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  • Tax Cuts Stimulate Sweden

    Since the beginning of the recession, academics, authoritative international institutions, and most government officials pushed for massive stimulus spending. Sweden bucked the trend, focusing instead on slashing marginal tax rates and peeling government back. How did it fare?

    The Spectator reports:

    While most countries in Europeborrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

    Three years on, it’s pretty clear who was right. ‘Look atSpain,Portugalor theUK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cuttingSweden, by contrast, had the fastest growth inEuropelast year, when it also celebrated the abolition of its deficit.

    Too bad the U.S. decided against Sweden’s advice. Still, missing one opportunity doesn’t mean we have to miss another: Tax reform is calling.   

    Posted in Economics [slideshow_deploy]

    3 Responses to Tax Cuts Stimulate Sweden

    1. steve h says:

      Really, David/Heritage. You are going to point to Sweden and their tax rates and talk of stimulus? They pay the 2nd highest tax rates as a share of GDP in all industrialized countries (2nd only to Denmark). Perhaps they didn't need to borrow because half of what it's citizens pay goes to the government, whereas here in the US it averages abotu 10-25%. The average income tax in Sweden is 57% and they have a VAT on top of that! They also have universal healthcare for all it's citizens. It's got one of the highest life expectancies and lowest infant mortality rates in the world..and some of the happiest people in the world. Yes, the US could learn alot from them.

    2. Pingback: Los recortes de impuestos estimulan la economía de Suecia | Heritage Libertad

    3. john says:

      Swedish companies are in general very productive and environmentally conscious

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