I'm not in Denmark but in a very similar European country. I don't want the high taxes. The current taxes and mandatory payments feel unfair.
The generations before us worked during the greatest economic boom in history, were mostly employed in safe and high paying government jobs (still are), bought houses before their values tripled, and are now receiving monthly pension payments that are almost twice what most young people earn through work. My effective tax rate is more than 50% (including mandatory pension payments that are more than 10% of my pre-tax pay). A good part of that goes to pay the pensions of existing retirees. A third of my remaining pay goes into paying rent for the apartments owned by the older generation. In the end, I get around 1.5k euro out of the 7k I cost my company (employers also have to pay additional social and pension payments).
Looking at the current luxurious lifestyle of the older generations, and the rapidly ageing population, and increasing youth unemployment — I want out.
Wait, you've got it backwards. At the risk of stating the obvious: the wealthy older generation are the ones who want the tax cuts for the wealthy. In a progressive taxation scheme the young and poor get more benefits from the government than they pay in via taxes, so what you're arguing for would hurt you and help them.
The real problem is that assets are taxed (sometimes significantly) less than income. We're in a world where assets are becoming much more valuable than labour, but have a taxation and pension scheme that is built for the opposite (post-WWII).
The older generation has assets like houses and stocks. Youth have the ability to work. Here in Canada, the capital gains tax is literally half of what the income tax is. So when old people make their money (house prices go up, investment portfolios increase) while literally not lifting a finger, they get to shift half of their tax burden onto the people that get up every morning and work for a living. /That's/ unfair.
This is all happening in a time when we've got so much cash floating around that interest rates might go negative, which means the usual "oh, but if we tax assets then it will reduce the available investment pool and it will hurt the economy" is complete self-serving horseshit.
Taxes are one of your biggest tools for redressing the screwing over that the younger generation has got. You'd be crazy to consider them the problem. Furthermore, with pensions the older generation basically wrote themselves a blank cheque that the younger generation had to pay. I don't think we should feel obligated to follow it to the letter - and that doesn't have anything to do with tax rates, that's just a contract re-negotiation.
The situation you're referring to, where older citizens own more assets than average, might indeed seem obvious in Canada but it might not be the case at all in any country with a differently structured social security system, since the decision to save money for a rainy day or not is directly affected by the availability of social security.
In a country with an ageing population and with a pension system overwhelmingly funded by intergenerational transfer, then voting for tax cuts is optimal for young voters. In a country where pensions are mostly funded by private savings, then sure, taxes are nice.
The intergenerational inequality is an increasingly serious problem, and as you suggest might kill the welfare state if it's no longer percieved to be fair. The flashpoints are more likely to be in the south of Europe, such as Greece.
The critical failure of the welfare state, as it is currently implemented, was that it relied on ever-increasing payrolls in the younger generations to fund the pensions and subsidies of the retirees. Once that breaks down, as it is starting to, so does the system built upon it.
Yea, here in Spain most people under 35 dont expect to have any public pensions when we come of age. The system is so underfunded and corrupt that I expect to work until 75 at least and really dont expect there to be any public funding left by then. As I tell others here, get a private plan, even if you cant put a lot in it, setup an automatic transfer each month and done.
The system is not underfunded, its main problem is the aging population. Or maybe even the system, in Spain, as in most countries in Europe, pensions are paid by the current generation, so the moment that the ratio of pensioners to workers becomes unsustainable the system will collapse.
>and corrupt
There is some corruption going on in Spain, that's undeniable, but I wouldn't say that the pension system is corrupt. What are your bases for that statement?
Another view is: I could definitely invest especially the forced pension better myself. The problem is most people would use that money for consumption if they had a choice, and then at old age they would blame society for having to live on the street (and in the end probably get a handout anyway). Perhaps in the end all of us are better off if we "force" these saving for most people.
However, we probably should withhold paying obviously unsustainable pensions to current generation of retired citizens.
There's this desperate feeling that despite paying a large chunk of money into pension fund, my generation won't get any pensions at all, because of population ageing there just won't be any money for that. But brace yourself. And have a nice mood. (c)
We're just giving those money to aged people without hopes of getting anything back.
And no, immigration won't solve this, because every immigrant you bring today will retire (or try to), too.
Your problem is not the high taxes themselves, but the way they are used. If young people are taxed in order to provide pensions for old people that are higher than the salaries of working young people, then there's something wrong, and I can totally understand the resentment.
I think the main reason why people object to taxes, is when those taxes are wasted on stupid things. But if taxes are efficiently used to provide a better society, then I think most people would support even fairly high taxes. Like in Denmark. Or in many European countries and the US just after WW2. Taxes were insane back then, but they were used to build up the country.
But the problem is a lot of them paid in already. so, should someone that worked 40 years for a system get screwed out of all the money they put in? I don't have a good answer.
You try not to leave them totally high and dry, but you can't shift the entire burden onto people who weren't even born when those deals were made. It wasn't the unborn that screwed them, it was their own elected politicians who did it, in other words, themselves.
