10 Apr 2012

Taxes are an open secret in Scandinavia

Want to know what your boss earns? Or your future husband? In Sweden, Norway and Finland everyone’s income and tax details are published online, for anyone to see.

What do the very rich really pay in taxes? Newspaper reports on Tuesday have suggested that the British Chancellor George Osborne is “shocked” that they often hardly pay anything at all.

In the United States, President Obama will be making the case for a fairer tax system, promoting what’s known as the Buffet rule. The idea, named after the billionaire tycoon Warren Buffet, argues that the wealthiest earners shouldn’t pay a lower percentage of their income in tax than ordinary people.

At the moment, thanks to loopholes and clever accounting, the Congressional Research Service estimates that around 25% of America’s millionaires end up paying a lower effective tax rate than ten percent of middle class households. A handful end up paying no federal income tax at all. Righting that balance has become a key plank of Obama’s re-election campaign.

His Republican rival, Mitt Romney, didn’t boost his own cause when it emerged that in 2011, he only paid around 15% of his multi-billion dollar income in taxes, far less than the standard rate. Other Republicans were more forthcoming about their own details. But it’s all up to individuals to decide what goes public: United States law prohibits releasing anyone’s income or tax information to a third party without their consent: they were last on public record in the 1920s.

Letting it all hang out

Not so Scandinavia, where the US satirist PJ O’ Rourke once commented – “(It)works, but it shouldn’t.” In the grand tradition of “jantelag”, where no-one is better than anyone else, Sweden, Norway and Finland publish everyone’s income and tax details, every year. Sweden’s ‘tax calendars’ are published in stages, starting with ordinary taxpayers, then high income earners from company bosses to celebrities.

Norway’s been making similar details open to the public since 1863. Its “skatteliste“, or tax list, includes personal income, tax burden, and where people rank on a list of national averages. Searching for a particular individual used to require a host of lengthy paperwork, but under the new rules it all became instantly available online through a searchable database.

That provoked an outcry from privacy campaigners, who claimed it had sparked a “frenzy of snooping”, as people rushed to find out exactly how much their neighbours and co-workers made. Newspapers and media outlets swiftly compiled their own “Top 10” lists, comparing the earning power of celebrity couples, and revealing details of top-earning footballers, actors, and business tycoons.

With details on everyone from reindeer herders to top lawyers freely available, the list seemed to symbolise the best of Nordic openness. As Jan Omdahl, from the tabloid Dagbladet, wrote at the time: “Isn’t this how a social democracy ought to work, with openness, transparency and social equality as ideals?” However a poll carried out in 2007 found most of his countrymen disagreed: just 32% thought the list should be published, while 46% were opposed.

Italian outcry

Italians aren’t keen on seeing their financial information aired in public either.

In 2008 the minister heading the fight against tax evasion, Vincenzo Visco, released the 2005 tax year details online, days before he left office, causing an instant outcry. “This is an act of transparency, similar to what happens elsewhere in the world”, Visco proclaimed, as the site swiftly crashed under the sheer deluge of clicks.

It was just as swiftly shut down by Italy’s privacy office, amid concerns about the risks of identity theft and fraud. But not before the media had managed to pull out key details, like Silvio Berlusconi’s £21.9m earnings, or the even greater financial clout of fashion moguls like Giorgio Armani, who topped the list with just over £35m.

Italian comic Beppe Grillo wasn’t so thrilled to see his £3m income made public: “This is madness”, he declared at the time, “People will be kidnapped, and ransoms can be calculated in proportion to incomes. The Mafia don’t need to investigate, they can just go to the tax site”, he said.

Clearly the spirit of transparency, when it comes to money at least, doesn’t translate into every culture. What some see as an honest commitment to fairness is for others, an invasion of personal privacy, and a licence for what the Norwegian tabloid Dagbladet described as “tax porno”. But for Scandinavia’s political leaders, though, it seems the wealth and wellbeing of everyone is more important than the risk of a bit of gossip.