Sunday, September 14, 2014

Swedes Vote for Higher Taxes, More Government Spending

On September 14, 2014, Swedes voted to replace their center-right government led by Prime Minister Fredrik Reinfeldt with a center-left government led by union leader Stefan Loefven. The era of Fredrik Reinfelt (2006-14) is over!

Bloomberg News on January 21, 2014, summarized Reinfeldt's achievements:

“Prime Minister Fredrik Reinfeldt, whose main policy thrust over the past eight years has been to let voters take home more of their pay....Reinfeldt has prioritized tax cuts as a path to job creation....To help pay for five rounds of income tax cuts since 2006, Reinfeldt has reduced unemployment and sickness benefits. His government has also lowered corporate taxes by 6 percentage points to 22 percent, below the EU average of 22.85 percent....Sweden’s tax revenue has dropped to 44.3 percent of GDP, from a peak of 51.5 percent in 1999, when the Social Democrats were in office.”  Reinfeldt also abolished a tax on wealth.

Reinfeldt has been widely credited with steering Sweden through the global financial crisis at the end of the last decade, consolidating its position as perhaps the healthiest economy in Europe.  After 8 years of lower taxes and more economic freedom, Swedes could not resist the siren song of more government spending for political handouts.  The center-left Social Democrats based their campaign on increasing government spending by 40 billion crowns ($5.6 billion) on job schemes, education and healthcare to be financed by raising personal income taxes from a maximum rate of 57% to 60% as well as company taxes.

Welcome to Sweden!

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