Swedish Taxes Overhauled for First Time in 50 Years

Heavily taxed Swedes will keep more of their paychecks under the first major tax reform since the welfare state was created 50 years ago, the finance minister said Wednesday.

The package, planned for legislation in 1990, would simplify income tax and close loopholes that have been exploited by the rich at the expense of the worker, said the minister, Kjell-Olof Feldt.

The program calls for sharp reductions in income tax, which is 72% on the highest brackets and on some overtime payments. But, by limiting deductions, it foresees higher revenue from tax on earnings from investments and profits.

Feldt portrayed the reform as a return to the long-held goal of leveling incomes and redistributing wealth more equally. He said the tax system had become cumbersome and distorted by a patchwork quilt of revisions that shrewd taxpayers had learned to manipulate.

Many Driven to Exile

“Even though Sweden has higher taxes than most other countries, a lot of people call Sweden a tax paradise because it is so easy to evade taxes,” he said.

Swedish taxes are notorious for having driven some of the country’s best-known personalities into exile, among them film director Ingmar Bergman. He left after police dragged him off the stage of the Royal Dramatic Theatre during a rehearsal and charged him with tax evasion in 1976.

In the same year, the children’s story writer Astrid Lindgren contributed to the Social Democrats’ election defeat by writing a satirical tale after being presented with a tax demand for over 100% of her income.

The overhaul is the largest since the Social Democrats came to power in 1932, governing all but six years since then.

“The reason the system has begun to rot is that it’s been in existence for too long. It worked well in the beginning,” Feldt said.