Sweden is #8 in terms of total tax wedge in the OECD. Norway is the 18th highest and just barely above the OECD average, compared to e.g. US at #25, Belgium at #1, Germany #2.
Sweden is high, but still 6-8 percentage points below Germany, Italy, Austria, Hungary, France, and about twice that beow Belgium, which is an extreme outlier.
...but the structure of the tax wedge is quite different. In Denmark, almost all of it comes from income tax while in other countries it's usually 40% paid by the employer...
That's a good point. I'm generally opposed to including payroll taxes when talking about tax for that reason, because what people tend to compare when talking about income, tends to be their contracted salary excluding anything paid by employers. If you then include payroll taxes when comparing tax, you should compared it income + payroll taxes as your "actual" gross income.
But when you discuss with people who want to quote high tax rates, they almost always include everything in order to try to get shockingly high numbers, which is why I now tend to use the OECD numbers because they too favour that, and their numbers still tend to come out far below what certain people like to think they pay (I was shocked at first to find out that there is a huge number of people out there that have no idea what their actual tax rates are, but just blindly go by the marginal rates and assume that's what they're paying...)
But of course that comparison also goes the other way if you try to compare against countries where the relative split is wildly different.
> In the end, I get around 1.5k euro out of the 7k I cost my company (employers also have to pay additional social and pension payments).
Is your pension program a personal pension program or is it like Social Security taxes like in America?
Also, one of the biggest reason why there is no real right wing in Europe because people who might think that way (low taxes, personal responsibility) all move to America (so should you).
In other countries, taxes are complicated (no citation needed). There's income tax, but there are also social security payments, industry-specific taxes, etc. And you have to pay for your own education and healthcare!
Danish tax is simple and all inclusive. It is around 50%, which is about the same as in US if all hidden obligatory payments are taken into account. But it is all inclusive: all education and healthcare is free in Denmark, and social security grid is immense.
I am a pro-free-market person and Ayn Rand admirer. But even I think that Danish system is not that bad: you just pay 50% of your income to the government immediately, and they do not bother you until the next time. On the other hand, in the US, the IRS will pursuit you relentlessly, there are insane friction multipliers like healthcare insurance rising costs spiral, and everything is so complicated that only lawyers are happy about it.
Free markets only work if the government is separated from the economy. If they are entangled, you are getting the worst of both worlds.
No, it isn't. The total tax wedge under OECD definitions, which includes employer payroll taxes, the Danish income tax burden is on average around 38%. Excluding employers payroll taxes it's around 36%.
For comparison, the "all in" number for the US is around 31%.
The OECD average is 36%.
The only OECD country that crosses the 50% mark is Belgium, which consistently is one of the highest tax countries in the world.
You can find this data here [1], and while the publisher isn't exactly neutral, the source for all the data is an OECD publication which is also freely available (I don't have the link handy). The OECD report has far more detail
If you fully load the per-capita US healthcare costs to that 31% and make it a closer comparison based on services received, I would guess the US percentage will go much higher than the Danish tax burden.
Absolutely. The difference for most Europen countries vs. the US, other than the top 5-6, is low enough to get eaten up by healthcare and similar very quickly.
It's a good question. It's pretty arbitrary, to be honest - with all of these things, despite the reasons I set out below - it's about what you want to highlight, and for what you want to use the data.
But there are two specific main arguments for presenting the data this way:
All prices in most countries that has VAT or GST or equivalent tends to be given tax inclusive. E.g. in most of Europe, a consumer can legally demand to pay the stated price if a price is advertised directed at consumers even if it is not specified that the price was meant to be VAT exclusive, or in some countries even if it is explicitly stated that the price is VAT exclusive.
So the first answer: Because when we otherwise compare price levels we compare the sticker price. If we otherwise treat the VAT separate from the goods, then that makes no sense. It's part of the complexity of trying to compare cost-of-living.
The other reason is that while the tax wedge on income is relatively stable across large parts of the population, VAT varies massively from person to person on the same income. A tax wedge excluding VAT tells us a lot about what proportion large swathes of the population will be taxed, and can't avoid paying.
But for VAT, a large proportion of it comes down to personal consumption choices.
To illustrate, let's assume 30% income tax (and lets forget about payroll taxes). This person has 70% left. Now, if I were to pay 10 percentage points of the gross to rent somewhere small, I have 60% left to spend. If I'm not bothered about a pension (stupid, yes), most of that might get towards VAT'able consumption (though some will e.g. be VAT-exempt goods like basic food stuffs). At a 25% VAT rate, that means 15% of my gross salary goes to VAT. If, on the other hand I earn exactly the same, but live in an expensive place that takes 30% of my gross salary, and I pay 10% of my gross towards pensions, I now have only 30% left to spend, and if make the same assumptions about what I buy I'd end up paying 7.5% of my gross in VAT, all through my own choices.
