Even Socialists Have A Limit At 102% Taxation

The Author of Pipi Longstocking, Astrid Anna Emilia Lindgren, generates this interesting story.

In 1976, Lindgren learned that because of tax laws requiring her to pay both income tax and employer’s fees, she would effectively be taxed at a rate of 102 percent. Though she was generally a supporter of the principles of socialism, paying more than she actually earned appalled her. And so she published a satirical fairytale, “Pomperipossa in Monismania,” about a children’s book author forced to pay exorbitant taxes, in the Stockholm tabloid Expressen. The satire ignited a furious debate over both the tax laws and the reigning Social Democratic Party. Because of her popularity, people listened to Lindgren. Later that year, the Social Democratic party lost the election, giving up power for the first time in 44 years.”
(Vintage News. When the Swedish author of “Pippi Longstocking” had to pay 102% in taxes, she fought the injustice with her best weapon: her writing Jan 4, 2018 E.L. Hamilton)

This got me digging into the economic ideologies at work behind this story.

This is based on “Marginal Taxation” and the idea of Tax Brackets. The more you earn the higher the tax rate on each bracket of incremental increase in income. I think the maximum tax rate in Canada is 33% on every dollar earned after $205,000. Obviously Lindgren achieved a higher margin of income, and entered a bracket where her government deemed every dollar after a certain income was heavily taxed, every dollar was basically taken back to the state, and more, because of the fees.

Socialism can be the very equalization force it sets out to be. I’ll spare you more critique about the Socialist Economic ideology rabbit trail I followed.

“Marginal tax rates are applied to income in countries with progressive taxation schemes, with incremental increases in income taxed in progressively higher tax brackets.
In economics, one theory is that marginal tax rates will impact the incentive of increased income, meaning that higher marginal tax rates cause individuals to have less incentive to earn more. This is the basis of the Laffer curve theory, which theorizes that population-wide taxable income decreases as a function of the marginal tax rate, making net governmental tax revenues decrease beyond a certain taxation point.”

-Wikipedia

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