Even though Swedes pay more than half of their income to the government in taxes, they are still wealthy enough to hire nannies. At least government ministers are, provided they pay their employees under the table to avoid the payroll taxes.
Check out this Bloomberg story:
Illegal nannies are shaking up Sweden’s ideal of social equality.
Two ministers in Prime Minister Fredrik Reinfeldt’s newly installed government quit last month after saying they had hired nannies and cleaners under the table to avoid payroll taxes. The scandal came as Reinfeldt prepared to cut taxes employers pay on the wages of household help, making such workers more affordable.
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The controversy highlights tensions between an increasingly affluent population that can afford domestic help and Social Democratic traditions that reject the use of servants. Opponents say Reinfeldt’s proposal will boost the use of cleaners and nannies, eroding a culture in which even the wealthy were expected to do their own housework.
“The tax deduction has a great symbolic charge,” said Ulf Bjereld, a professor of political science at Gothenburg University. “For the left, it’s seen as a return to 19th-century values, where maids deal with the household labor so that the upper classes can live well.”
About one in five Swedes hires household help without paying employer’s fees, according to the Swedish tax authority. It costs three times as much to employ a cleaner legally as on the black market. If the cost fell, 24 percent would hire workers legally, according to an October survey by researcher Sifo for the newspaper Svenska Dagbladet. The paper didn’t say what percentage of Swedes currently hires workers legally.
The government, led by Reinfeldt’s Moderate Party, on Oct. 16 said it would cut income taxes by 38.7 billion kronor ($5.5 billion) and introduce tax deductions for people who hire cleaners and nannies.
If I understand this initiative correctly, the proper translation would be, “Since we got caught in the act, we’ll cut your taxes and subsidize the servant industry, so you, too, can afford to hire a Third World nanny.”
But here’s a part I don’t understand:
“Employment would increase and black-market jobs would partly be replaced by white jobs,” the government said in a statement. “There’s a great potential for employment opportunities within household-related services.” [emphasis added]
I hope “white” means “legal” in this case…
Therese, a 32-year-old public-relations consultant from Stockholm, said she supported Reinfeldt’s proposal. She currently pays the equivalent of $15.50 an hour to a Polish worker who cleans her apartment every other week.
“The price difference to buying a legal service is just too big,” Therese said, declining to give her full name because she is evading the tax.
Domestic workers, too, say they support the plan. When employers don’t pay social-security taxes, workers aren’t entitled to government-sponsored benefits and have to save for retirement through private programs. Imelda, a 48-year-old Filipina cleaner and caterer who has lived in Sweden for 26 years, said many clients pay her in cash.
“It’s a lot better for me when they pay taxes,” said Imelda, who declined to give her last name. “I’ve got to think about my future, but I expect things to become a lot better with this proposal.”
High taxes… A demand for cheap labor… A tacit agreement between the ruling class and the peons so that the black market can supply what the distortions of Socialism suppress… What are we, back in the U.S.S.R.?
No word if that Filipina maid is a Muslim, although her name makes it unlikely. Nothing about how many Muslims are domestic workers caring for the children of the upper class. Sweden has an awful lot of Muslim immigrants, though. And, judging by the case of the Colorado slave-owner, the going rate for a Muslim household servant —ten bucks a month, and sexual service for free — may be low enough that Muslim domestics would be a better deal for the frugal Swedish politician than those expensive immigrant Poles.
It does indeed mean legal, given the context of the reference to black-market jobs.
I’d also differe with your translation of why the cuts are coming. Tax-cuts were a plank of the Moderate’s campaign, partly because high taxes force a lot of people in to black and grey-market employment. As the Bush tax-cuts demonstrated, a reduction in tax actually increases government takings overall. Presumably the deductions for hired help are meant to encourage people to hire workers legally rather than resorting to the black market, which is rather ironically named considering most people willing to work for cash-in-hand are immigrants. And probably illegals at that. The upshot is, there’ll be more money remaining in the Swedish economy.
Your interpretation of events is, honestly, quite the opposite of what’s happening.
You wanted Sweden to change for the better, to try and become a more normalised society that rejected the extremes of multiculturalism and PC crud. Reducing the demand for immigrant workers is one of the first steps toward that goal, isn’t it?
Archonix, I was being sarcastic about the high-minded Swedes — after having been lectured by them all my life, they turn out to be fallible sinners after all. The sarcasm was perhaps uncalled-for.
Tax cuts are, of course, always a good idea. But targeted subsidies are not.
In Finland, the situation is the same except that the tax cuts have already been introduced a few years ago.
It is common practice to pay, for example, the home renovation work “black”, because otherwise it would cost more than twice as much. If the worker does not have a company of his own, employing someone also involves a lot of paperwork that you would rather do without.
The purpose of these tax cuts is to reduce the incentive for “black” work. Of course, these attempts are half-hearted at best and fiercely resisted on ideological grounds by leftist Social Democrats who paint a gruesome picture of return to the old “servant society”. The Social Democrats would rather see people live on state benefits than work for a living.
In Sweden, it is a common practice to draw all the benefits you can get from the state (early retirement or extended sickleave) and work in the black market in restaurants or selling cheap sunglasses on the street. This kind of behaviour is typical for immigrants.
Early retirement and sickleave used to be the ways for the Social Democrat government to make unemployment figures look better.
The Economist sez: Sweden is the most democratic nation on Earth!
They even scored a 10 in political participation. I suspect the Economist use a fairly wide definition of that term.
Baron, I’ve learned that sarcasm never coems across well on the ‘net. 🙂
I wouldn’t call it a targeted subsidy, personally. It’s not the government paying out (unlike the abomniable “tax credits” system we have here in the UK), merely the government taking less tax in the first place. At least that’s how I read it. I’ve been known to be wrong before…
I disagree. When the government enacts a targeted tax cut, it decides to take less money from a favored group. When it subsidizes, it gives money to a favored group.
The results are the same: economic distortion introduced by government intervention on behalf of certain activities.
Cut all the regulation. Let people spend their money on what they want, instead of what the government favors. We will all benefit.
And yet there are no sightings from Sweden on the I Saw Your Nanny Blog.