While Warren and a number of Democrats have touted Nordic socialism as a model, not everyone thinks the comparison is sound.
In fact, Nordic countries long ago abolished their high personal and corporate taxes as unworkable and now find themselves among the top capitalist countries in the world, said historian and sociologist Rainer Zitelmann in his latest book The Power of Capitalism.
Today, Sweden, Norway, Finland, Iceland and Denmark rank among the 30 most capitalist countries in the world, according to the Heritage Foundation’s index of economic freedom.
Sweden, long heralded as the beacon of democratic socialism, actually began slashing its corporate and personal tax rate in 1990 in reaction to massive dissatisfaction among taxpayers and entrepreneurs like IKEA founder Ingvar Kamprad, who moved his company to Denmark and later to Switzerland in revolt, Zitelmann said.
Pushback against Sweden’s experiment with democratic socialism, high taxes and comprehensive welfare led to major tax reform in 1990 and 1991, when the country slashed corporate taxes from 57% to 30%. Income from stock shares was exempted from taxation, while capital gains tax was reduced to 12.5%.
Sweden’s top marginal income-tax rate was cut to 50%, a reduction by 24 to 27 percentage points for the majority of the workforce. The proportion of earners taxed at a marginal rate of over 50% dropped from over half of Sweden’s residents to only 17% paying income tax.
“Sweden’s ‘democratic socialism’ with high taxes, redistribution and high state regulation failed, and the young people who are today enthusiastic about the ideas of Bernie Sanders should draw lessons from the experiences of Sweden and other Nordic countries,” Zitelmann said.
Sweden’s reforms continued: In 2004, the estate tax with its top rate of 30% was scrapped entirely.
Sweden’s wealth tax was abolished retroactively in January 2007. The corporate tax rate continued to be reduced, getting cut from 30% to 26.3% in 2009 and to 22% in 2013. Sweden has also substantially cut property tax rates, Zitelmann said.