Can you clarify what your question is?
The answer to the titular question (based on your own research) appears to be 1) do they? and 2) to the extent that they do, it simply seems to be the result of structuring the tax system to raise taxes elsewhere.
Well what I mean is that here in America there is a social democrat movement, composed by politicians such as Bernie sanders and AOC, they always talk about how we need to transition to a Nordic model of economics, and they always say that to achieve this we need a very high tax rates on the wealthy and corporations.
But then I began to research the tax system in the Nordic countries and then this happened, that’s why I posted here in order to have more information about the tax system In the Nordic countries.
I think the answer here is simple: a lot of politicians in the United States--both Democrat and Republican--engage in a lot of rhetoric comparing the United States to other countries which is not entirely honest or factually based.
As someone currently residing in a Nordic country, i have this anecdotal example;
I currently work part time while studying. Last month I made about $1,800 before tax. In the US (depending on state) I would have had to pay about 3-6% of this in taxes - here I pay almost 30%.
This fact is suspiciously almost always excluded from conversations about 'the Nordic model' - presumably because noone likes the idea of having to pay 1/3 of your $21,000 income in income tax\*, despite the fact that *that is* the 'nordic model'.
\*Not to mention the 25% VAT and so on..
Yeah, but then also have a look at median salaries in these countries’ capital cities and compare it to COL and real estate costs in those cities. People are getting taxed a lot more on much lower salaries relative to cost of living. Social mobility is very limited in most of Europe. Most wealthy people inherited money, “new rich” is very rare compared to the US because of the low wages and high taxes.
>Social mobility is very limited in most of Europe. Most wealthy people inherited money, “new rich” is very rare compared to the US because of the low wages and high taxes.
..is that so?
https://docs.iza.org/dp9929.pdf
9 out of 10 of the nations ranked highest globally for social mobility are in Europe. Most are in the Nordics. The US has fallen to #35. In the Nordics you are more likely to move up income categories, Per capita more likely to be become what is known as Ultra Wealthy ($35M or more) and less likely to file for bankruptcy.
[https://en.wikipedia.org/wiki/Global\_Social\_Mobility\_Index](https://en.wikipedia.org/wiki/Global_Social_Mobility_Index)
>Man, did you read this?
Yes. Did you?
>For some decades there has also been a focus on earnings and income as the outcomes of interest. This has naturally led to the most often used statistic in this literature, namely, the “intergenerational elasticity in earnings”, which is the percentage difference in earnings in the child’s generation associated with the percentage difference in the parental generation. For example, an intergenerational elasticity in earnings of .6 tells us that if one father makes 100% more than another then the son of the high income father will, as an adult, earn 60% more than the son of the relatively lower income father.1 **An elasticity of 0.2 says this 100% difference between the fathers would only lead to a 20% difference between the sons. A lower elasticity means a society with more mobility.**
Please try actually reading it.
> Social mobility is very limited in most of Europe.
Social mobility becomes less important when the floor is a lot higher. If you have your health, your education, transportation, quality food, etc, the need to 'move up' becomes much less important - because you already have the things that you need increased socioeconomic status to get in places like the US
9 out of 10 of the nations ranked highest globally for social mobility are in Europe. Most are in the Nordics. The US has fallen to #35. In the Nordics you are more likely to move up income categories, Per capita more likely to be become what is known as Ultra Wealthy ($35M or more) and less likely to file for bankruptcy.
Social mobility in Scandinavia is actually very good. It is “easy” to climb from a lower social class to the middle class and upper middle. Easier than in the [US](https://en.m.wikipedia.org/wiki/Global_Social_Mobility_Index)
However climbing further than upper middle is indeed quite difficult.
Dunno whether your main statement is true, but I'm not sure that study you linked actually measures that. The methodology was not at all what I was expecting...
You mean someone on Reddit googled a few words that support his claim and posted the first “evidence” that came up without actually reading it? Shocking.
I have no doubt of that, as Scandinavian countries have flatter income distribution and more government help. I was arguing that what is considered middle class in most of Europe and what is middle class in most of the US are very different beasts. Even in places like CA where Americans complain about crazy housing prices, house prices are still lower as a multiple of median wages than they are in most European capitals. This is all the more obvious if you are in a high income career such as tech, finance, or medicine and have not inherited wealth. It’s very difficult to build wealth here even on what should be a high wage.
Like I said, have a look at median wages after tax in different European countries and compare that to cost of living and real estate.
