-right government. According to the OECD, Sweden’s tax wedge fell by 7.2 points from 2000 to 2017, a decline surpassed only by Hungary and Israel.
Economists say high taxes work in the Nordic region because the notion of state welfare is so deeply rooted in its culture. The region also has a highly educated population, multiple supports built into the labor market and a relatively high level of trust in government, which allows the system to work.
“No country can start with a clean slate,” said Karkkainen. “So taking the Nordic model and attempting to implement it in the U.S., which has a much larger population and very different history, it wouldn’t work there in the same way as it works here.’’
This article was provided by Bloomberg News.