In reality, in the latter case you'd pay even less, as a larger proportion of the remaining cash would go towards exempt/zero-rated products like food (your total tax wedge would also be far lower, as in most countries those pension contributions would result in reduced tax).
1%-5% of the gross towards VAT is relatively typical even in countries with 25% VAT headline VAT rates. For someone with a low salary in a low VAT country it may very well end up being well below 1% (because low salary tends to mean a larger proportion goes to housing and food, leaving less for consumption affected by VAT)
So the second answer is that the VAT part is to a large extend under individual control, and so varies within the same income tax bracket, and so confuses the issue or a lot of the things you'd use the total tax wedge to get an indication of.
That doesn't mean that totals including VAT/GST or equivalent would be wrong/bad/misleading any more than excluding them is. They just show different things, and you need to be aware of different things when trying to use them in comparisons.
A lot of reports on taxation will include a variety of different breakdowns like this to give a fuller picture.
I think low tax wedge in Denmark is caused by relatively low cost of an employee to the employer (who pays relatively small amounts over their salary) vs in other Western countries.
Yes, it's more transparent. It does also mean, though, that it feels like you're taxed more, because e.g. in the UK, most people aren't aware that their employer pays 12.8% or whatever the current rate is, in employers national insurance contributions.
This does complicate cross-border comparisons in that if you're including payroll taxes when talking about the tax, you also need to add them to salaries to get comparable numbers.
Taxes are very complicated in Denmark. I don't know anybody who can calculate their own tax without computer systems, and I say that as a lawyer who talks to accountants and tax advisors regularly.
Nobody just pays 50 percent. The tax is progressive and there are numerous deductions and special cases. The actual percentage of income paid is closer to 40 for most people. And then there is the mess of indirect taxes. And the details of the tax rules change significantly all the time.
But most of the majority of Danes, which are on some kind of welfare/pension/public education grants (2.2 million out of 4 million voters) and the half of the 1.8 million employed that work for the government, like the current system.
British system: tax and social security deducted by employer. Council sends you an annual bill vaguely related to the value of your home, paid over 10 months. Healthcare free at the point of use, apart from the £7 prescription charge in England.
I was in my mid-30s before I had to file a tax return, and that's only because I'd set up a limited company. The Inland Revenue (HMRC) can be nasty, but nowhere near as nasty as the benefits accountants. HMRC website is also rather good and you can calculate and file online.
Small correction, the council (municipal government) charges the occupant of the house, not the owner. As a renter in London I was paying council tax.
Edit: The biggest downside to the UK system is there isn't an obvious end of year review, so many people don't look at their taxes. I wonder how many people are overcharged?
Correct, that's a detail I'd left out for simplicity.
End of year: That's your P60 + end of year payslip, isn't it? PAYE overcharging is certainly possible when you change jobs if you lose the P45 or end up on an emergency tax code for some reason, but if you take the 30 seconds to check your payslip every month you're more likely to notice.
What's more messy is the tax credit system. I hear that the way to maximise tax chaos for yourself is to have two self-employed divorced parents alternating custody of a child every month and claiming WFTC.
Free healthcare at the point of use won't survive in the long term. Too little funding and too much use. There's no negative externality from people abusing it.
I think this is a myth being put around by private healthcare providers. The overall cost is not too high - it's much cheaper than the US system - and the main users are the elderly. I'm also not sure what constitutes "abuse" of the system; it's not like people enjoy being in hospital.
It's not like they have VAT because they are in the EU. They had VAT since 1962, and they have had it at the current rate of 25% (higher than most EU countries) since 1992, which is way before the EU VAT directive was even a thing.
Edit: Correction, the EU VAT directive actually has its origins before 1992, but still after Denmark already had its own VAT.
In fact there are several levels - municipal, state and church tax, bottom, middle and top tax. VAT, as well as other industry taxes, among other a tax on the air in softice and an special nut-tax.
Most of those do not interfere with the lives of the average Danish citizen. Church tax is interesting though, and highly debated. Everyone's leaving the churches, especially in Copenhagen. Many teenagers deregisters from the Church of Denmark[0] to save money; the usual counterargument is mostly based on history; i.e. we should support the churches for the buildings'(not the institution) historic value.
The church tax is not the only income for the church. It receives a large amount of money from the general tax, exactly to perform restorations of old buildings and cultural heritage. Even if you deregister from the church and therefore do not pay direct church tax, some of your tax kroner will go to the church anyway.
Americans do not pay anywhere near 50% in taxes. A high income American that makes money as ordinary income (rather than capital gains) and does not own a house and lives in a high tax city will pay almost 50% if you factor in federal, state, healthcare, and sales tax. Everyone else pays a lot less. Typical including health insurance premium is probably around 30-35%. In a state like Georgia with a generous employer that pays your insurance premium, a family can probably pull in close to six figures and pay under 25% all-in if they own a house.
