I got a kick ouf reading the following paragraph:
Sweden’s success lies in part in its focus on income equality, Swedish Prime Minister Fredrik Reinfeldt said in an interview last month. Sweden has the world’s highest tax burden as a percentage of gross domestic product after Denmark. The two countries also boast some of the most equal income distributions in the world, according to the Organization for Economic Cooperation and Development.
While the mayor of the Big Apple had been busy busting Occupy Wall Street, his company was reporting on institutionalized occupation.
And this is all the more telling since as I remarked in a past post a socio-psychological study by Norton and Ariely found that the great majority of Americans, regardless of political orientation, would move to a country with the wealth distribution of Sweden! So why so much crying "income redistribution!" whenever there is a timid attempt to raise marginal income tax and similar legislation?
At the cost of oversimplifying, I'd say it's a matter of perception. Just like the Norton-Ariely study revealed dramatic misperception in the distribution of wealth in the US, so it is reasonable most on the conservative side believe any policy aimed at fiscally increasing social justice is deleterious to the greater good. Obviously, such misperception has not spontaneously arisen, but is the result of the slogan drumbeat that can be traced to the trickle-down economics of Reagan. Labels such as "income redistribution," or "communist," or "taxing job creators" have been slung to whoever sought to redress the trend that is starving the government of the resources it needs to maintain a modicum of a social safety net.
When confronted with actual data, such as the near stagnation of real wages since the Reagan years, none of these labels stands the test.
Take for example the "higher taxes" that would result from an expiration of G.W. Bush tax cuts. First of all higher taxes would mean a return to previous marginal tax rates especially for a family filing jointly with yearly taxable income higher than $250000. Secondly, we are talking of reinstating higher marginal rates. That means that such family would pay exactly the same tax as everybody else on all income up to $250000, and 4.9% on the income that exceeds that threshold . For every $1000 in excess of $250000 such family would pay $49 more.
Given significant demand, an entrepreneur whose business is subject to personal income tax would not hire or expand because of such tax increase? And what about the fact that his costs, including salaries, would not result in any higher tax due?
I have not heard a single convincing explanation on how that increase can have a meaningful impact on any economic choice.
And what is the price of starving the government? The price is that the kind of investment for the "greater good of the country," those infrastructural investment that only a government can afford, are sorely lagging behind. The result is that so many Americans had to go deep into debt to simply afford an education or pay medical bills. The result is, if you let me stick a label, too, the demise of the American Dream.
The single most important contribution of the Occupy Wall Street movement is the making of this awareness and the dispelling of the myths that defined the American Dream as a function of income redistribution upward.
Sweden today demonstrates that capitalism with a human face is possible. In the words of Robert Reich
Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that’s almost dead in the water.
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