March 24, 1970
By Leonard Gross


MEET THE EDSTROMS. They live in Sweden. Runo produces television programs. Cay markets literary properties. What they keep of what they earn will make most Americans shudder. Why, then, that contented glow? Well, they happen to be in love. They each enjoy their work. And they've just bought a house, to shelter a growing brood.

But a decisive percentage of their contentment is profit from an asset we Americans have suddenly found missing a sound, secure environment. With just $8,000 to spend a year, Runo and Cay Edström live well in a livable town, Stockholm.

Stockholm is Mecca for urban planners, but what-follows is not a technicians' story. Its premise is a basic equation that links us indisputably to the Edströms: taxes. And the smallest common denominator of the tax equation is what each of us pays to support our towns.

We thought you might like to see what it costs one young couple, whose income exceeds the national average, to maintain a city that works. To see what they get for what they give, let's first take a look at their town.

Across the harbor, Old Town, intact.

Downtown at night: serenity, safety.

What makes a city livable? Beauty. Culture. Space. Safety. Good transportation, schools and neighbors. Stockholm has them all. It also has its problems: rising crime and violence. Restless kids. A housing shortage. Alienation, particularly among people in the green-belt apartment clusters that ring the city. But strung together, these troubles are as misleading as Sweden's infamous suicide rate, which suffers from an honest count that doesn't exist where law or religion condemn the act; which is not Europe's highest; and which has increased only slightly since the turn of the century.

Social critics see the problems-particularly the housing shortage-as inevitable consequences of urbanizing a traditionally rural culture and as short-term dislocations within a long-range program that the people want. Where our urban chaos today threatens the national will, beneath Stockholm's headlines lies a serene conviction that Sweden's priorities are in order.

Foreigners visiting Stockholm for the first time frequently find it "boring." The charge is partially warranted, Swedes are difficult to know. But the charge is overblown; the foreigner, accustomed to clatter, fails to recognize a city at peace with itself.

Twenty minutes from the city center, atop a man-made hill.

Priority: shoppers. A downtown mall.

Priority: drivers. A new traffic circle.

In Sweden, the city comes first. City fathers have powers unrealized in the U.S. In the city's name, they buy up its land. No developer with a flashy scale model and seductive figures turns a zoning board's head. The city's well-paid planners, fortified by outside counsel and public debate, determine what's best for the city as well as for the private builder. They then invite the builder to build.

But it's the city's power to tax that really boggles an American mind. Each municipality has an unlimited right to charge what it requires to meet projected expenses. The city fathers simply add up the amounts needed to run and develop their city. From this total, they subtract the national government's contribution to the city-25 percent on the average. Then they subtract their city's income from taxes on local industry, and their revenue from city-owned apartments. The remainder must be covered by the residents. Last year, Stockholm took 19 percent of its residents' taxable income, slightly under the national average. (In the U.S., city income taxes seldom exceed one percent.)

The Swedes know that's what it takes, and that is that. If the city needs more the next year, it takes more the next year, and that continues to be that.


Carl Johan Winberg can't wait to leave.

But, oh, the total tax-which includes indirect taxes (on tobacco and whiskey, sales and auto upkeep) that can run between $500 and $2,000 a year. The people who set the rates have held power for more than 30 years; the course seems firmly set, but the arguments never stop.

HENNING SJÔSTRÔM, ATTORNEY. Average annual earnings, $40,000. Average taxes, $25,000. That glorious wife. Their country home at left. Cardin suits. A Rolls-Royce. An office-apartment overlooking the harbor. All Sweden would love to know how he does it-particularly the Swedish bar association, which harrumphs at his zesty habits and has three times inspected his books. Sjöström is a tough ex-coal miner who took correspondence courses, and never forgot his past. After a five-year battle, he's just won a giant settlement for Sweden's thalidomide babies from the company that made the pill. His fee, set by the court, is $200,000-$160,000 will go to the state. "You always have that 20 percent," he says. "In Sweden, $40,000 is a fortune." Sjöström lives the good life through myriad arrangements practiced by most upper-class Swedes. Says Sjöström, "The key is the company. A man with only an income is in a very weak position." Sjöström's company publishes books-many of them his own. From his company, he borrows money, and then deducts the interest. His company pays for dinners with writers, as well as a portion of the upkeep on the Rolls. Working trips abroad allow for days off. "We are always rolling a tax ball before us," Sjöström explained. Works of art held for more than five years can be sold free of tax. Five years ago, he bought some Picasso etchings for $160 a piece; today, each is worth $2,400. "As long as I'm living in a capitalistic society, I'm using its possibilities. At the same time, I'm a Socialist. I'm not against the authorities attempting to reduce the possibilities of people living as we live. If the government goes too far, it will stop development, but we haven't reached that limit yet."