> A high income American that makes money as ordinary income (rather than capital gains) and does not own a house and lives in a high tax city will pay almost 50% if you factor in federal, state, healthcare, and sales tax.
You have just described a typical Hacker News reader, who lives in, say, San Francisco, has relatively high income, and pays rent.
But if you're a married couple in Georgia with a mortgage and a kid, making $90k total, tax withholding takes out 23% from your paycheck, with the 4% sales tax rate taking out maybe another 1-2% because most of your expenses (e.g. mortgage, services, and food) aren't subject to sales tax.
The U.S. is unusual among western countries in how little it taxes the middle class.
Not when you compute actual tax rate as opposed to marginal. For example a single person in SF making $250,000 a year will pay 35-40% of her income to taxes, depending on how much sales tax she pays. [1]
That's assuming she does not contribute to a 401k, make charitable donations, or take advantage of any other tax incentives.
Right. You have to be making about $700k as a single person (almost a million as a married couple) in ordinary income in San Francisco before you exceed 45% total tax burden. Many people who make that much money will not pay that much in taxes because their compensation will come from capital gains (e.g. VCs earning carried interest capital gains).
Had the same feeling about Australia vs France. In Australia I'd pay $120 for a tax agent (~1% of my income tax), it would be over and I'd be happy about it. In France I feel like I'm being chased, because it's such a socialist country: I earn €2000 per month after tax, I feel like I'm being told by the tax administration that I'm a thieve because I'm rich, even though they're the ones who attempted to double-tax me between Australia and France. I don't mind the 63%[1] that goes to the government between what my customers pay my company and what I receive as a net salary, it's just, they could at least make it respectful and simple.
[1] VAT 20%, employer tax 50%, income tax 14% on the remainder, plus an accountant to understand the law and that makes 63%. Yes, I get I'm supposed to receive benefits from the mandatory insurances, except:
- by design they never apply to the situations I might fall into (unemployment when you're between 2 countries, medical insurance when you travel, retirement going under the poverty levels by the time I'm 60, paraplegic benefit being under 800€ per month for the rest of your life - how are you supposed to live on that?).
- and those taxes don't even succeed at keeping France afloat, because we have a socialist president who's hiring for about $6bn of policemen whose work is just to bust into Muslims' houses. Yeah, unemployment reduced, socialist goal fulfilled. Doesn't sound more social that giving a job to everyone undepending on their race, however.
I'd be ok with 63% retention if it were simple and useful.
Not my feeling at all... As an employee filling taxes in France is super simple, just fill a web form with salary and banking pre-filled (just check). Done in under 15mn.
Sometimes one can be in odd situation that don't fit well. It's also been my case some years ago when exercising and selling US stock options not considered as such in France (so taxed as salary, ouch...). Just ask them ahead, in my experience they reply and are clear. And I sent them the data with explanation on what I did, so they could correct easily if I misunderstood. Always been fine so far.
Maybe you had worst experience and decided to move elsewhere, but no need to paint a bleaker picture. One can question the level of taxes and how they're used, but the payment itself is simple for most I'd say.
You can't just compare the after-net salary income tax when you compare countries. How would you then compare a country with high income tax but low VAT? You need to take the whole cycle.
As a software programmer, I receive money from people I sell the software to, pay VAT, pay social charges, pay income tax and I'm left with 37% of the money given by the clients, even though I have a very lean company (no office, no advertising costs in this calculation, no cloud costs, etc). That makes 63% of my revenue taken by the government.
What did you mean with "pure and utter nonsense", apart from not wanting to acknowledge the tax pressure in France because you've never created a company and, therefore, don't know what you are talking about?
How is creating a company "disinginuous because your tax situation is complicated"? What about we make it simple so we can focus on delivering a product for the customers (like, doing our job)?
As said, I don't even mind the 63%, even though it's impoverishing everyone. I mind the paperwork.
Living in two countries in increasingly common situation. Postdocs in Europe are required to move between countries by many grant programs (this is why me and my wife have 4 different residence permits in varied countries). Also we have a 2 years old daughter. Taxes and other bureaucracy are hell for us. And scientists are not particularly rich.
Let's be serious here. I'm French, all for high taxes and all but please let's not delude ourselves thinking that American people pay "around 50%" taxes. As soon as you have enough money to afford it, you'll pay a tax lawyer to get that down to about 15% or something, thanks to a bajillion hidden tax system loopholes allowing the rich to get an advantage on the less fortunate.
And even if you take into account the price of college, health care and everything, you'll get to about the same amount but the whole point in the US system is that you do NOT have to pay for other people, cause who needs solidarity in a society.
Well it must be an obscenely large amount of money. My wife (a college professor) and I (IT Manager) are nowhere near being able to take advantage of these amazing loopholes. We pay federal tax, state tax and 2 local taxes (one for the village we live in and one for the village where my wife's college is located). Don't forget sales tax on literally every item we purchase. Property tax is a killer as well. Then there are the payments that are deducted from our paychecks to go into Social Security (which we have no guarantee will even exist by the time we retire). We also pay an enormous amount for medical care, fees for our kids public primary school costs, huge amounts for our son's college, etc.