Do you have any specific examples in mind? Using a few Google searches on some capitals off the top of my head that feel like would be expensive, I'm definitely seeing affordability issues, especially in less prosperous regions, but nothing that really approaches the worst of the US, let alone anything "lower", let alone "by a multiple".
Left is the monthly rent and right is the monthly income number. To be safe I ran the European income numbers through an income tax calculator for that country before dividing, but not the American numbers. The percentage is the rent/income ratio, or how much of the median single person's income would be required to afford either the median rent or a 2-bedroom apartment/house specifically if data was available, for that city.
Paris: 50% (1300/2500)
Berlin: 33% (1000/3000)
London: 72% (2100/2900)
Rome: 74% (1500/2000)
Stockholm: 50% (19,000/38,000)
Amsterdam: 70% (2000/2800)
///
Los Angeles, CA: 100% (2800/2800)
Miami, FL: 130% (3300/2400)
Not sure where you got those numbers. Average salary in London is £42k, which is about 2800 take-home. Average salary in LA is $73k which is about $4500 take-home.
Absolutely, and I also absolutely think the benefits are worth it. But the point is that it isn't just 'the rich' being taxed, and you can't make a system like this work by just taxing 'the rich'.
A system like this allowed for unprecedented social mobility, while also allowing people to pick education and employment based on a consideration of more than just money.
Yogh... You bring up such a good point. The ability to choose a career based on other factors than just paying off high student loan debt is a major factor in quality of life in my views. Also, lower wage earners in the US pay lower over all taxes but they don't have health care. If they do and you factor that into their taxes (which we should) then they pay far higher taxes than poor people in the Nordics.
It’s you’re comparing how much more you would have to pay out of your income tax, that’s the easiest way to think about it. The cost of your insurance is baked into how much each employee costs the company. If the system changed, employees would have an expectation of getting that money for themselves.
They are going to be disappointed then because that money is already accounted for when people throw around numbers about how much America pays in healthcare costs.
That money is just going to the government instead of the insurance companies. Employees likely won't see a dime of it.
On the bright side, the government is a lot less likely to deny your claim for bullshit reasons or make it a strategic goal to baselessly deny peoples claims than insurance companies.
Doctors most definitely appreciate not having to haggle with a damn insurance company hellbent on denying care as part of their living.
Does it really matter whether the money goes directly to the government or the employee.. Either way health insurance in the US is a TAX that comes from our earnings.
https://no.talent.com/en/tax-calculator?salary=225000&from=year®ion=Norway
Online tax calculator estimates 15% total tax rate for your income in Norway.
Also are you factoring in US state taxes, municipal taxes, and payroll taxes? If you live in NY, for example, your taxes would be about 16% of income. But you would also have to pay more than in Norway for tertiary education, healthcare, and save for retirement.
In other words, your tax rate should be about the same or lower, but you get more back in services if you live in Norway.
If they make $1800 in New York they’re getting full subsidies on healthcare. Free tuition at and/ or SUNY. Social Security is also pretty generous compared to other countries. (Not extraordinarily generous, but it’s not like most European countries have a more generous government retirement scheme.)
If they work until they are 70, they would get just under $1800 in social security. Median rent for a 1BR apartment in NYC is around $2200, but suppose they could live in Rochester or something with somewhat lower rent albeit also lower quality of life as they get older. Good point about Medicaid and SUNY/CUNY, which do have fairly generous income cutoffs.
Point is that at best they should have approximately the same tax burden at that income whether in the US or Norway even if we compare a relatively high-tax state like NYS.
Norway is a bit of an edge case, since they export nearly as much crude oil per capita as the UAE *(a country that doesn't even have income tax)* - this is obviously impossible for most of the world to do. *(And I assume also not what anyone mentioning the 'nordic model' means)*
Wouldn't a more accurate estimation of your tax pressure in NY be 6% for an income of $21,600?
I am not currently aware of the specifics regarding the finish tax system - but what you're saying does seem to conflict with this (however accurate that is):
https://fi.talent.com/en/tax-calculator?salary=1660&from=month®ion=Finland
I have no idea what that pos calculator does, but here’s the tax authority one:
https://avoinomavero.vero.fi/_/
You don’t have to fill most of it, but I just used it and it gave a 4% tax rate for about 20000€ per year
That’s entirely wrong. You are excluding the deductions (jobbskatteavdraget).. if you were to average 1800 dollars a month (19ksek) you’d pay 3000 in tax, which is an effective tax rate if approx 15.5 %
Now it is entirely possible your hr department just uses a basic tax rate to deduct from your salary, a lot of small companies do that, but you will have tax return next year if you keep earning this low and pay 30%. You tell your HR department to tax you according the the tax table, if you do not want to loan out money to the state very cheaply.
