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Norway Tax Data Now!
It's the moment nosy Norwegian neighbors have been waiting for -- the release of official records showing the annual income and overall wealth of nearly every taxpayer in the Scandinavian country.
In a move that would be unthinkable elsewhere, tax authorities in Norway have issued the ''skatteliste,'' or ''tax list,'' for 2008 to the media under a law designed to uphold the country's tradition of transparency...
Many media outlets use the tax records to produce their own searchable online databases. In the database of national broadcaster NRK, you can type a subject's name, hit search and within moments get information on what that person made last year, what was paid in taxes and total wealth....
The information had been available to media until 2004, when a more conservative government banned the publication of tax records. Three years later, a new, more liberal government reversed the legislation and also made it possible for media to obtain tax information digitally and disseminate it online.
There has got to be more than one dissertation here. Aside from the obvious issues of studying the distribution of wealth over time and cross-sectionally the three year break raises possibilities such as testing whether making salary and wealth information public encourages people to work more or less and whether public information about income increases or decreases inequality.
Perhaps most interesting--does conspicuous consumption fall and efficiency increase in a society in which income is conspicuous?
Posted by Alex Tabarrok on October 24, 2009 at 07:38 AM in Data Source, Economics, Travels | Permalink
Comments
I've been complaining about Alex posts lately, so I'll come out first and say that this is a very interesting post, and I'm glad it came to my attention. And yes, it will be interesting to see the effect on conspicuous consumption, since it's hard to fake it when everyone knows exactly what you earn.
Posted by: Jason H. at Oct 24, 2009 8:05:41 AM
Does conspicuous consumption decrease? An excellent question!
Posted by: Robin Hanson at Oct 24, 2009 8:10:47 AM
Is the divorce rate for couples married during non-disclosure periods higher?
Posted by: RP at Oct 24, 2009 8:13:16 AM
Are there less marriages per capita during non-disclosure periods?
Posted by: RP at Oct 24, 2009 8:14:43 AM
You ask a very difficult (though compelling) question. My first thought is that no, conspicuous consumption (or the related pecuniary emulation) wouldn't change a bit. It has been awhile since I last read Veblen, but I seem to recall that both practices are a matter of culture more so than brunt economics. Simply being rich is not enough, one must surround himself with the toys that wealth confers to truly flaunt. Likewise, consumption gives of not just a signal of wealth but tastes associated with being wealthy.
Pecuniary emulation works in much the same way, even if there is some laundry list that proves one is not as rich as he claims, it is a matter of showing you have the tastes of the elites, and thus share some traits with them. Lastly, and this is a far more pragmatic answer, I believe this practice's effect on conspicuous consumption and pecuniary emulation (if there is one) decrease drastically as the population of the society increases. Imagine the page count of an American income list. It is entirely unlikely, people are going to check a log to determine if that guy driving a Mercedes is really rich or not.
Posted by: Ryan Vann at Oct 24, 2009 8:22:20 AM
Transparency with other people's private data! Peculiar use of the word...
Posted by: Vernunft at Oct 24, 2009 8:31:08 AM
I love that they use the word 'subject': "you can type a subject's name...". Hilarious.
Posted by: JamieNYC at Oct 24, 2009 8:52:52 AM
I love that they use the word 'subject': "you can type a subject's name...". Hilarious.
Posted by: JamieNYC at Oct 24, 2009 8:53:27 AM
This is an old practice in Norway, and the intention was to make the tax system transparent, so that people could check that noone had unfair advantages. The data were available on demand to anyone, but before they were put on the internet that really just meant that is was available to journalists, who used it for research.
Searchable tax databases on the internet changed this into something new and unintented: a tool for snooping on your friends, neighbours and colleagues, (as well as for criminals, who can easily find the richest people in a neighbourhood). The media organizations defend these databases with lofty ideals about democracy and transparency, but what they're really doing is providing a fun service that generates a lot of profitable internet traffic, (while incidentally also destroying a good chunk of our privacy).
So here's a question for the economists: Is it possible to fight a practice that is 1) bad for society, but 2) profitable for the media, and 3) fun?
Posted by: Bjørn Stærk at Oct 24, 2009 8:59:08 AM
I think the "In a move that would be unthinkable elsewhere" is a bit wrong. It's not issued by the tax authority but Taxeringskalendern is the Swedish version of Skattelisten, and as far as I know anyone who is obsessively interested in their neighbours can buy one.
Posted by: Dennis at Oct 24, 2009 9:22:42 AM
In my genealogical pursuits, I discovered the local paper in Ontario County NY published the amounts of income taxes paid by each person for 1864 or 65. And the Broome County government in 1940 published a hardbound book recording all its disbursements. Our ideas of privacy have changed over the years.
Posted by: Bill Harshaw at Oct 24, 2009 9:22:58 AM
You do not have to be wealthy to conspicuously consume. People go into debt to finance their conspicuous consumption. Conspicuous consumption does not always signal income or wealth.
So, it is more interesting to see the actual income being made public--Do people publicize how to search for their income? I doubt it.
It would also be interesting to correlate conspicuous consumption with the now observable income. Do people go into debt to conspicuously consume when you can go to a website to find out a person's true income? Would there be a negative attitude toward conspicuous consumption if income were observable and thus it was known the person was living beyond their means?
What is more likely is that income transparency could create workplace problems, and lead employers to compress wage scales since there are no hidden bonuses without collateral damage.