So, we pay a large number of taxes (I didn't even touch on all of them), risk catastrophic financial collapse if we get very ill or badly injured, have to spend obscene amounts of money on education and do NOT have access to whatever loopholes you imagine we have (well, probably someone like Donald Trump does but not normal people, or even slightly better off people).
> Let's be serious here. I'm French, all for high taxes and all but please let's not delude ourselves thinking that American people pay "around 50%" taxes. As soon as you have enough money to afford it, you'll pay a tax lawyer to get that down to about 15% or something, thanks to a bajillion hidden tax system loopholes allowing the rich to get an advantage on the less fortunate.
This is false. Once you account for all the various levels of taxation (federal, state, local), there is no possible way wealthy people have a tax rate around 15%.
> And even if you take into account the price of college, health care and everything, you'll get to about the same amount but the whole point in the US system is that you do NOT have to pay for other people, cause who needs solidarity in a society.
If I wanted solidarity then I'd have stayed in my home country. I like the idea that I am free(er) to chase my dreams and suffer the consequences of my actions. More importantly I like the idea that there are other people who think like me in this country.
> As soon as you have enough money to afford it, you'll pay a tax lawyer to get that down to about 15% or something
You need a lot of money before that's an option. By that point, you have enough to be one of those citizen-of-the-world globe-trotting types with vacation homes that double as convenient tax shelters.
That is to say, the American middle class pays quite a bit in taxes. Even the poor working class pay a flat 12.4% in payroll taxes, maybe 7-8% in sales taxes (depending on locality), and varying amounts in service taxes (fees, tolls, etc.). That's assuming they make too little to pay income tax.
> And even if you take into account the price of college, health care and everything, you'll get to about the same amount but the whole point in the US system is that you do NOT have to pay for other people, cause who needs solidarity in a society.
You seem to be angrily agreeing with the person you replied to.
Paying money to the government or a private monopolies that are heavily, and often bizarrely, regulated by the government is basically comparable.
Any sense that you "do NOT have to pay for other people" is mostly fictional.
You have a very distorted view of the American system of taxes and the American systems of wealth redistribution. It appears you've learned most of it from popular culture.
I think they where adding the cost of equivalent health care one guy I know who worked for citi bank in the usa was paying well over 15% just for his healthcare (his wife is a fed so that wasn't covering his family)
Another thing to consider is the size of Denmark compared to the US. It's a much smaller political unit which tends to translate into more responsive politicians. Danes have about half the number of representatives we have in the US but less than 5% of our population.
I think New Zealand probably has one of the most streamlined tax systems in the world, at least for the average person.
GST (essentially sales tax) is levied at 15% on all goods and services except for domestic rent and financial services (and one or two rare exceptions that don't apply to the vast majority of cases).
As for tax returns, it's as simple as going online, adding up your interest earned during the year (most banks will do this for you and send it to you) and adding your dividends earned. It's a bit more work if you do any contracting or freelancing, but it's still simple enough that the vast majority of people can do it while drinking a beer or two on a Sunday afternoon.
In Norway, the tax authority will send you a summary telling you what you owe or what they owe, and if you don't have corrections you don't need to do anything.
(all bank accounts in Norway are keyed to a national ID number assigned at birth, and the banks report all interest income and loss (as interest on debt can be subtracted from your taxable income), and your employer(s) reports your income)
There are some exceptions, in cases where you have particularly complex tax matters, but most people don't have to do anything any more.
I'm not sure why they don't do that in New Zealand, the numbers are all provided, you just have to type them in.
Perhaps it's a privacy thing?
One of the advantages is that you can check if you're owing money before filing a Personal Tax Summary (they have a tool to check if you'd owe money or be paid money), and you don't have to file for one if you owe money, and as long as it's less than a certain amount ($500?) then they don't care.
My guess is it's just a matter of slowly changing policy. In Norway it went paper return => online return => online summary that you had to confirm => summary that you only needed to act on if you had corrections. That process took many years, I'm assuming as they wanted to iron out any issues with one step before taking the next.
> In other countries, taxes are complicated (no citation needed).
Lots of citations needed actually, from what I know of it the Belgian tax system sounds pretty similar to the Danish one for employees (most taxes are held directly on salary, there's a year-end tally for deductions and the like if necessary), tax rate is ~40% of income.
Having lived a big chunk of my life in both the US and a Scandinavian country, I would say that taxes are a lot more complicated in the US. There is no way you can do your taxes in the US without the help of special computer software (e.g. turbotax) or help from professional accountants.
More accurately, Danes value their welfare state and high-equality society and are smart enough to accept that it has to be paid for. Therefore any campaign on cutting taxes immediately attracts the suspicion: what services are going to be cut?
This is a more probable reason. The only people I know who are against tax and public sector cut downs are the people who are actually employed by the state.
