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What broke Sweden? Real estate bust exposes big divide

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Re: What broke Sweden? Real estate bust exposes big divide

#361

Post by eastbound »

JeremyNT wrote: post #271
satvikpendem wrote: post #105

Earlier quoted context omitted.

Lots of people say this but very few have a concrete idea of what is needed to accomplish this. What taxes are the rich going to pay? Who among the rich? How does one define "rich?" Et cetera.

Taxes on real estate are the obvious answer here. Every residential property you own after your first should increase your tax burden substantially, such that you are incentived to sell them rather than hoard them and rent them out.

And own stock instead, or petroleum or any kind of virtual asset offshore, on which there way more little tax, meanwhile renting a mansion at home that belongs to your own subsidiary? Perfectly doable for the rich, it will raise no tax gains at all.

Don’t get me started on “taxing virtual assets beyond the 30th you own”.

Re: What broke Sweden? Real estate bust exposes big divide

#362

Post by brodo »

isoos wrote: post #357
jdmoreira wrote: post #61

I'm in the highest percentiles of income in Sweden (public data is available) and it doesn't matter. It's basically impossible for me to afford a house / apartment for my family in the best neighborhoods. What's the point? What is the point of trying to be a high performer if wealth can't be acquired by income? Why would I want to work for anyone in this country? Only way out is equity and that game is even harder to…

This looks like a common pattern at other places too: you won't get "best-neighborhood" wealth from being first- (or sometimes even second-)generation high achiever. The root cause seems to be that there are usually more high achievers than properties in good neighborhoods, and old wealth erodes slowly (may take a generation or two), so there is very little pressure for old occupiers to sell their properties.

That, and income is highly taxed but property isn’t.

Re: What broke Sweden? Real estate bust exposes big divide

#363

Post by ChuckNorris89 »

AdrianB1 wrote: post #58
ChuckNorris89 wrote: post #8

Earlier quoted context omitted.

Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to…

You got the communist part wrong. If you are born in 1989 as your name suggests, I see why you got it wrong, like that entire generation and the generations after that, but it does not makes it right. Food shortage in Romania had a very different cause.

What exactly did I get wrong?

Re: What broke Sweden? Real estate bust exposes big divide

#364

Post by brodo »

arthur_sav wrote: post #341
lawn wrote: post #311

Earlier quoted context omitted.

The only way to win is to stop playing the game by avoiding the "best" (more expensive) neighborhoods and towns. If you work remotely, as software developers can, you don't have to give up salary either.

Bingo. I moved to a lower tax country and my income almost doubled (no more 50% Swedish tax). Sweden is a bad deal high earners.

What country did you move to?

Re: What broke Sweden? Real estate bust exposes big divide

#365

Post by rullelito »

arthur_sav wrote: post #341
lawn wrote: post #311

Earlier quoted context omitted.

The only way to win is to stop playing the game by avoiding the "best" (more expensive) neighborhoods and towns. If you work remotely, as software developers can, you don't have to give up salary either.

Bingo. I moved to a lower tax country and my income almost doubled (no more 50% Swedish tax). Sweden is a bad deal high earners.

Can't recommend this more. I moved out of Sweden and worked in UK tech for 7 years, earned a filthy amount of money, and are now moving back to Sweden to settle down.

Re: What broke Sweden? Real estate bust exposes big divide

#366

Post by bandrami »

Aeolun wrote: post #198
b112 wrote: post #142

Earlier quoted context omitted.

In the 90s, I didn't know anyone in their 20s, who didn't have a roommate(or two!), or were married. No one I knew, could afford an entire apartment to themselves! I find it weird that people complain about not being able to rent their own entire apartment, but are in their 20s. It wasn't a thing 30 years ago! As one advances in their career, eg in their 30s, then income tends to rise, due to experience, and better p…

In the 90s I didn’t have a house, I was in diapers. In my experience growing up, everyone I knew could afford to buy a house on a single salary when 28-30, so that’s what I expect for myself. Anything other than that is a regression.

> everyone I knew could afford to buy a house on a single salary when 28-30

Did you grow up in 1958? Because that's the last time that was true.

Re: What broke Sweden? Real estate bust exposes big divide

#367

Post by EVa5I7bHFq9mnYK »

jjav wrote: post #340
csomar wrote: post #229

Earlier quoted context omitted.

