The International Tax Competitiveness Index (ITCI) measures the neutrality and efficiency of tax systems in OECD countries. Defying logic, Daniel Bunn for the Tax Foundation asks, why some countries with high tax burdens rank so well on competitiveness?
Sweden provides a good example for this type of comparison. Bunn explains that among OECD countries, Sweden had the 5th highest tax burden in 2016 as measured by total tax revenue as a percentage of GDP. The Swedish government collects 44.1 percent of GDP in tax revenues, nearly 10 percentage points higher than the 34.3 percent OECD average. However, in the 2018 ITCI, Sweden ranks relatively well with the 7th most competitive tax system out of 35 OECD countries.
Why can’t we be more like Sweden? Skatteverket, the Swedish Tax Agency, is popular and considered a highly trusted public body, despite the hefty tax bills.
Skatterverket “takes” about a third of most Swede’s pay and yet are not disliked like the IRS.
A 2015 survey by market research institute TNS Sifo concluded that the Swedish Tax Agency has the third best reputation of 27 major Swedish public bodies, scoring highly for its customer service and for “contributing positively to society.”
How can we better emulate Sweden’s system? First, Skatteverket does more than just collect tax. It is responsible for population registration (folkbokforing), and keeps track of many important events in every Swede’s life.
Similar to the U.S. Social Security number, Swedes receive a personal identity number and the agency is responsible for determining if you have chosen an acceptable name. There are no Supermans or Dotcoms in Sweden.
Skatteverket deals with your marriage by ensuring there are no impediments to marriage. It requires Swedes to keep their mailing addresses current. When you die the doctor informs the agency for your cremation or burial certificate. Maybe a little Big Brother, but apparently the Swedes think that is ok as long as there are good intentions.
Filing taxes is also as easy as a few smartphone taps. Swedes actually are not anti-tax and value a fair and well-functioning society, with decent public services and a universal safety net. The Swedish word for tax—skatt—has another meaning: treasure.
Additionally, Skatteverket is considered highly accessible and customer-friendly!
No one wants a high tax rate but a fair and competitive tax rate is a goal worth pursuing. Maybe we should adopt an attitude of appreciation rather than punishment as a method of gaining compliance here in the U.S. Plus a good set of public relations folks could help explain what state taxes do for citizens so people would be more willing to comply.Excerpted from the white paper
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