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– The richest one percent tax a smaller share of their income than nurses and teachers. For the Labor Party, it is obvious that we cannot live with such a tax system. If the Labor Party had been in government, we would have proposed a better tax system that actually redistributes values. The current tax system does the exact opposite, says Eigil Knutsen, who sits on the Labor Party’s finance committee.
Knutsen receives Dagbladet along with fiscal policy spokesperson Hadia Tajik in the latter’s office during a lull in the debate on the throne.
The two financial leaders of the Labor Party are concerned. In the last ten days there have been two reports that in turn have sparked debate on the increase in differences and how the tax system affects distribution.
They want fact-based conservatives
First came a report from Statistics Norway which showed that the richest are much richer than previously thought. The richest one percent do not receive 9 percent of all income in Norway, but 19 percent, was one of the findings.
This week, the Frisch Center released a report, commissioned by the government, showing that the wealth tax provides plus jobs, because it makes it more profitable to invest in employees.
– I hope the Conservatives are a fact-based party. Now they have commissioned the report on the effect of wealth tax on employment. It shows that it is not the wealth tax cuts that contribute to more jobs, but a fairer wealth tax, says Hadia Tajik, who urges conservatives to listen to the professionals and put aside plans for new cuts in wealth tax.
The corona epidemic has doubled the number of unemployed to 200,000. The Labor Party’s fear is that the government’s wrong medication will continue.
Tajik refers to a 2016 Statistics Norway report, which shows that to create a new job, an increase in public consumption of one million is needed. 4.3 million are needed to create jobs by increasing public investment. If you want to get a job with tax exemptions, you need NOK 64.7 million.
The cheapest way to create jobs in a crisis is to increase public consumption, Tajik notes.
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– Can it be said that the public sector has spent very little money in 2020?
– The government has used money incorrectly for the past seven years. Billions have been spent on tax cuts, a total of more than 25 billion, which conservatives cannot document and has created just one job, Tajik says.
– Isn’t there a danger that I will put too much pressure on the public accelerator instead of letting companies adjust?
– We do not want to keep companies alive that do not have the right to life. It has never been the policy of the Labor Party. But we are concerned about the more than 200,000 who are totally or partially out of working life today. We know that some of them barely got stuck in work life with fingernails before the corona pandemic. There is a great risk that many of them will be permanently expelled from working life.
– It’s okay to spend a lot of money now to make these work rather than wait and see and hope it gets better, only to find that some never go back to work life and get a freelance job. income they can live on. It is too great a risk both for the individuals and families in question, and for our country, says Tajik.
The national meeting of the Conservatives decided last fall that the party wants to eliminate the estate tax in the next legislature, but Prime Minister and party leader Erna Solberg quickly stepped up and canceled the promise shortly thereafter. Instead, the party will prioritize reducing and eventually eliminating the wealth tax on so-called working capital.
Worst Labor Poll in History
Reject “working capital”
Working capital became a relevant term in the tax settlement between the bourgeois parties and the Labor Party in 2016 and includes wealth related to running a business. But the Labor Party believes that the term has proven to be totally misleading.
– Working capital seems reliable, but it only means a very specific tax cut for those who can afford to own stocks, says Tajik, and Knutsen follows:
– Nine out of ten crowns that are “working capital” in Norway today are shares. I call it a stock discount, it’s not about tractors and industry. The discount the government has given to shareholders simply has no effect on job creation, Knutsen says.
Shaken by executive pay
Since 2006, the general rate of wealth tax has been reduced from 1.3% to 0.85%, while the minimum deduction has increased to NOK 1.5 million per person. The discount on working capital, which is almost just shares, was 20 percent in 2016. In the spring, the government increased the discount to 35 percent.
If you own shares for NOK 2.3 million, this means that you do not have to pay wealth tax, even with a minimum deduction of NOK 1.5 million.
– If the government is going to cut taxes, how should it do it to create more jobs?
– It is not about cutting taxes, but about having a more redistributive tax system. In the case of income tax, it is about ordinary workers being able to keep more of their salary. This means, for example, doubling the union deduction and increasing the suburban deduction. For wealth tax, this may mean a higher lower deduction.
“Fair” wealth tax
– Is not what you are criticizing a result of the tax system that the Labor Party wanted and helped to introduce in 2006, that the money is left in the companies instead of taking it out and taxing it?
– We had reservations when the exemption model was introduced and asked to see the effects. What we see in hindsight is that there are examples that there is a way to finance private consumption rather than investments in businesses and jobs. We believe there are reasons to take a closer look at how this turns out. I’m not saying you should toss all the cards into the air and see where they land, but adjustments may need to be made to make it fairer, says Hadia Tajik.
– Now it’s been a while and we have clear evidence that it has adverse effects on the distribution of wealth. When we have proof that it’s bad for distribution, we need to be responsible, grown-up politicians and take a look at things and evaluate. So I am surprised that conservatives reject all these issues and say that everything is fine and very good, continues Eigil Knutsen.
– What is the Labor Party’s fair wealth tax for next year?
– We will return to that in our alternative budget, says Tajik.