If it doesn't collapse, then society may collapse? Like the sibling comment mentioned, you can only push this too far, and I think it's pushed too far to be very alarming. And housing is expensive by design and not by constraint. I'm staying in KL, a comparatively cheap place by Western standards. The housing market is crap here from a seller perspective as you have an over-supply of condos. That, despite the large a…

> If it doesn't collapse, then society may collapse? But there are plenty very cheap areas to buy houses or rent. Sure, many people don't want to live there, that's why it's cheap today. But it is a possibility nonetheless, one that is better than collapsing society. I'm always honestly confused why today it is seen as impossible to move to a cheap area? People have been doing this for generations (centuries?). It's…

What really attracts people to those places? Cuisine? Night life? Tinder opportunities?

Re: What broke Sweden? Real estate bust exposes big divide

#368

Post by alephnerd »

ctroein89 wrote: post #310
alephnerd wrote: post #227

Surprised no one on here mentioned estate taxes - Sweden repealed estate taxes in 2005 [0], and as such Sweden has one of the highest wealth (not income) Ginis in the world [1]. Other notable developed countries in the top of the wealth list are Netherlands (€1.3mil exemption from inheritance tax if planned correctly [2]) and the US (no inheritance tax below $12mil [3]). In essence, you are allowing the top 10% to go…

Sweden abolished inheritance taxes because the cost of enforcing the tax was greater than the taxes raised, and was passed by a left-wing coalition. At the time, it was considered a success of social democracy to not need inheritance taxes (and in fact, everyone, including the law, referred to dödsskatten - the death tax). 20 years isn’t ready enough time for wealth to consolidate like that via inheritance alone, and…

"The question we set out to answer in this study is how the Swedish personal wealth distribution has evolved since 2007. This year, a right-wing party alliance was elected after a long period of Social Democratic rule and among its first reforms was to repeal the wealth tax ... Our main result concerning wealth inequality in Sweden is that it appears to have increased since 2007. The recorded rise in the Gini coefficient and top wealth shares is about ten percent"

https://onlinelibrary.wiley.com/doi/abs/10.1111/roiw.12294

Note that the study above only analyzed wealth in Sweden over the time period of 2007 (when the wealth tax was repealed, not 2005 as I erroneously wrote in my earlier comment) and 2012.

Germany and Norway don't share a comparable Wealth Gini (like I said above, it's WEALTH Gini, not Income Gini).

While absolute wealth inequality did grow in both NO and DE since 2008, SE's Wealth Concentration also at a much higher starting position than either NO and SE in 2008

   2008 - 2019
DE 0.667 0.816

NO 0.663 0.798

SE 0.742 0.867

2008 - https://www.nber.org/papers/w15508

2019 - https://www.credit-suisse.com/media/assets/corporate/docs/ab...

And finally, roughly the same old money families/nobility that existed in Sweden c. 1700 continue to have a roughly similar impact in Sweden c. 2012 from a social mobility standpoint.

https://faculty.econ.ucdavis.edu/faculty/gclark/papers/Swede...

Re: What broke Sweden? Real estate bust exposes big divide

#369

Post by blobbers »

The land is owned by the lords. The problem is the latest generation of wealthy lords has figured out how to stay wealthy. As their wealth grows, the plight of the common person grows as well. The wealthy haven't allowed themselves to become poorer, or even relatively poorer. They've only grown their riches.

Because there is a lack of taxation on the rich, they tend to accumulate assets. They can then depreciate these assets while using their income for leverage. Ultimately every dollar the rich landlords collect is a tax on the poor.

The very concept of ownership may seem a little bit unnatural. How can one person own the dirt someone stands on. How deep down do they own it? Is it a radial ownership of the earth?

Re: What broke Sweden? Real estate bust exposes big divide

#370

Post by slaw »

jjav wrote: post #340
csomar wrote: post #229

Earlier quoted context omitted.

If it doesn't collapse, then society may collapse? Like the sibling comment mentioned, you can only push this too far, and I think it's pushed too far to be very alarming. And housing is expensive by design and not by constraint. I'm staying in KL, a comparatively cheap place by Western standards. The housing market is crap here from a seller perspective as you have an over-supply of condos. That, despite the large a…

> If it doesn't collapse, then society may collapse? But there are plenty very cheap areas to buy houses or rent. Sure, many people don't want to live there, that's why it's cheap today. But it is a possibility nonetheless, one that is better than collapsing society. I'm always honestly confused why today it is seen as impossible to move to a cheap area? People have been doing this for generations (centuries?). It's…

Could you point me to these plenty cheap areas? I work remotely and may consider moving there.
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