VOTING RIGHTS COMPARED TO INCOME TAXATION AND WELFARE BENEFITS THROUGH THE SWEDISH LENS.
BACKGROUND AND RESEARCH APPROACH 714 II. SOCIAL CONTRACT THEORY, CITIZENSHIP, COHERENCE, AND CONGRUENCE AS A STARTING POINT FOR ANALYSIS 717 III. CASE STUDY 721 IV. TAXATION IN SWEDEN 722 V. ACCESS TO THE SWEDISH WELFARE SYSTEM 728 VI. VOTING IN SWEDEN 734 VII. DISCUSSION ON IDENTIFIED MISMATCHES BETWEEN THE APPLICATION OF LEGAL FRAMEWORKS COMPRISING TAXATION, ACCESS TO WELFARE BENEFITS, AND VOTING 737 VIII. CONCLUDING REMARKS 740 APPENDIX 741 I. BACKGROUND AND RESEARCRCH APPROACH
Taxpayers are now more mobile than ever as a result of ongoing globalization. On a global level, increased mobility not only complicates tax allocation when determining tax nexus (1) but also results in an inclusion or exclusion of taxpayers with respect to the democratic process in individual states, because some will gain access to voting through citizenship programmes (so-called investment citizenships or golden citizenships) or access to local elections due to their EU citizenship while others (primarily those originating from a state outside of the EU) will have no access to voting at all despite them working and contributing with taxes in one or several states other than their residence state. This project, "Political (Tax) Equity in a Global Context," will not deal with the tax nexus/allocation issue but instead will focus on the problems related to the democratic process. These problems may be identified through three examples. First, it is becoming more common for states to offer so called golden citizenships or golden visas in order to attract high-income earners, high-skilled workers, and high net value individuals, (2) illustrating how states use citizenship as a tool for tax competition. Second, less fortunate individuals such as immigrants or refugees are refused these privileges, reinforcing the separation between weaker and stronger taxpayers. Third, some states have gone so far in this separation that they introduce tax rules aimed at impeding the immigration of weaker individuals. For example, Hungary has introduced an immigration surtax in order to disincentivise the assistance of immigrants. (3)
One could, based upon these three examples, identify two issues that have democratic implications on a society: (1) can those with economic leverage secure special tax concessions? and (2) what are the possibilities for poorer non-citizens (4) to access a state if said state allows other noncitizens more access as a result of them contributing financially to the state? These issues are highly relevant and acted as inspiration to this project, resulting in a focus on the increasing global mobility across different taxpayer groups though several studies on how this mobility separates individual taxpayers and as a result leads to deficiencies in social justice and political equity.
Various theories gathered from not only law but also political economics, sociology, and political science are integrated into different parts of the project in order to study the main issue--the impact globalization and taxation have on the democratic process in regard to taxes and public spending in individual states--from different perspectives. (5) In this Article, theories are mainly referable to social contract and citizenship as they are often contrasted against each other, illustrating that it may be necessary to apply both in order to achieve political equity between individuals. To clarify, citizens may directly influence tax legislation and public spending through voting rights awarded due to their citizenship, resulting in political equity between non-taxpaying citizens and taxpaying citizens as they are equally entitled to vote regardless of whether they have contributed to state finances or not. However, the application of citizenship as the requirement for voting privileges excludes taxpaying noncitizens from influencing regardless of whether they have contributed to state finances through taxation or otherwise contributed to society. This suggests an antagonistic relationship between the social contract and citizenship; yet, in this Article, it becomes evident that they are acting as safeguards supplementing the weaknesses of the other. Both are necessary to be considered when creating tax policy in order to strengthen political equity in a society where individuals are becoming more mobile and are less restricted by territorial affiliation or formal citizenship.
