Sweden’s Shift from Equality to Wealth Disparity

Throughout much of the 20th century, Sweden was celebrated as one of the most egalitarian nations in Europe. However, in recent years, this perception has shifted. Journalist and author Andreas Cervenka describes the current situation as a “paradise for the super rich.”

Today, Sweden boasts one of the highest percentages of dollar millionaires globally. It has become a hub for “unicorn” startups valued at over $1 billion, including well-known companies like Klarna and Spotify.

The abolition of the wealth tax, or Formogenhetskatten, two decades ago plays a significant role in this narrative, coinciding with generous tax deductions for household chores and home improvements. After twenty years, the increasing number of households employing cleaners illustrates the growing income disparity in Sweden.

As part of my anthropological research, I spoke with retirees in the southern suburbs of Stockholm to understand their feelings about the lower taxation they now experience in their later years. Many expressed disappointment over the declining welfare state, lamenting the lack of a collective effort to foster a more unified society.

Kjerstin, 74, shared her concerns: “As seniors, we witness the erosion of what we built as young people. After the war, we worked hard to establish this society, but now, with reduced taxes and stripped social security, there’s little coming together.”

The Swedish Gini coefficient, a common measure of inequality, has increased in recent years, now sitting at approximately 0.3, up from around 0.2 in the 1980s. For comparison, the EU average is 0.29. “There are now 42 billionaires in Sweden. That’s a significant jump,” noted Bengt, 70, questioning where this sudden wealth originated. “It’s surprising how easily people can get rich now.”

Bengt also pointed out the influence of social circles on this transition, reflecting on the generation that saw the rise of the welfare state. However, many acknowledge a failure to protest these changes. “We didn’t fully grasp that we were becoming a country of immense wealth disparities,” he admitted.

The Economic Contrast

Sweden’s wealth tax was introduced in 1911, initially based on a combination of wealth and income. This was around the time Sweden started moving toward a welfare state, notably with the establishment of a national pension in 1913.

Known as Folkemet or “People’s House,” this concept aimed to provide comfort and safety for everyone, standing in contrast to the American Dream. Instead of striving for exceptionalism, it sought a reasonable standard of living alongside universal services.

After World War II, the wealth tax was gradually increased, reaching a peak of 4% in the 1980s for the wealthy, though actual tax burdens remained hard to calculate due to numerous exemptions. Interestingly, total tax revenue never exceeded 0.4% of Sweden’s annual GDP in the postwar years.

By the late 1980s, as various European countries began privatizing public services, political sentiments in Sweden also started shifting. Criticisms of the wealth tax emerged, including claims that it disproportionately affected the middle class while favoring the wealthiest, as well as concerns about tax avoidance through offshore havens.

While you might assume a wealth tax demonstrates a commitment to socio-economic equality, my conversations with interviewees revealed that they hadn’t given it much thought. The tax was ultimately abolished in 2006 by a right-wing government following the previous Social Democratic Party’s removal of the inheritance tax.

Marianne, 77, reflected, “When the wealth tax was repealed, we didn’t think it would primarily benefit the wealthy… We didn’t view it as a big political issue but rather a practical one.”

The retirees emphasized that the welfare state was a collective initiative, not merely a Robin Hood scheme. This idea, that it was crafted by equals—mostly rural lower classes—may have shifted their focus away from wealth accumulation as a concern.

As I spoke with older individuals about the evolution of societal structures, many recognized the abolition of the wealth tax as a pivotal moment. It marked a transition from a social democratic welfare state to one increasingly accommodating billionaires and witnessing social erosion.

Jean, 72, voiced concerns about the future for her daughters. “They benefited from the welfare state growing up and had access to great schools and activities, but now they worry about a worsening society.” Like many others, she expressed regret about their complacency, stating, “We thought the welfare state was secure and didn’t foresee the implications of abolishing the wealth tax… but things have changed.”

Rethinking Society

This research suggests that the absence or presence of a wealth tax goes beyond just revenue. It influences broader social perspectives and shapes people’s thoughts about their communities.

As it stands, only three countries in Europe maintain an overall wealth tax: Norway, Spain, and Switzerland. A few other nations, such as France and Italy, impose taxes on specific assets rather than total wealth.

In Sweden today, the conversation has shifted from whether wealth taxes are effective to pondering what kind of society they promote—something resembling a welfare state or one favoring the affluent.

These discussions indicate a transformation in attitudes toward taxes over generations. Reflecting on her childhood in the 1950s, one participant remarked, “I never worried back then. Taxes were just part of life.” However, she noted, “Now, people often think about what they can gain rather than what we can build together.”

She added that we shouldn’t think in terms of, “I’m paying this much in taxes, so I should get this back,” but rather focus on the value of fostering a more humane society where everyone knows they will be looked after from a young age.

Names have been changed to protect the identities of research participants.