
Most Danish voters oppose government plans to cut the top rate of income tax - lnguyen
http://www.bloomberg.com/news/articles/2016-09-13/danes-loves-their-high-taxes
======
hedgew
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.

~~~
mstade
This sounds like Sweden or Norway, and I couldn't agree more.

~~~
vidarh
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.

~~~
egman_ekki
...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...

~~~
vidarh
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.

------
atemerev
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.

~~~
VeejayRampay
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.

~~~
humanrebar
> 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.

~~~
rayiner
Working poor also get the earned income tax credit which mostly offsets their
payroll taxes.

~~~
lostboys67
Which is a subsidy for low wage employers

------
pjc50
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?

~~~
ekianjo
So are you saying its unreasonable for services to become less costly over
time ?

~~~
pjc50
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.

~~~
ekianjo
> 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.

~~~
ebalit
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.

------
ulrikmoe
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/...](http://taxfoundation.org/sites/taxfoundation.org/files/docs/Sanders%20Capital%20Gains.png)

~~~
hanspeter
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?

~~~
ulrikmoe
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.

~~~
hanspeter
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.

------
iaskwhy
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.

~~~
unknown_apostle
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.

------
hanspeter
> Perhaps it's no coincidence then that their word for taxes, skat, also means
> “sweetheart”.

The word "skat" means _treasure_. That's why we also use it as a word for our
sweethearts.

~~~
azeirah
Oh cool, we have the same word in Dutch, "schat".

~~~
vidarh
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.

------
jonatron
Not mentioned is that Denmark has the OECD's lowest inequality. Having visited
a couple of times, it does feel like they're doing something right.

~~~
vixen99
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.

~~~
V-2
> _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](https://en.wikipedia.org/wiki/Law_of_Jante)

~~~
simongray
Or not:
[https://en.wikipedia.org/wiki/Tall_poppy_syndrome](https://en.wikipedia.org/wiki/Tall_poppy_syndrome)

~~~
V-2
Just because something is called a syndrome doesn't mean it permeats a culture
in which it was identified

------
dpatru
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.

~~~
rayiner
I love how the rich and privileged in this hypothetical are the lambs.

------
EJTH
As a dane I can tell you the headline is a lie, almost everyone I know thinks
that we pay way too much for the mediocre services we get.

~~~
unknown_apostle
(Caution: serious venting ahead ;-)

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.

~~~
pjc50
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.

~~~
unknown_apostle
Yes. Flemish/Walloon stuff is a lot, but it doesn't stop there. France has
similar problems with out of control government.

Why not Australia? My occupation is on the list of wanted occupations?

~~~
pjc50
Then you'll probably be OK. It's just that immigration is no longer welcome in
general. Great place if you avoid the spiders and the bogans, though.

~~~
unknown_apostle
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.

------
jwally
I'd be happy to pay more in taxes if I knew the money would be spent wisely.

------
crdoconnor
>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.

~~~
manarth

      and raising personal allowances so as to boost the salaries of the lowest earners by an average of 7 percent
    

So the plan is to cut the taxes of high-earners, as well as improving the tax-
free allowance for everyone…

Without increasing other taxes, or reducing spending?

Where's the extra money coming from?

~~~
guard-of-terra
From creating jobs, taking people off welfare and making them pair their
taxes, albeit reduced.

------
VMG
Their individual ones? Or the ones other citizens are paying?

~~~
hanspeter
Both.

------
guard-of-terra
Explanation doesn't seem to make sense:

"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.

------
redthrow
Bill Gates, on the other hand, is in favor of switching from income tax to
progressive consumption tax.

[https://www.youtube.com/watch?v=ar0ri9NLArs](https://www.youtube.com/watch?v=ar0ri9NLArs)

------
perseusprime11
Here is a well laid out argument for flat tax

[http://www.hoover.org/research/flat-tax-
solution](http://www.hoover.org/research/flat-tax-solution)

------
Retric
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.

~~~
ekianjo
Lol healthcare is far from being free in Japan.

~~~
Retric
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.

~~~
alkonaut
> 100% free sets up perverse incentives.

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?

~~~
ekianjo
Buyers are easily corrupted since there are few of them.