Posted by: Bill at Oct 24, 2009 9:30:32 AM
So, it's been done and the country of Norway has not collapsed, but remained a nice place to live, albeit a bit cold in the long winter.
Another research question might be whether this affects public versus private salary levels in some way. In the US, public managerial salaries are usually more available that private sector managerial salaries (not counting top executive level at public companies).
Posted by: zbicyclist at Oct 24, 2009 10:56:49 AM
Related to this subject, I have always been amazed by Americans reluctance to discuss their incomes, it really is completely taboo in America to ask someone what they earn. I don't see this so much elsewhere, why is that I wonder?
Also, Jason H, could you possibly be more patronizing? Do you have a blog we can critique?
Posted by: ChrisA at Oct 24, 2009 11:13:09 AM
"skatteliste": fascinating - as in the old expression "scot-free", meaning free of tax?
Posted by: dearieme at Oct 24, 2009 11:20:32 AM
"skatteliste" is more like, tax list
Posted by: erik at Oct 24, 2009 11:39:09 AM
There are privacy interests, and tax fairness interests. It seems to me that the best balance would be to publish detailed tax data for the top 1% or so of earners (who are most likely to do large scale tax avoidance, with serious consequences for the budget), but just aggregate data for everyone else.
If it works at all in Norway, that is.
Posted by: Tomasz Wegrzanowski at Oct 24, 2009 12:21:13 PM
There is one group of Americans who undergo the same exposure - public employees. You can at least ballpark how much your kid's teacher is making based on years of experience and level of education.
Posted by: Ted Craig at Oct 24, 2009 12:33:42 PM
Anyone have a link to one of the databases?
Posted by: C at Oct 24, 2009 12:44:29 PM
Such arrangements increase the shadow economy -- renumeration through back-scratching, quid-pro-quo, gifts and favors. People who want to hide their wealth and power (in other words, all wealthy and powerful people) are now forced to sublimate their wealth and power into less transparent instruments. Corrupt third-world societies have lots of practice at this.
Posted by: Joshua Allen at Oct 24, 2009 12:51:26 PM
It might be of interest to note that annual tax payments were open and published in the 19th century in the Netherlands, while today such openness would be seen as a gross violation of privacy. A few years ago a researcher got a PhD for studying elite continuity. She dug up the old State Courant and looked how well their great-grandchildren were doing today.
The key reason they were published at that time was 19th century census voting. One had to pay taxes to get the right to vote and in particular one had to pay a substantial amount of taxes even to become eligible for becoming a representative. For the 2nd chamber [house of commons] a minimum annual tax payment of 1.000 guilders was required, for the 1st chamber [senate] a minimum annual tax payment of 10.000 guilders was the treshold.
Multiply that amount by about 40, to compensate for inflation, the change from guilder to the euro, as well as the expansion of taxation to fund the welfare state. One then grasped that not only becoming a Senator was definitely within a poor men's reach, but also why the few socialist parliamentarians in the Netherlands were mainly Reverends, medical doctors and academics.
But openness was required to allow the general public to check whether someone was eligible to run for parliament and the higher offices.
Off course that kind of openness also kept a far stronger scrutiny open for the general public on politicians using their position for private gains.
The eligibility for public offices, when one paid a substantial amount of taxes, with a skewed scale for higher tax payment requirements when one desired to be eligible for certain more prestiguous offices seems to have taken away many of the privacy concerns.
As with universal suffrage, the tax data became a non-disclosed private matter, that obviously increased the opportunity for politicians to advance in wealth during their office.
One could imagine that openness in the USA on the tax filings for elected politicians or appointed Administration members might be more effective than campaign finance reforms. A permanent register however would be needed to avoid the situation of "making big bucks" after office, due to opportunities created while in office.
Posted by: Peter Halferding at Oct 24, 2009 1:16:06 PM
A couple of things: You can't actually see what anyone's making -what you can see is taxable income, i.e. income after deductions.
If you're interested you can go to
http://skattelister.no/
Here's me for instance (I only worked two months last year since I graduated last year)
http://skattelister.no/skatt/profil/aslak-berg-11823708/
"inntekt"=income "Formue"= net wealth and "skatt"= tax paid
This site also calculates an estimate of income before deductions:
"Beregning av egentlig inntekt" In my case it's pretty close
Posted by: Aslak at Oct 24, 2009 2:44:35 PM
Hmm, I think my post may have disappeared. Apologies if this gets posted twice.
Anyway, VG, a Norwegian tabloid has created a website which you can consult at skattelister.no/skatt/
If you click on my name you can see my results as an example (it's not much considering I graduated last year and only worked two months)
"Inntekt"=income "formue"= net wealth and "skatt"=tax paid
Inntekt is income after deductions, "Beregning av egentlig inntekt" is an estimate of income before deductions which in my case at least is pretty close to the truth.
Personally I dont really mind much, but it's a big deal for some people
Posted by: Aslak at Oct 24, 2009 2:50:21 PM
Thanks Aslak!
Posted by: C at Oct 24, 2009 2:59:41 PM
I enjoyed the way that article described those who want to hide the way the government collects its money as "more conservative."
Those who want transparency into government operations, of course, are "more liberal."
If you can find a description of anything more bass-ackwards than that, I'd love to hear it.
Posted by: Jim at Oct 24, 2009 3:38:16 PM