To be fair, we should probably also take into account the a much higher percentage of the population have a family member or a close friend that works in the public sector.
No silver bullets + Baumol Cost Disease + greater expectations = very unlikely that services will become cheaper. Someone promising to make public services much cheaper should be treated like someone offering to sell you a $10 Rolex. It's either fraud or theft. God help you if someone tries to sell you a computer system to improve public services, that needs very careful management (18F, GDS, not Capita and friends) if it's not to become a cost writeoff.
I should probably expand on Baumol Cost Disease: many public services inherently involve humans doing touchy-feely automation-resistant things, and as the rest of the economy becomes more automated or imported this gradually becomes relatively more expensive. Things like childcare, where the cost in childminder-hours-per-child is inherently fixed. You can raise the ratio (ie reduce quality), but you can't produce an hour of childminding in 50 minutes.
Besides, when redistribution is a goal in itself, it's a mistake to talk purely about cost and you have to look at outcomes.
> Someone promising to make public services much cheaper should be treated like someone offering to sell you a $10 Rolex.
That's what we do in the private industry the whole time. We try to improve processes, reduce wasteful behaviors, improve our efficiency and ultimately try to offer better services and products, while competing on value vs other competitors.
I don't see any reason why such a way of thinking would not be applicable to the public sector.
My experience of the public sector is rather the exact opposite: they have way too many civil servants for the work they do, and could benefit in simplifying/streamlining their processes to cut down costs significantly and at the same time improve their services.
> Besides, when redistribution is a goal in itself, it's a mistake to talk purely about cost and you have to look at outcomes.
That's a naive view. There is a lot of waste in the "processing" of redistribution.
I agree that a lot of processes could be improved and simplified to augment the productivity.
But we shouldn't expect a huge productivity gain either. Most of public servant are professors, police officers, nurses and doctors a least in France. They won't gain in productivity as the parent said.
I think that the public sector is really bad at marketing itself... When we think about public servant, we think about administrative clerks, whereas in reality they're a small part of the public sector.
I think given the choice, many Danes would prefer to keep that taxation as is, and and get more and better services.
If some public service would get cheaper (so fare all services seems to just get more and more expensive), there's a ton of other services that could really use the money that would be freed.
Honestly I think that the Danish public sector is a terrifying example of mismanagement of public funds. We simply aren't getting enough value for the taxes we pay. Part of it is insane ways of handling purchasing and outsource of public work.
Far less risky to first make the services less costly, show a surplus and that service has not been degraded and then lower taxes than lowering taxea first.
This is simply not true. In Denmark we have a welfare and tax scheme that benefits the majority at the expense of the productive few and the poor (Director's law?). I have never met a danish entrepreneur who didn't complain about taxes, never ever... http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
And I have never met one who did complain about taxes (I haven't asked about it either).
The danish successful entrepreneur Morten Strunge recently entered the tax discussion saying that he did not think much about taxes and that current proposed tax reliefs would not make much difference to him.
I see myself as an entrepreneur and I am not complaining about taxes.
In fact I have a hard time seeing taxes as something working particularly against entrepreneurs.
1) When you're an entrepreneur you keep your salary low and you re-invest the profit in your company. This will limit the amount of taxes you pay personally and in the company.
2) As an entrepreneur you likely have a dream about huge growth in the company and making a lot of money in the end. Why would you worry about having marginally less "lot of money" in the end?
How do you define "marginally less"? Open your eyes and look at the graph I posted.
Let me name the obvious few: Christensen and Fornais (Saxo Bank), Jesper Buch (Just Eat), Mads Peter Veiby (M1), Lars Tvede, Toke Kruse (billys), Martin Thorborg (Jubii/Amino/Dinero/Agera). They are all members of Liberal Alliance and all of them frequently advocate lower taxes. Janus Friis (Skype) fled the country to avoid taxes (nuff said). I have met at least 50 entrepreneurs who openly complained about the current level of taxation.
Using the numbers in the graph, if you make 1 billion you would have 580 mio. after taxes in Denmark and 720 mio. in UK. The difference is huge in absolute numbers but relatively it is not. I doubt that entrepreneurs would have any less drive or motivation to succeed because of this difference.
> Christensen and Fornais (Saxo Bank), Jesper Buch (Just Eat), Mads Peter Veiby (M1), Lars Tvede, Toke Kruse (billys), Martin Thorborg (Jubii/Amino/Dinero/Agera)
Most of these are liberalists who happens to be entrepreneurs. They also all belong to the commercial/business type of entrepreneurs.
DHH would beg to differ with you. He's stated a few times that he's a successful entrepreneur because of the Danish social safety net (and the taxes that pay for it).
