Per Kleepe, Norway's new Cabinet minister for planning, has come up with a hot if not universally popular new idea for doing something about Scandinavian income taxes.
He has proposed that Norway replace its present complicated system of steeply progressive tax rates and myriad deductions and allowances with a flat 33 percent tax rate for almost everyone, plus a 10 percent social security tax.
On top of that, the wealthist families -- about 15 percent of the Norwegian population, by Kleppe's estimate -- would pay a graudated "super tax." At the bottom of the ladder, "a few basic allowances would protect the lowest income families" from some or all taxation.
But all other deductions -- particularly deductions for home mortgage and credit purchase interest payments -- would be eliminated.
Kleppe's plan has two goals: to even out Norway's heavy tax burden so extra money earned by middle-class families is no longer nearly all confiscated by thte government through high marginal tax rates, and to close deduction loopholes that now enable clever Norwegians to escape paying their fair share of taxes at everyone else's expense.
This is what has made Kleppe's proposal, now being considered by parliament, so intriguing and sometimes alarming to Norwegians and to other Scandinavian observers who have come here to study it. The plan appeals to the desire of many Norwegians for the tax system to achieve some measure of equality in society without removing all incentive to work harder and earn more. But it threatens to punish the vast number of Norwegian taxpayers of nearly all class and income levels who had learned to use the system to their advantage as American taxpayers are accustomed to doing.
"It's a game for middle-class couples these days," said a newspaper editor here, "to pile up as many interest deduction as they can by going into debt buying a house, a car, a summer house, a boat and whatever."
Kleppe said his "model for tax reform" is designed "to stop the deductions game" that has helped push credit buying of almost everything in Norway to disturbingly high levels, depleting family savings and decreasing direct investment in Norwegian businesses.
Government officials, business executives and labor union leaders complain about a similar problem in Denmark and Sweden, where taxes also consume more than half of their national income each year. A Swedish executive talked about friends buying expensive jewelry, paintings and rare stamps on credit to reduce their taxable incomes.
Concern also was widely expressed in all three Scandinavian countries about outright cheating, especially among young people, and a growing "black economy" of cash and barter transactions to avoid taxation altogether. "I worry that this is encouraging a breakdown of our traditional values of honesty and duty to society," said a Norwegian businessman.
On the other hand, many Scandinavians, including Gro Brundtland, vice chairman of Norway's ruling Labor Party, point out that "at least we have a lot to show for our taxes here."