Page:NATIONAL INTELLIGENCE SURVEY 11; SWEDEN-CIA-RDP01-00707R000200090017-8.pdf/14

 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090017-8

Government and Labor: Taxes and Teamwork

Until the latter 1960's the single purpose of the government seemed to be to ameliorate life in Sweden, not to make society over according to a preconceived socialist formula. The welfare system, to be sure, was rapidly developed to become the most comprehensive in the non-Communist world. The average citizen was provided health benefits covering the whole spectrum of possible ailments. He was assured to maintaining his current high level of living in the event of incapacity, unemployment, or other adversity; he could enjoy old age retirement benefits second to none. He was, in sum, secure. If his high and ever rising personal income became the most heavily taxed in the non-Communist world, so as to enable the state and local governments to meet the costs, what was left still compared favorably with net money wages anywhere else in Western Europe.

The business and industrial enterprises, whose success is imperative to the national well-being, continued to find their tax obligations quite manageable. The Social Democrats in the past have been careful not to kill the goose laying the golden eggs. All firms were accorded a 10% writeoff on taxes if they reinvested the amount in capital improvement or expansion. Furthermore, in the mid-1960's, capital equipment could be depreciated 30% the first year, 100% in 5 years. While in the early years of Social Democratic rule the writing down of depreciation allowances on buildings was extended over 10 years, the period was down to 23 years in the early 1970's. A high-ranking research official in the powerful Swedish Employers Confederation recently demonstrated how a corporation that calculated precisely the right rate of growth, the right rate of return, and the right composition of investment could effectively avoid paying any taxes. To demonstrate the validity of his proposition, he showed how several enterprising corporations were able dramatically to reduce their tax obligations. For example, the huge motor vehicle producer Volvo probably pass only an effective 20% annual tax.

Recognizing that some profit motive—at least the creature comforts that extra money can buy—was a needed inducement even to the more socially attuned entrepreneurs, the Social Democrats have in the past taken care not to eliminate it entirely. The personal income of the rich was indeed heavily taxed. The upper range executive with a monetary income of US$1,300 a month in the mid-1960's would immediately have about 45% deducted in direct (graduated) taxes, and the personal inheritance tax at this level was just about confiscatory. The availability of reasonably priced consumer goods and services, however, helped to compensate. If he could not save very much money or pass on an amount of any significance to his children, the successful executive could still enjoy a comfortable apartment, a country home, a small yacht, an expensive automobile, and a vacation in the south of Europe. Similarly, moderately successful business and professional people as well as a

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090017-8