That is a very simplistic attitude. First of all, I have met countless entrepreneurs who support this "scheme", just to counter your anecdotal evidence. Second, shouldn't a "welfare scheme" benefit the poor, not exist at the expense of them? Are you arguing that the danish welfare system failed in what could be considered it's most essential undertaking? Third, "benefits the majority at the expense of the productive few" doesn't ring true to me. You make it sound like the "productive few" do not receive the same benefits as everyone else, and that the fact that everyone else receives benefits is inconsequential. It's not. Time and again (financial) equality in society has proven to be immeasurably beneficial, in so many regards.
Having been to Copenhagen a few times in my life (partner used to live there) I came to realise there might be two extremes in terms of the way you look at tax rates.
Some people might move to Dubai because its income tax is low or even nil - that attracts people who are more interested in their own well being than their communities'.
Now some people - I would include myself here (rightly or wrongly, it doesn't really matter) - look at countries with high taxes and low inequality and enjoy the idea of a country where the well being of the community might came before than yourself getting rich.
It's all a bit utopical (and, knowing Copenhagen, it really feels a bit off reality) but I can't help not thinking about it.
All people who are net receivers from the system do so literally for their own well being.
Which is logical. And ok, because obviously there are lots of truly helpless cases in any given country.
But over the decades, it accumulates fraud. Or even worse, a kind of learned helplessness which keeps people in their place. Maybe Denmark is different. But my guess is that many living in Belgium and France will be able to point out multiple cases of fraud or at least debatable cases in their immediate surroundings.
Finally, a lot of the available money never leaves the hands of the vast bureaucratic caste that manages the system.
I guess what I want to say: people will be people, regardless of the system. Social democracy involves a lot of cynicism and greed too. And probably in a less constructive way than systems that don't rely exclusively on "anonymous" Big State-enforced redistribution.
Even people who desire lower taxes and less services love their communities, they just operate from a strong sense or right and wrong. Right being that you work if you can and even if you cannot you do not impose on others unless necessary.
The generations who came up in the early 1900s, twenties, thirties, and even forties, have a vastly different outlook than those that followed. You were entitled to do right, you were not entitled to take.
You know any two of German + one of the Scandinavian languages + Dutch, you can often read the third pretty well if you apply some imagination - they're all very closely related.
That's a fair point. The wealth inequality is high because a lot of people rent rather than buy housing and because savings are less important with the Danish level of cradle-to-grave government services. A lot of things that you would need savings for in other countries come in the form of welfare services instead.
Inequality is a large driver of crime. So keeping a low inequality means you don't have to spend as much on incarceration, police, courts etc., as you would have otherwise. That in turn means you can spend money on things that tax payers care about (schools, etc.) which increases equality, and so on.
That's a metric that evidently appeals to you. So be it. It's a relative measure and my preference, possibly shared by others, is for an absolute one. Human nature and entrepreneurship being what it is, as general wealth increases thus does inequality increase. We have seen this happening on a grand scale across the world during the last 20 years or more.
One other point: what suits the Danes wouldn't necessarily suit the Brits or others. National characteristics are certainly different even we try sometimes to ignore this probably because it's tacitly interpreted as some hint of mild racism.
> One other point: what suits the Danes wouldn't necessarily suit the Brits or others. National characteristics are certainly different even we try sometimes to ignore this probably because it's tacitly interpreted as some hint of mild racism.
Think there's room for more nuance around saying inequality increases as wealth increases. Eg a public transit system and a limousine service could both increase the wealth of a community but might have different effects on inequality. Services like Facebook or google naturally lead to extreme inequality due to the information availability differing between the company and consumers.
I did not say that inequality increases as wealth increases. I said, it <has> increased and so has wealth. This is a fact. We have seen the largest decline in material poverty in human history along with a massive increase in inequality. As an example, the OECD says that over the last three decades the share of Chinese living in absolute poverty has declined from eight in ten to one in
ten. At the same time, relative poverty (taking inequality into account) has more or less doubled.
Which metric is more important if you're a poor Chinese person?
The fallacy here is to aggregate the people. Democracy has been compared to two wolves and a lamb voting on what to have for dinner. Proposals to cut government will fail when more than 50℅ figure they are net beneficiaries. This does not mean the system is just or that the lambs approve of their exploitation.
Same here in Belgium. Both the situation and the propaganda about it.
Total tax pressure is extremely high. Government services in Belgium are mediocre at best.
Imagine every public institute disease possible (rent seeking, no skin in the game, resistance to reform, employees not giving a shit, impossible size, …). Then multiply it by the fragmentation between Belgium’s many governments and departments and regions and bureaucracies. Then there's the EU.
But in the end it all depends on whom you ask.
The ever growing group of net receivers of the system are very happy. Multinationals and the very rich don’t care.
Even people who are employed in the private sector don’t care. They have a significant portion of their taxes paid for by their employer. So for them it remains an abstract thing as long as they don’t get fired.
The ones who sweat extremely high taxes the most are self employed people and SMEs. Basically most people who are personally involved with a business and are willing to work very hard to get ahead with something.
But hey, it’s social democracy so the majority is what matters! And boy let me tell you, the majority is very happy with socialism. I bet a lot of them would rather get rid of refugees and immigrants than abort socialism.
