TIMBRO, an Atlas Network partner based in Stockholm, Sweden, recently released a video displaying the organization’s recent research study findings. This study compares the effective marginal tax rates for high-income earners in wealthy nations, and presents an analysis on the staggering results.
The effective marginal tax rate, often overlooked, includes the income, payroll, and consumption tax placed on the last dollar earned for individuals with high-level incomes. When examined in these terms, Sweden tops the global list with an astonishing rate of only 25 percent returned to the person who earned it. In the United States, the rate is 48 percent, with individuals retaining a little over half of every dollar earned in that tax zone. These high rates significantly reduce the incentive of high-income earners to continue to create value in their industries. In addition, it encourages these same individuals to take themselves and their organizations to a countries which have more reasonable tax rates.
“Taxation is not so much a question of enabling public spending — it’s about pricing effort and excellence,” explains TIMBRO CEO Karin Svanbor-Sjövall. “If you live in a country where the majority of your earnings are being grabbed by the government, your nation is telling you that there should be little reward for the virtues that make a country great and individuals flourish … like investing in an education, providing for your loved ones, creating services or businesses that help others. That’s why you need the full picture of what the government force you to pay: it’s a moral argument just as much as economical.”