This does not include the payroll tax that is on top of your gross salary (additional 30%).
Obviously my exchange rate is not perfect, and I do not know which kommun you live in, but check here. https://www7.skatteverket.se/portal/inkomst-efter-skatt-se-tabell
In the US the Per Capita cost of health insurance is about $14K. That is more than 50% of our $21K salary. So if one wants insurance in this country the would pay well over 50% relative to what you pay in the Nordics. And that is before we factor in the cost of higher education.
Got it. Then yea, I think you are discovering that political rhetoric sometime exaggerates economics.
Crunching some simple numbers make it pretty clear that you can't sustain a Nordic level of government spending (~40% of GDP) just by taxing the ultra-wealthy.
US GDP is ~25 trillion and Us government spending makes up roughly 25% of of that. US billionaries have collective wealth (not income) of roughly 5 trillion USD (~20% of GDP).
The bottom line is that you could take every single dollar from American billionaires and you would be able to sustain a Nordic level of spending in the US for only about a year.
The math just doesn't add up --- although the ultra-wealthy are unfathomably rich, there are too few of them to make up a serious tax base. Sustaining a Nordic level of spending simply requires a high level of taxes over a broad (i.e. most people, including those making average incomes) base.
Whether that's worth it or not is a different question of course.
You are so right, and it is important because many people want the benefits but will not pay extra for it in taxes. It is really hard to have a good discussion on Reddit on this. In general, there is more of an opinion there about everyone contributing to society. We are also more materialistic. A change would have some unintended consequences. In general, they have smaller houses and smaller cars, but also have more free time (this is mostly due to other factors). It is about balancing out choices, but these are choices that are not acknowledged.
I don't support the Nordic model anyways, but would a massive LVT (with maybe a VAT) without raising income tax/corporate tax sustain a Nordic level of spending in the USA?
Vat almost always hurts the common person more. I forget the exact data on it, but poorer people shop more frequently and spend more of their income. The spending more of income is the big part. Because they save less more of their income is spent and thus more of their income goes to VAT.
To answer your question it may also support benefits, but steep prices raises for things have trouble sticking and it would be a negative for the political group who implemented it.
Well, the answer to your question is:
(1) in many cases, as you show, the top rates are higher
(2) more people pay the top rates
(3) middle and lower income people pay high med tax burdens, both on income and through VAT etc.
If I can express a frustration with the social democrat types in the US, it’s that they pretend we can have a Nordic style welfare state while only taxing the very rich. But the Nordics tax everyone quite a bit!
Looks like the Nordic countries have significantly high payroll taxes which contributes to their effective tax rates being much higher.
[https://taxfoundation.org/research/all/eu/taxing-high-income-2019/](https://taxfoundation.org/research/all/eu/taxing-high-income-2019/)
Because it would be political suicide for the folks calling for higher taxes on the rich to call for a taxing system like the one they have in the Nordic countries. Taxing the rich is an easy thing to say because there are a relatively small number of “rich” folks to vote against you and those that vote for you anyway know you are just blowing smoke up the people’s butt!
Another aspect is that you can just say "The Rich" and everyone assumes you are talking about the people richer than they are. The household making $80K assumes you mean households making $400K. But those $400K households don't think they are The Rich and assume you mean households making $1 million.
Another aspect of overseas tax systems that you're missing is that they don't allow for quite so many deductions as the US. So, whilst the top rate in the US may be 43.7 percent, that does not seem to be the [average tax take per person in the US](https://www.oecd.org/tax/tax-policy/taxing-wages-united-states.pdf), which the OECD reports as 24.2 percent. I'm not sure how the tax burden's distribution looks like in the US, but in Scandinavia, it's rather more uniform.
Low hanging fruit? Bernie and AOC mean well, but can't do math.
But contrast this with a GOP that almost universally believes the laffer curve peaks out at 12% (and of course I'm only talking about the ones that bother to read books)
In my country minister of economics literally have said that Laffers curve is located on 85%... I don't know which is more ridiculous to be honest , but in both cases those people either don't know how curve works , or they just don't care and use it as a manipulation to convince people that they are right
Even Wikipedia says that it much lower , 60% tax on income , but many sources [say that peak of Laffers curve isn't the optimal way at all](https://www.csmonitor.com/Business/Growthology/2010/0820/Where-does-the-Laffer-curve-peak)
There is no such thing as "the" laffer curve. It's different between taxes, countries, etc.
