Kalevi Sorsa Foundation: RICH ARE GETTING richer in Finland

NordenBladet – The wealthiest percentile in Finland has seen its share of net wealth surge from 8.4 to 13.5 per cent between 1987 and 2016, finds a study of income and wealth equalities published by Kalevi Sorsa Foundation.

The share of the nine lowest deciles has contrastively diminished from 65 to 55 per cent.

The study found that income inequalities in the country have become more pronounced since the 1990s. The amount of income at the disposal of the wealthiest percentile increased by 3.2 per cent and the wealthiest decile by 2.4 per cent between 1990 and 2017. Disposable income, by contrast, has risen by 1.6 per cent on average and by only 0.8 per cent for the lowest income decile.

Income differences had diminished in the roughly two-and-a-half decades leading up to the recession that began in 1990.

The study was conducted by Marja Riihelä, a senior researcher at VATT Institute for Economic Research, and Matti Tuomala, a professor emeritus of economics at Tampere University. They pointed out that the tax scheme has stayed largely unchanged since the major tax reform carried out in 1990.

The reform brought about a shift to separate taxation of earned and capital income and effectively removed the progressivity of tax on capital income. The tax rate on capital income is currently 30 per cent for income not exceeding 30,000 euros and 34 per cent for income exceeding 30,000 euros.

Riihelä and Tuomala argue that the tax system should be scrapped and the progressivity of capital income tax restored.

Kalevi Sorsa Foundation is a social democratic think tank named after Kalevi Sorsa, a three-time prime minister of Finland and long-time chairperson of the Social Democratic Party.


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