[luuse]

They differ all over sweden depending on how old you are, how long you've been working for and how much you earn.

In Stockholm you pay about 30% in income tax (add 20% if you earn more than 401 100 SEK annually, you earn about 360 000 SEK annually as a newly graduated MS CS student). However you also have another tax, the employment tax, which isn't displayed on your salary specification and is paid by your employer in addition to your salary. The employment tax is 31%. This makes the effective income tax about 81%...

The sales tax is 25% for most things.

We do have free public education, and healthcare for everyone under 18 (it's heavily subsidized after 18 but not free). The standard of our universities is not bad but i wouldn't call it world class as they try to make you believe... We do have problems with the earlier education. Stockholm doesn't have any problems with natural disasters or bombings but the housing situation is pretty crappy.

[bjourne]

Sorry but that calculation is just stupid. Thanks to deductions, the income tax paid for even a high earner does not surpass 28%. The 20% state tax is only paid on income in excess of 401 100 something that is always conveniently forgotten when discussing taxes. E.g. the tax scale is progressive which is to offset the trend that the more you earn, the likelier you have other incomes such as investments returns which are taxed significantly lower than salary tax. Yes, Sweden still has high taxes but the situation is not nearly as bad as you make it out to be.

[luuse]

Yes, sorry about that, that's true. I forgot that for a few minutes when reading up on the actual percentages (regarding the state tax).

However the regular income tax is still around 30% and while regular employees don't see the employment tax (arbetsgivaravgifter) i'd still say it's an income tax because it's based on your income and not on how much you work or when you work.

[beagle3]

Your math doesn't make any sense - the 81% (assuming that all is right, and bjourne says it isn't) is out of 131%, not out of 100% - so the actual tax is 61%. Still high, but on par with Tel-Aviv and NYC (assuming fiscal cliff) - and you get back infinitely more than NYC and just "a lot more" than Tel-Aviv.

I'd say it's great.

[samuellb]

For many people there are also substantial tax deductions you can make. E.g. you can subtract 30% of interest expenses on private loans (ränteavdrag) and 50% of renovation costs of owned houses/apartments (ROT). Now unfortunately these deductions lead to higher property and apartments prices, so it might not reduce your total expenses after all.

[luuse]

Well the state tax isn't as i said it, bjourne is correct about that part.

I see that extra tax as money that if not for the tax would be part of my salary (at least some of it) because it's based on how much I earn, not how much I work or when I work. Thus making it of 100% of my salary, not 131%.

I never said it's bad. It's OK. I'd just rather pay for something great/world class than having someone else take some of my money throughout my whole life and pay for average things for me (whether i want them or not). It's a lot harder as a consumer to demand things when you're not paying for it and you loose options when there's a single entity that pays for everything and wants everything done a certain way.

[beagle3]

Were you ever an employer?

If your salary is 10,000SEK/month (to make numbers simple), then you cost your employer 13,100SEK/month. You pay 3,000 SEK in taxes, so your take home is 7,000/13,1000 = ~55%, and the tax rate is 45%.

If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them.

It doesn't matter how the line items are listed from the employer's perspective, and it shouldn't matter to you. Just assume that this appears as another line item, and also a grand total "employer expense". This is what you negotiate when you negotiate your salary - not the 10,000 SEK.

[mongol]

Someone here asked what you get for the Swedish taxes. This is the post to tie in to to describe how Swedish welfare is funded.

What is called "employment tax" in the thread above, partly is a kind of insurance premium. For example, of the close to 32% that are added on top of the "salary you see", 11% goes to pension, 5% pays mandatory sickness insurance, 2,6% pays for maternity / paternity leave privileges. That gives you kind of sense "what you get for your taxes in Sweden".

The 30% that everyone pays of their salary goes for services in their local municipality: schools, child care, care for the elderly, hospitals, roads, local infrastructure such as water, drains etc,, and also subsidies for commuter traffic.

The approx 20 % that are added on top for some, together with the 25% sales tax is taken by the government, and goes into the national budget.

[kalininalex]

> If the employer didn't have to pay those 31% to the government, he would have paid them to you, and you would have been taxed on them.

It's unlikely the employer would pay you more. You negotiated and expect 10,000 SEK. Yes, the employer knows it'll cost 13,000, but you only get 10,000. So if there's no employer tax, you'll still likely get 10,000, but now the employer can hire another person using the money that's freed up, or invest in some other ways.

[beagle3]

On the first day. But then, a couple of years later, you are smarter and you know that before the tax was canceled, your boss was willing to pay 13,000 SEK to employ you. So the next time you negotiate (possibly with another employer), you know you are worth 13,000 SEK, so that's what you'll demand, and that's what you'll get.

The specific line item in which this expense is listed with the employer, whether "employment tax" or "salary", makes no difference to them, and shouldn't to you.

This is really basic economics.

[luuse]

Yes.

That looks right.

It's a completely different tax, if the employer didn't have to pay that to the government you'd have to renegotiate your salary to get any of it (because it's not part of your salary).

But in Sweden you do negotiate the 10,000 SEK. You generally don't talk about the 13,100 unless you are an employer and have to think about it. That is my point and that is what I think is stupid.

[beagle3]

What you say might be true on the day this tax is canceled, but if you like a few years later, you realize:

a) it was worth 13,000 SEK for your employer to employ you

b) you're only getting 10,000 SEK.

c) you ask for a 3,000 SEK raise, and get it.

So, not immediately, but after a while it will reach the steady state that I described.

The bottom line is: it's arithmetics; It doesn't matter to the employer which line item the 3,000 SEK are listed under, whether "employment tax" or "salary"; it comes out of their pocket either way. It shouldn't matter to you either in the grand scheme of thing. Employment is a reasonably efficient market in the time frame of a few years, and you will realize, and then demand, and get, a salary of 13,000 SEK.

The transient is going to be weird. But in the steady state - it doesn't matter which lines appear in your pay stub and which do not.

[walshemj]

oh come on if they abolished NI Social Security or its equivalent do you really think that your employer would suddenly pay you that?

If you believe that I have some shares to sell you in London bridge

[beagle3]

I am amazed at how many people have your response. If you are looking at a timescale of days, you are right. If you are looking at a timescale of just a few years, you are dead wrong.

The employer down the road was profitable paying 13,000 SEK for an employee like you just yesterday. They know you're still getting 10,000 SEK. When they need an employee, they'll offer you 11,000 SEK. Many people will happily switch job for a 10% raise. Later, rinse, repeat: It will eventually converge to how much the employer was willing to pay before. Not more, of course - but why would YOU settle for less than you did before?

The time it takes salaries in high-tech to converge in active economic times is 2-4 years.

I'm talking about the steady state, the transient is short lived and irrelevant in the grand scheme of things.

It really is basic economics.