And since the majority has got it all figured out, I’m looking to emigrate, away from Utopia.
It’ll have to be Australia or NZ because Canada and the US have closed down. Anything Western outside the EU that’s just slightly behind on the curve is fine.
Good luck immigrating to Australia if you think the US has "closed down" - you might get stuck in a concentration camp on an island.
Belgium is a little special because of the fragile Flemish vs. Walloon "ethnic tension". It seems to be stable so long as both sides are permitted equal subsidy.
Well, we'll see whether they want us. I'll be visiting the country with my wife in a couple of weeks. Then I'll file the paperwork.
Btw I'm not frustrated in daily life ;-)
I've just started to believe that "happiness with high taxes" is a euphemism for an ever growing sense of entitlement that is (barely) being fulfilled. At least in Belgium and France.
Yes, of course your anecdote is true and the poll the headline is based on must be lying. My own personal anecdote is that everyone around me thinks the tax level is appropriate and that they are sad whenever the government wants to lower taxes.
I think it's a little bit of both (It's the same in Sweden). It depends on who you ask obviously, but also how you ask.
Do people think they pay a lot of taxes? Yes. Too much? That depends on how you ask. If you ask "would you like to pay less taxes" the answer is generally no. The reason for that isn't that people feel they would rather pay less, only that they would like to get more for it. They are unhappy about waiting for surgery for 6 months (for example) - which they think shouldn't happen because they pay so much in taxes. But when asked whether that meant they'd like to pay less in taxes, the answer is usually "no, I'd like to have a shorter wait for the surgery"...
>The government's plan involves cutting the top rate of income tax by 5 percentage points
>The main idea behind the change, which is now being discussed by parliament, is to make salaried work more attractive and woo some 40,000 people off welfare in the process. Not a bad plan for a country that faces labor shortages and growing pressure on its costly social safety net from an aging population.
This is a sales pitch for tax cuts on the rich, not an idea.
Somebody, somewhere made a campaign contribution and this is their reward.
Assuming that's true, by ramping up public borrowing (most likely), increased tax receipts from increased employment (less likely) or seigniorage (least likely).
Regarding the personal allowance increase, I'm sad that the article glossed over this. I was really impressed that it was a tax cut for both the top bracket and "everyone". I wonder how the Danes would react if it was only an increase to the allowance, without the top bracket cut?
If Denmark is like Sweden (It has a very similar political system, as do all the Nordic countries) then donations usually aren't solicited by politicians but by parties. Individual politicians rarely campaign at all.
Obviously parties can be indebted to donors just like individual politicians - but the result at least superficially seems to be lot less shady dealings since buying something off a major party will take a lot more than buying an individual.
>Obviously parties can be indebted to donors just like individual politicians
Obviously. AND given that the proposal is obviously a hand out to the wealthy and it came at a political cost to the prime minister (in decreased popularity)...
I mean, you can put two and two together yourself right?
Strange on unpopular policies from large parties in our multi-party governing collisions are usually concessions to the smaller parties in exchange for parliamentary support. Not sure what's going on here though.
Do politicians solicit campaign money in the UK? I thought it was a uniquely American issue. The cuteness usually lies in when Americans assume local problems are universal.
"Equality is deeply ingrained in a society that resents individuality and success", therefore they would oppose smaller taxes for the poor (same taxes for more affluent).
"Danes treasure their welfare state", therefore they would oppose measures to decrease load on said welfare state while giving unemployed a job.
The sad thing is the US has a focus on taxes not spending. SS, Medicare, State, Local, Federal spending add up to 41% GDP yet taxes are no where near that. But, unlike say Japan at 42% GDP spending we don't get free healthcare etc.
100% free sets up perverse incentives. The minimum subsidy is 70% and there are effective price controls. So the actual bill is often higher in the US for those with decent insurance.
How is that? I realize 100% free is pretty rare (I have a usual out-of-pocket cost of around $20 for an ER visit for example) but what are the perverse incentives created by completely free healthcare?
You mean that those who supply the healthcare are incentivized to give more expensive treatments, because the patient doesn't need to keep an eye on the bill?
Shouldn't the buyer (which in case of publicly financed healthcare is the government) be the one who oversees the cost, and not the patient?
The generations before us worked during the greatest economic boom in history, were mostly employed in safe and high paying government jobs (still are), bought houses before their values tripled, and are now receiving monthly pension payments that are almost twice what most young people earn through work. My effective tax rate is more than 50% (including mandatory pension payments that are more than 10% of my pre-tax pay). A good part of that goes to pay the pensions of existing retirees. A third of my remaining pay goes into paying rent for the apartments owned by the older generation. In the end, I get around 1.5k euro out of the 7k I cost my company (employers also have to pay additional social and pension payments).
Looking at the current luxurious lifestyle of the older generations, and the rapidly ageing population, and increasing youth unemployment — I want out.