Part II of this Article briefly introduces the theoretical framework of the entire project and focuses primarily on the concepts of coherence and congruence as applied to the Swedish taxpayer case study. A more detailed examination of the social contract theory is undertaken in the remaining two articles in this series. (6) Part III describes the design of the taxpayer case study which is applied throughout the Article. Parts IV and V of this Article describe and analyse taxation and access to welfare benefits in Sweden for each of the taxpayer groups in the case study. Part VI integrates voting privileges in Sweden and links these to the analysis of taxation and distribution of welfare benefits. Part VII elaborates on identified mismatches between legal frameworks comprising with taxation, access to welfare benefits, and voting. Part VIII of this Article provides some final conclusions.
SOCIAL CONTRACT THEORY, CITIZENSHIP, COHERENCE, AND CONGRUENCE AS A STARTING POINT FOR ANALYSIS
This Article answers the principal question of whether three major legal regimes in Sweden--taxation, voting, and welfare benefits--are theoretically coherent under formal citizenship or a social contract theory of the state and democracy. (7) In order to answer the principal question, we must first understand the basics of these legal regimes so that we can determine whether they provide a coherent story of rights, benefits, and burdens and, to the extent they do not, examine whether there are policy reasons that led the legislature to draft these regimes with such inconsistencies.
Previous work done by Wolfgang Schon, Allison Christians, Giorgio Beretta, Mats Tjernberg, Asa Gunnarsson, and Thomas Erhag has inspired this project and the utilization of social contract theory to encompass both income and expenditure and the possibility of influencing tax legislation and public spending in a welfare state context. (8) Researchers such as Schon, Christians, and Beretta apply social contract theory and the role of citizenship to the context of international taxation in order to analyse how the concept of citizenship, when determining tax nexus, has been affected by harmful tax competition and increased cross-border mobility. Swedish scholars such as Tjernberg, Gunnarsson, and Erhag focus on a national level, applying congruence to the obligation of paying taxes and the right of receiving welfare benefits. (9) In this, the concept of congruence acts as a theoretical tool in describing the contractual exchange with regard to taxation, voting rights, and welfare benefits--i.e., in order for the state to collect taxes, there must be a corresponding benefit, such as taxing rights and/or welfare benefits.
In addition to formal citizenship and social contract theory, a theoretical framework comprised of coherence and congruence is applied as a tool when analysing if and why there may be mismatches between the three regimes of taxation, access to welfare benefits, and voting rights. One could state that the search for coherence in the given material is a central and an unspoken part of legal research in general; (10) nevertheless, emphasis is placed on the concept as it will assist the analysis in addition to identifying mismatches between legal regimes. For instance, a non-resident in Sweden is subject to limited taxation, limited access to the welfare system, and, depending on the case, limited voting rights, which could arguably be a coherent application of the legal frameworks. However, one may also argue that it is incoherent if one considers the fiscal contract--i.e., if he or she pays taxes to the Swedish state and receives in return some access to welfare benefits, but no access or a limited possibility to influence tax legislation and public spending (the voting privileges). This would be where congruence comes in. If the individual pays taxes, then he or she should in this context also receive welfare benefits and voting privileges in order for the contractual exchange to be corresponding.
Reciprocity is often utilized when discussing such an exchange of mutual benefits. For instance, it is often utilized within taxation as a theory or principle when describing the relationship between costs (income taxation) and the ability to deduct costs related to the taxed income. (11) This implies a strong link (earmarking) between the cost and the possibility of deducting; hence, some scholars reason that income that does not qualify for deductions should not be taxed at all under the principle of reciprocity. (12)
However, this Article does not discuss reciprocity but instead focuses on congruence as the latter does not imply an immediate exchange but rather a long-term relationship in which the link is weaker than with reciprocity due to the lack of earmarking. To clarify, congruence bears a strong resemblance to the reasoning on which insurance contracts are built upon. (13) The consumer concludes a contract with an insurance company, and subsequently the consumer pays premiums with the safety and knowledge that the company will step in and reimburse losses if an accident were to happen. The same reasoning is applied within social insurance law--i.e., a taxpayer pays taxes while the state takes on the responsibility to support the individual through various welfare benefits/social benefits if the taxpayer were to suffer a loss of income. (14) Congruence is therefore often applied within research that comprises the relationship between taxation and social insurance law. (15) This...
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