Most Danish voters oppose government plans to cut the top rate of income tax
bloomberg.com
bloomberg.com
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.
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 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.
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.
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?
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).
Also check out https://www.reddit.com/r/IWantOut
Most governments in Europe right now are right-leaning.
To win one election, borked the future of millions.
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.
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.
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.
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.
Edit: Correction, the EU VAT directive actually has its origins before 1992, but still after Denmark already had its own VAT.
[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.
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.
VAT is also not your contribution, it's a client's, you collect it because you can offset it.
So that 63% figure is pure and utter nonsense.
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.
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.
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.
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 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.
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.
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.
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%.
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).
https://en.m.wikipedia.org/wiki/United_States_congressional_...
https://jakubmarian.com/number-of-seats-in-the-national-parl...
If only they had scatter plot!
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.
You have just described a typical Hacker News reader, who lives in, say, San Francisco, has relatively high income, and pays rent.
The U.S. is unusual among western countries in how little it taxes the middle class.
That's assuming she does not contribute to a 401k, make charitable donations, or take advantage of any other tax incentives.
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.
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?
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.
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).
Your income tax rate is figured from a flowchart, it's really simple: https://www.ird.govt.nz/resources/b/f/bf9db1804ba3cfc08a6ebf...
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.
(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.
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.
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
[1] http://taxfoundation.org/article/comparison-tax-burden-labor...
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.
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.
/generalization
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.
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.
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.
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.
After reading the parent for three times I could not find anyzhing which would imply that he did saying anything implying this.
> Danes are smart enough to accept that it has to be paid for.
This was clearly an opinion about the matter at hand.
https://en.wikipedia.org/wiki/List_of_countries_by_public_se...
But I don't get your logic anyway. Because a friend of yours work for BMW you wouldn't buy a Tesla?
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?
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.
> 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.
You should meet me.
Most freelancers I know want out, not because taxes are too high, but because an accountant is too expensive.
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.
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.
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.
The word "skat" means treasure. That's why we also use it as a word for our sweethearts.
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.
Quite right... see https://en.wikipedia.org/wiki/Law_of_Jante
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"...
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.
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.
Why not Australia? My occupation is on the list of wanted occupations?
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.
>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.
and raising personal allowances so as to boost the salaries of the lowest earners by an average of 7 percent
Without increasing other taxes, or reducing spending?
Where's the extra money coming from?
Assuming that's true, by ramping up public borrowing (most likely), increased tax receipts from increased employment (less likely) or seigniorage (least likely).
You are assuming that the chance of being elected to public office increases with the amount of money you can spend on trying. That's cute.
Edit: You aren't american. But still so cynical about politics :)
Clearly politicians solicit campaign contributions just for the hell of it.
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. 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?
That's cute.
"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.
Somethig is amiss here.
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?