They explained that due to the non-progressive nature of the capital gains tax, the richest 1% pay proportionally less tax than middle income earners. While the wealth of the top percentile thus increased fivefold between 1987 and 2019, the wealth of the bottom nine deciles grew only marginally, by 3.6 percent.
The differences have only grown since the financial crisis, when the wealth growth of the top percentile has accelerated and the wealth growth of other income groups has stopped.
“The fault of our tax system is that people do not necessarily pay the same tax for the same amount of income. The amount of tax depends on the source of the income.” compressed Riihelä and Tuomala.
The duo also drew attention to the assessment made by the World Inequality Database (WID) in 2018. The estimate shows that over the past three decades, the wealth of the highest decile has increased more in Finland than in the other Nordic countries. The share of the bottom five deciles in net income is, on the other hand, smaller than in the rest of the Nordic countries.
“Perhaps a surprising observation in the assessment is that the income shares of the highest and lowest five deciles are now roughly the same in Finland as in Great Britain,” they said.
Riihelä and Tuomala saw that Finland should switch to a progressive tax system that includes both earned and capital income in order to curb income and wealth differences.
“Correcting the shortcomings of final income taxation and wealth taxation would increase equality in society and at the same time improve productivity and incentives to invest in production activities. It would also reduce harmful tax planning,” they argued.
Elsewhere in the report, the correlation between income level and voter behavior was highlighted. Timo M. Kauppinen, Hanna Wass and Anu Kantola wrote that the distribution of votes between parties differed slightly based on the number of high-income voters in the 2021 local elections.
While the National Coalition was clearly the most popular party in areas with a large number of high-income earners, the Greens and the Swedish People’s Party also received relatively more support in high-income areas.
“Total predicted vote share is up to 30 percentage points higher in the highest income neighborhoods than in average neighborhoods,” they said.
Although the differences related to the number of high-income voters were relatively small, the trio reminded that regional differentiation can have negative effects on democracy.
“Especially in municipal elections, it can be of concrete importance from which suburbs the parties get their votes. High-income districts can benefit from municipal decision-making because the turnout is high, votes are concentrated in a few parties, and candidates are elected more often from high-income than from low-income ones, they elaborate.
Kauppinen is a research manager at the Institute of Health and Welfare (THL), Wass is a vice dean at the University of Helsinki, and Kantola is a professor of media and communication studies at the University of Helsinki.
Elina Kilpi-Jakonenassistant professor of sociology at the University of Turku, Irene Prixuniversity lecturer in sociology at the University of Turku and Outi SirniöIn the section of the report, THL’s senior researcher drew attention to the gender segregation of occupations.
They challenged the tendency in both research and policy making to frame the issue as a “women’s problem” by focusing on the underrepresentation of women in technical fields rather than the underrepresentation of men in female-dominated fields such as nursing.
“[This] may add to rather than remove cultural stereotypes about women’s “wrong” choices and normalize men’s aversion to the nursing profession, they warned. “Furthermore, the focus on women’s choices has shifted the discussion about structural factors, i.e. the wage gap and gender differentiation, to the area of individual choice, where structural wage differences in industries are accepted as if they were natural.”
The trio felt that policy measures should not be aimed at shaping people’s cultural and gender role views, but rather at the structural pull factors of the fields, in order to “support people’s pragmatic motives and opportunities to study and work in fields atypical of their gender.”
They suggested that the way to do that is to improve wages and working conditions in socially important and low-wage sectors suffering from labor shortages.
“It is likely that raising the wage level in low-wage (and often female-dominated) occupations would have a direct impact on the gender wage gap and labor shortage,” they estimate.
The Kalevi Sorsa Foundation, named after the longest-serving prime minister in Finnish history, is a think tank close to the Social Democrats.
Aleksi Teivainen – HT
Source: The Nordic Page