The Swedish government announced recently that it was eliminating its property tax on houses and apartments and would soon eliminate its so-called "wealth tax" as well. That tax, implemented back in 1947, is imposed on family assets - the car, house and bank accounts - valued above $215,000 for singles and $430,000 for couples. These taxes are levied on top of Sweden's hefty income taxes, which range from 29 percent to 60 percent.
This news is particularly noteworthy because Sweden is the bastion of cradle-to-grave socialism. But the consequences of its high-tax policies have become clear. Some of Sweden's brightest and most successful citizens, including tennis star Bjorn Borg, ABBA's Bjorn Ulvaeus, and Ikea founder Ingvar Kamprad, left the country rather than be subjected to its punishing taxes.
Finance Minister Anders Borg says his country's decision to reduce taxes is "a step on the way back toward making Sweden an entrepreneurial country."
What is happening in Sweden is an object lesson for lawmakers everywhere that excessive taxes are counterproductive. Rather than bring in more money, abusive taxes drain wealth by driving away productive individuals and businesses. If lawmakers want to see the consequences of high taxation, they need look only to what's happening in Sweden. The verdict is in.
The same is true for other public policy issues. As lawmakers consider whether to implement a particular program or impose a new regulation, they should first look at the consequences of those policies elsewhere.
Take health care, for example.
Washington state lawmakers are considering a "connector" bill that emulates efforts in Massachusetts to attain universal health care coverage by requiring every person in the state to get health insurance. Nice idea, but Massachusetts officials are having a difficult time turning their dream into a reality. The plan is not yet implemented, and the monthly premiums have already doubled.
The costs are much higher than anticipated, increasing the need for taxpayer subsidies. Currently, the Massachusetts plan proposes to provide taxpayer subsidies to families of four that earn up to $62,000 a year.
Still, some Washington lawmakers are determined to move forward without waiting to see what happens in Massachusetts.
To date, Washington's version looks more like a health care disconnector, offering only four state-approved plans. One might ask, "What's the rush?" In a recent statewide poll of registered voters in Washington, 94 percent of those surveyed had health insurance coverage, and 87 percent were satisfied with their plans.
Sometimes, state officials get it right. Take global warming, for example.
The agenda set forth by former Vice President Al Gore to address global warming could devastate the U.S. economy, with no assurance that it would impact climate change.
Governor Gregoire has set ambitious goals for dealing with climate change, but she is adopting a more careful approach on how we can reach those goals. The governor has put together a 21-member advisory council which includes representatives from business, tribes, ports, utilities, agriculture and environmental groups. This approach will enable the state to better understand the effects of various alternatives, allowing us to anticipate the consequences before we act.
In other words, when it comes to global climate change, Gov. Gregoire is demonstrating that responsible public policy requires that you look before you leap.
Don C. Brunell is president of the Association of Washington Business.