Thursday, June 17, 2004

Something rotten in the state of Denmark

The countries most admired by left liberals are the Scandinavian countries like Sweden, Denmark and Norway. This is because left liberals generally like the idea of large, interventionist welfare states of the kind you find in Scandinavia.

We should think twice though before accepting these countries as role models. I doubt, for instance, if too many Australians would really want to suffer the kind of taxation levels existing in these countries.

Per Hansen, an economics teacher at the Copenhagen Business School, has briefly summarised the Danish taxation levels as follows:

Denmark has therefore for many years had a very high and continuously increasing tax level.

In 2002, the lowest marginal income tax level is 44.31 percent, then it increases to 49.77 percent and 63.33 percent. Forty percent of the working people pay the top marginal tax rate of 63.33 percent, which applies to all income over $33,000.

There are very few tax deductions available, and the tax value of the tax deductions is continuously being reduced.

A sales tax of 25 percent hits just about everything.

The capital gains tax is 59.7 percent for a private person in the high income tax bracket, unless you hold your investment for more than 3 years. It then falls to 44.8 percent.

There are additional taxes on "sinful" and "luxury" products likes cigarettes, alcohol, candy, soft drinks, electronic goods, and other luxuries.

For cars, there is a 180 percent special tax on top of the sales tax of 25 percent. Then there is a registration fee and a weight fee to be paid twice per year for the privilege of using the roads. The price of gasoline is nearly three times as high as it is in the US.

Denmark imposes many new green taxes. These are the taxes that have increased most substantially during the 1990s. These taxes hit heating, electricity, water, and gasoline.

Real estate, which is already heavily taxed, has been the target of new taxes throughout the 1990s. In addition, the tax value of deductions have been continuously reduced.

Forty percent of the population are paying a 63% income tax and are then slugged by a 25% sales tax! Mr Hansen has, in fact, calculated that Danes pay on average nearly 70% of their wages on tax!

And what about the car tax. You not only pay the 25% sales tax, you're then hit with an additional 180% special tax!

This is where advanced left liberalism has brought Denmark. Liberalism is supposed to leave our individual wills unimpeded, but in reality it has left most Danes spending much of their lives working to pay state taxes.

With such high taxes the choice for women to stay home to look after their children has largely been lost, as it's too hard to survive on the 30% of a wage that the state allows the breadwinner to keep.

And with such high taxes on cars and petrol, even the modern freedom of transport is much reduced in Denmark.

Liberals promise us individual freedom and autonomy, but in Denmark the reality is something less glamorous: left liberals have delivered to ordinary Danes a massive burden of high taxation.

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