The state budget does not lead to greater inequality – E24

– The left has competed for who can seal the budget with the biggest words and with the highest outside vote. So we thought about checking how the budget and fiscal plan would turn out, says Sanner.

The Ministry’s economists have used the Statistics Norway model to calculate how the proposal for next year’s tax scheme will affect revenue development relative to this year. The answer: inequality will remain unchanged and at a low level in the European context.

– There is no basis to claim that inequality is increasing, says Sanner, adding:

– I am worried that unemployment will take hold. If we fail to reduce unemployment and include more people in working life, inequalities will increase. Herein lies the great challenge that the budget responds to, he says.

Inequality measured by the Gini index increased slightly both under the red-green government in 2006-2013 and under the Solberg government.

– These are completely marginal settings. But under the red greens, it went up even with high income taxes and corporate taxes., inheritance tax and high estate tax, says Sanner.

The Gini index is used to calculate differences in income or wealth. Differences are given as a numerical value between 0 and 1. If a country has 0, it means that everyone in the country has exactly the same amount of income and wealth.

If the number is 1, it means that a single person has all the income and wealth of the country.

Wealth tax controversy

Particularly controversial is the government’s proposal to reduce the wealth tax by NOK 1.37 billion by increasing the discount for stocks and fixed assets from 35 to 45 percent.

The majority goes to the shareholders. The discount was introduced in 2017 with APS votes to make it more profitable to invest in businesses rather than buying a second or third home.

In short, the scheme works like this: Your bank deposits are valued at 100 percent when you pay taxes. Every penny in the bank counts when the tax is applied.

If, on the other hand, you save on funds, stocks or own a company, you get a 35 percent discount. This means that only 65 out of 100 NOK is taken into account when the tax is applied.

– Won’t inequality increase NOK 1.37 billion in stocks and reduction of unemployment benefits to pre-crown level?

– We have seen how the tax regime turns out and it shows that in practice there is no difference.

– Is the effect of the reduction in wealth tax included in the calculation?

– Yes. Changes to wealth tax in 2021 have been taken into account, which will affect the amount you pay in taxes and therefore have an impact on income.

– Does the calculation also take into account inequality in wealth?

– No, it’s about income. Wealth depends on how things go in the economy: during the financial crisis, inequality decreased, but unemployment increased because the price of shares fell.

– If you are going to fight that kind of inequality, then, put at the forefront, you must make sure that things go wrong in the economy. But there are no poor or unemployed children getting better, Sanner concludes.

– Do you now expect the opposition to stop criticizing the government?

– No. But we have used the measurement method on which there is broad political agreement. It shows that we are a society with low income inequality, concludes Sanner.

Almost no topic generates as much political and professional debate as inequality. In the last few weeks alone, there have been several reports:

• The Frisch Center found that increasing the estate tax on average has led to increased employment at businesses and reduced pay and dividend withdrawals. The results are questioned by other economists.
• Statistics Norway showed that income inequality is much higher than statistics show. The explanation is that business owners have had incentives to take smaller stock dividends after the dividend tax was introduced in 2006. – Lies, bloody lies and statistics, replied Bettina Banoun, one of the top tax attorneys at Norway, in DN.

Work: The wealthiest 10 percent pay almost all of the wealth tax alone

Aps Hadia Tajik says the finance minister’s figures are “completely uninteresting.”

– They are compared from one year to another. Work is critical with the development of differences over time.

Second, he says it is nothing new to say that people’s incomes are not affected by differences in wealth.

– It will be like asking the Ministry of Finance to calculate how many bicycles you get by buying skis. The answer is obvious. There will be no more bicycles.

– Whether Norway has high or low inequality depends on whether differences in wealth or differences in income are observed. If you look at wealth, there is no longer any basis for claiming that Norway is a society of equality, he says.

Tajiks point out that the richest 10 percent pay almost all of the wealth tax alone. She characterizes the wealth tax cuts as a “gift of money” to the wealthiest who widen the gap.

– According to the OECD, in 2017 Norway ranked sixth on the list of countries with the lowest inequality. Is there a basis for talking about such great differences?

– Yes. Inequality has increased for several years. Then one can choose to be like the Truth and explain and de-dramatize with poor numbers. Or like us in the Labor Party, who see this as a bad development and are willing to tackle it, says Tajik.

In 2017, according to the OECD, Norway ranked sixth on the list of countries with the lowest inequality. Norway was on an equal footing with Denmark and had somewhat less inequality than Finland and Sweden.