CARL JOHAN WINBERG, LAW STUDENT, LAW CLERK. Salary, $3,600. Taxes, $1,260. He's had it. "I could go out on the sidewalk and lie down and someone would come along and pick me up and say, 'We are so sorry for you,' and take me to the police and they'd take me out to a lovely country home with a nice room and a television and give me a thousand crowns [$200] a month and take care of me for life. No thank you." A socialite, a crack golfer, son of a successful attorney, Carl Johan is typical of a number of young Swedes who chafe over restrictions on upper-earning limits. Already, several of his friends live in Switzerland six months a year to avoid Swedish taxes. Carl Johan hopes to move to the U.S. "I don't want the state to take my hand and lead me," he says. "The basic idea of a social society is OK. It's possible to reach a balance between social needs and personal life, but it's overbalanced now. I know everybody can't be successful and can't be lucky, but they can try. What I object to is not a price, but an ethic."

Cheers and groans from the neighbors

Sven and Torsten are basically content.

SVEN PETTERSON AND TORSTEN JOHANSSON,GARBAGE MEN. Salaries, $6,000. Taxes, $2,000. They exchange unappealing work, poor hours, for premium wages. They think taxes are too high, but they accept them. "At least we can afford to be ill." Would they like taxes lowered in exchange for fewer benefits? "We'd like the taxes lowered, but we want to keep the benefits."

0lof Palme wants still more equality.

OLOF PALME, PRIME MINISTER. Salary, $32,000. Taxes, $18,000. Private capital has been fleeing the country. Some young Swedes are emigrating. But Sweden's leading Social Democrat-and Europe's youngest prime minister-sees no pattern suggesting that Swedes have reached the outer limits of taxation: "It's always the privileged groups who are concerned that the underprivileged will stop working if they share the privileges. The old conservatives' vision was that with four percent growth a year, you will have twice as much national income in 25 years. In that case, [the conservatives argued], it's ridiculous to talk about [income} distribution; the problems of distribution will automatically solve themselves. I think experience shows that automatic market forces work in exactly the opposite direction -toward increasing gaps between people." Palme, Sweden's Minister of Education before he was Prime Minister, thinks such issues ought to be aired in the schools-and that other countries are beginning to agree with Sweden: "In the autumn of 1967, I was over in Vienna for a European ministers' conference, and I said that the primary aim of education is to achieve social justice, and they thought I was slightly off. Two years later, we met again in Paris, basically the same ministers, and every education minister was talking about social justice and the need to have education as an instrument for equality. In the meantime, the educational system had blown up in their faces."


Runo: "We don't compete against the neighbors to have a better house."
RUNO EDSTRÔM EARNS $700 a month as a producer-director for the Swedish Broadcasting Corporation. Cay, his lilting wife, earns $400 from her agency. Free-lance television assignments for Runo and modeling jobs for Cay can push their annual income to $16,000.

They pay about $4,000 in national taxes. They pay $2,750 to their city government. Another $1,250 in estimated indirect taxes pushes their total tax bill to $8,000 a year.

It's the second figure that concerns us here. Of all the taxes the Edströms pay, one-third goes to the administrative unit most directly affecting their lives -their city.

A New Yorker earning $16,000 a year would pay total taxes just under $4,000, half what the Edströms pay. If he owned his home, as the Edströms do, he would contribute $1,150 of that amount to his city, mostly in property taxes-a tax lightly used in Sweden. Even though national-government support to cities, such as exists in Sweden, is unknown in the United States, what the New Yorker pays for his city is well less than half what the Edströms pay in Stockholm. And compared to other U.S. city residents, New Yorkers pay a lot.

So the Edströms, like other Swedes, are paying more for their cities than we are. Are they getting more by paying more? Would we?

Some of the answers can be expressed in amounts projected for LOOK by Swedish finance officials. The figures are estimates of what a family like the Edströms gets back for what it gives in taxes. For example, the Edströms three-year-old daughter Mikki goes to nursery, thus enabling Cay to work. The Edströms pay $4 for Mikki's full-day program, including a meal-which covers about half the $2,200-a-year cost. The city will pay $640 the national government, the rest.

Early in February, Cay had her second baby, a boy. Her only charge was the $30 extra she paid to enjoy a private room for a week. So this year, the Edströms will get more than their share of the $230 hospital subsidy projected for a family like them.

When the Edströms children go to school, each child will receive support worth $520 a year.

Such "visible" items, as Stockholm's budget office describes them, would bring the Edströms' benefits to about $1,500, if they were fully used. But, much of what the Edströms get for their money isn't "visible" at all.

About $60 of what the Edströms pay their city is set aside to help support its transportation system, should fares not cover costs. The Edströms' return on that is an intangible-the use, when they need it, of a system that works. From their home in an outlying district of Stockholm, a bus-and-subway combination takes them to the city center in 25 minutes. It's 28 cents for a fast, clean ride.

Who's ahead at this point, the Edströms or you? Even so apparently simple an issue as transportation raises a critical-and touchy-point. If some of the Edströms' benefits are not visible, neither are some of your taxes.

The Edströms are being taxed to subsidize a municipally owned transit system, a practice most Americans have resisted. But each time you take a taxi or drive to work, not because you prefer to but because your city's transit system is not good, you are paying a hidden tax.

