Basics on Social Democracy Although, at present, Sweden has the highest tax ratio among the OECD countries, this does not mean that the welfare state is particularly costly. Americans do not pay any less, privately, for security against the basic exigencies of life – unemployment, illness, old age – than Swedes are required to pay in taxes and social contributions. The decisive difference, however, is that in Sweden the whole population is insured, while in the USA(currently) all those who cannot pay remain outside the private insurance system. Box 2: The Swedish and American welfare state USA Income support Is entirely targeted on the absolute poorest. Is associated with self-imposed poverty. Cash assistance is time limited to five years. Varies from state to state (federal system). Great Britain Germany Sweden Tightly rationed funding. Not related to (former) income. Unlimited in time. Other services are granted on a means-tested basis(e.g. rents, insurance). 'Liberal welfare state'. Is conditional on a means test. Sufficient basic funding which is not related to (former) income. Unlimited in time. All economically active applicants have to proof that they seek employment. The right to participate in free advanced education. Basic funding. Not related to (former) income. Unlimited in time. No right to participate in advanced education, but the duty to do so, if it is offered. The search for employment has to be proved only in special cases. Unemployment insurance Pensions Assistance for six months. Corresponds to 30-40% of the previous wage. Assistance for six months. Dependent on family situation and age. Blanked amount of ca. 80 € . Pension is related to lifelong paid income tax. Who did not pay enough income tax relies on income support. Everyone who can afford it receives state pension only additionally to private funds. Pension is related to the lifelong income. A minimum amount is guaranteed. As state pension is tightly rationed, most British use additionally a private pension fund. Assistance for between six and 24 months, depending on age and length of contribution. According to family status, 60­67% of the previous wage. Assistance for between ten and in special cases 20 months. 80% of the previous wage, maximum 81 € per day. Special: taxes have to be paid. Pension is related to the lifelong income. Income support is the minimum. The number of persons relying on private pension funds is increasing. Employees and employers pay equal contribution. Pension is related to the lifelong income. A minimum amount is guaranteed. Both is far higher than, e.g., in Great Britain. Employees and employers pay equal contribution. 28