Swedish Taxation and drops in unmeployment

There is not a month going by without any news on Sweden's high income-tax level and its impact on unemployment rates. It seems as if politicians today cannot see beyond one main reason why unemployment rates are not dropping anymore although the country's economy seems to be in a real  boom. The reason is according to Swedish Prime minister Reinfeldt the high tax level as described above.

Income taxes here in Sweden followed a very simple formula before Reinfeldt came into the picture: about 30% of income taxe until a yearly income of 395 600 Swedish Kronas (SEK). For an income above this sum taxes will rise to 50% and for a yearly income of above 560 900 SEK taxes will be about 55%. But please note that only the marginal sums will be within the higher tax rate. And Swedish taxes are all inclusive: they include social security, pension, sickness insurance, the works. No more fees have to be paid by the employee. Compared with Germany where you can see tax-rates of about 20%, but then the employee will have to pay sickness insurance, pension insurance, unemployment insurance, ... it seems alright. The big difference is that we call it taxes, Germany calls it fees...

However, since Reinfeldt started his crusade against high taxation in sweden, we have received tax deductions for the working that decreases income taxes according to their working income, meaning: only the once who are working will receive this deduction. Reinfeldt administration says that this taxreduction has lead to declining unemployment figures. Well, please let me remind you that economics right now is moving upwards and in a boom unemployment figures ALWAYS drop. But: thing is, unemployment has not dropped as much as it was planned. So what is Reinfeldt administration's answer? Yes, of course, more tax reductions and less taxes for the people with higher income. At the same time important community parts i.e. hospitals, schools and care for elderly are sold out, not working, closing down.

I personally do not understand the advantage of another taxreduction. The last 8% of the unemployed will not start working because they have in mind that they will have to pay less taxes?! I believe that a major questions instead should be why employers are not hiring people anymore? Why do companies, both minor and large once, stop employing in good times like this? Could it be because labor is too expensive? An employer pays beyond salary even social fees that amounts to 31,42% of the gross-salary. Meaning: an employee will cost a month's salary plus 31,42% social fees. Why did not anyone discuss a reduction of those fees instead? Give employers an opportunity to hire more people for a minor cost. THIS should be a great bait for any company, espescially minor companies with a few employees and where the cost of the social fees is extremely high in relation to other costs.

In 2010 941.458 MSEK were paid as salary (including employee's taxes) from private, non-governmental comapnies (source: SCB). Above that 286.109 MSEK were paid in social fees, so the total cost for  Swedish companies sums up to 1.227.567MSEK, more than a billion Swedish Kronas. Is it crazy then, to wonder if it would be more interesting to hire someone if it was cheaper? And lower taxes will not do the works, lower social fees will!