As our cities continue to deteriorate, our hidden taxes increase. Each time you pay a private school bill because public schools are inadequate, you're paying a hidden tax. Each time you pay inflated prices for food because clogged streets increase delivery costs, you're paying a hidden tax. When you add these sums to your existing city taxes, you may be in for a jolt.

Eighteen percent of the Edströms' local tax-about $500-goes to what Stockholm's budget office describes as the "increase of public fortune." The most obvious use of this money is for land purchases the Edströms might not "see," but that insure their city's character and future.

Seldom have our cities done the same. Their development has been a largely haphazard affair-the most constant ingredient, a developer understandably interested in profit. The developer gathers parcels of land, and offers a plan to exploit them. The city may ask for some changes, but seldom refuses the project.

That system has now come under attack from the highest possible source. In his State of the Union message on January 22, 1 970, President Nixon declared: "As our cities and suburbs relentlessly expand, those priceless open spaces needed for recreation areas accessible to their people are swallowed up, often forever. Unless we preserve these spaces while they are still available, we will have none to preserve. Therefore, I shall propose new financing methods for purchasing open space and parklands, now, before they are lost to us."

It is just one step from President Nixon's proposal to Stockholm's program of buying land surrounding the city before it is developed-so that its constructive development is assured. But for that, a city needs money.

A small part of the Edströms' taxes finances studies that determine how the city should grow. Builders can then build for a profit-to the specification of expert plans.

Your taxes theoretically pay for that too. But there's a difference. Most U.S. cities haven't the money to offer attractive wages to planners, so the best ones don't always work for the cities. Stockholm and other Swedish cities offer competitive wages to planners-the best ones do work for them.

Because the city has the means, it can take the offensive in determining how it will grow. It wastes little, if any, time on the, preoccupying concerns of our city planners-undoing damage already done, or trying to prevent its spread.

Our city planners advise and forecast, but they do not usually command. Stockholm, like most European cities, has the power to carry out a thoroughly thought-out master plan. Part of this power is political, but part is surely the financial means to execute the planners' ideas.

Perhaps the most critical item on the Edströms' tax list is so invisible it does not even appear in the Budget Director's records. It is part of the extra share the Edströms put into the kitty-an investment in better neighbors.

It's often argued that Sweden, with a small, homogeneous society and no racial problem, has little relevance for us. The argument begs the point. Italy has no color problem, and its people are essentially homogeneous. They are also at one another's throats. Ultimately, the problem of social harmony is not one of color, but need. A man whose needs are well provided for will make a better neighbor than one whose needs are not.

So Runo Edström pays $4 to send Mikki to nursery each day-as well as taxes that help send the child of lower-than-average wage earners to nursery at no cost to them. He knows precisely what he's doing, and he doesn't mind a bit.

If you play the game with visible items, the Edströms come out losers. But Runo doesn't view it that way.

Somehow, in high-priced Stockholm, the Edströms manage dinner out once a fortnight, and save enough for vacation. They make do with $640 a month, and they wind up the year without money.

But they bear absolutely no grudge about taxes. "It gives me safety," says Runo. "It's absolutely worth it. I know that Mikki can go to the nursery. I know I have my job security. I know I'll be taken care of if I'm ill. .

"It would be nice to have a bigger car. But those are such small things. Details. I'm in love with my wife and my children, and even if I'm short of money, I find I am very happy when I come home. A lot of my friends with big cars, boats and villas are not very happy. Everything eventually circles around their big boat or their car or hunting money. Their wives talk about dresses from the boutiques. It means nothing."

Runo Edström's feelings are no more directly transferable to you than are Stockholm's solutions to your city. For openers, 26 percent of his city taxes go for Public Health-a feature we don't accept.

Nor are Stockholm's solutions perfect. But they do suggest what can happen when a city is organized to deal with its problems, and its people give it the means. Their contribution is founded on broad national policy. That policy may, at points, be at philosophical odds with our own. But some of its features are worth considering-particularly the national government's concept of its responsibility to the city. Where problems are of national origin, like crime, is not the national government obliged to furnish cities the means to cure their woes? Sweden's answer is yes-it supports its cities directly, for example, by payment of policemen's salaries. Its support is indirect, as well, in the consideration it gives each taxpayer for the taxes he pays to his city.

Sweden's defense establishment takes 14 percent of its national budget. Our own takes 36 percent. Should our priorities ever be reordered, and our cities put first, the Federal Government need not necessarily make a direct contribution. The same effect could be achieved indirectly if cities sharply raised residents' income taxes and the Government generously discounted such taxes. With as much money at stake in our cities as the Edströms have in theirs, Americans would be highly motivated to be sure they'd get a return.

The one incontrovertible point is that Runo and Cay Edström seem to be getting their money's worth for the taxes they pay their city. At least they can live there. How many Americans can say that?

High taxes:"It's absolutely worth it'says Runo.