Finnish economic inequality continues to grow
As the famous phrase says, the rich get richer and the poor get poorer. And this has been going on in Finland for over thirty years. According to the latest data, the richest ten percent own nearly half of all economic assets. At the same time, half of the country’s inhabitants own only five percent of material wealth.
Professor of National Economy at the University of Tampere Matti Tuomala says that the explanation for this phenomenon lies in the Finnish tax system. One of the goals of taxation is to smooth out income inequality, but this goal is not always met in Finland. The tax on income from work is quite high, which makes it almost impossible to get rich through work. Capital gains tax is relatively low, so people with higher incomes often pay less taxes than people with average income from wage earners.
According to the Statistics Center, economic inequality has been growing in Finland since 1987. Professor Tuomala says that the strongest concentration of capital from the beginning occurs in the mid-nineties. The division into income from labor and capital took place in the tax legislation in 1993. Prior to that, the scale of taxation was the same for all income.
At the same time, the economist of the EVA Business Organization Sanna Kurronen does not consider income inequality a big problem. It seems to her a completely logical situation in which, for example, students have less property and savings than middle-aged people. She is confident that if the taxation of capital income is tightened, part of the money will certainly flow abroad.