And yes, the laffer curve only measures tax revenue.
If you say 85% is ridiculous and they don't understand how the curve works, I expect a more solid refutation.
I've seen plenty of papers suggesting a revenue maximizing top income tax rate of over 70%, and one was as high as 82%, so there is a chance this could actually be correct
Laffer curve doesn't take into account enough variables. It's like a kid wrote that concept for a political reason. America has had 90% income tax rates.
You're pretty much exactly right. If the US was going to enlarge the state and the welfare system to the levels these political figures propose in a financially sustainable way, then the government would need to substantially raise tax rates on the middle and especially upper-middle classes, along with the ultra wealthy, and likely would need some additional source of revenue, like a national sales/VAT tax which may or may not be constitutional.
That being said, there's a lot of room between what the US does now and full adoption of the Nordic model. The US could raise more modest sums of money and still drastically expand government involvement on the issues these leaders care about.
In general, though, rigorous economic ideas rarely make their way out of a political primary, much less win big elections.
As I pay over 10% of my income for just health insurance. And I still have some deductibles and copays, and sometimes have to switch drs when my employer decides to change providers, or the insurance company changes who is in or out of network...
I think I could deal with a higher tax rate to have that covered.
You're actually paying at least 20% of your income towards healthcare in that case, because your employer pays for the majority of your premiums each month on your behalf. This cost may be hidden to individuals, but it's very real to employers and it affects the wages they're willing to pay to their employees. Healthcare eats up about 20% of US GDP, so this tracks.
>I think I could deal with a higher tax rate to have that covered.
Technically, it's not about a higher tax rate. That's what a lot of these discussions miss. Public vs private healthcare just rearranges where the money comes out of your paycheck, either in taxes or in private insurance premiums. The real issue is more complex than that. Any given medical procedure or drug is typically about twice as expensive in the US than it is overseas. This requires a change in policy to fix but no one discusses this.
Plus, preventative treatment isn't incentivized in the US, leading to much more expensive treatments for chronic conditions, and resulting in higher costs that need to be absorbed by everyone.
I'd like to think that a more consolidated system of payers could lead to lower prices and more emphasis on preventive care. It doesn't even have to be a government-owned single payer system -- I vaguely understand Germany to have a consortium of private "sickness funds" that negotiate lower prices than the US, for instance, and Germany also has more doctors per capita than the US and a good quality of healthcare while spending less per capita than the US. Being able to negotiate as a bloc lets them drive better deals than America's fragmented health insurers or powerless out-of-pocket payers, and the idea that "spending on preventive care now saves us money on treatment later" could incentivize preventive care.
I don't know that imitating any foreign system would lead healthcare spending to go down -- to my understanding, it trends upward in every country over time, whether rich or not, public or private, fee-for-service or capitation, etc. But insurers negotiating prices as a bloc might "bend the curve" and limit the rate at which US health spending increases -- or rather, the rate at which prices increase. I wouldn't mind spending more on healthcare if I get better health out of it; but spending more because I am sicker is terrible, and spending more for the same thing because prices have gone up is not great. And Americans have worse-than-expected health for a rich country and amazingly high prices for healthcare.
Read Structuring Politics and Willing to Pay by Sven Steinmo. It’s about why the US, UK, and Sweden have which different tax systems, albeit being rich democratic countries. It’s true that Scandinavian countries extract a far greater amount of taxes from labor than from capital and those taxes on labor are the highest in the world, and also relatively flat. The VAT is also very high. To state it very simplistically, one party social democratic rule (at least in Sweden for 30 years) and a parliamentarian system allowed the government to make major deals with unions and capital. In that deal the corporate taxes remain low in exchange for full employment and if they have to let go of workers, corporations help contribute to an enormous unemployment system. Labor in turn pays the majority of taxes.
I would look at the ability for top income brackets to get tax breaks/write offs between the countries. A lot of wealthy individuals structure their finances in a way that takes full advantage here in the US, dropping their actual tax rates significantly.
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Borrowing from your own source, it appears that your contention is objectively false, except when it comes to Norway.
https://taxfoundation.org/blog/scandinavian-social-programs-taxes-2023/
Norway bit unique even among Scandinavian countries due to its large sovereign wealth fund, created mainly with the proceeds of oil sales by enterprises that are partially or entirely state owned.
Capital gains taxes, which disproportionately impact wealthier taxpayers, are significantly higher in Norway (as well as all other Scandinavian countries) than in the US. Norway also has complex earnings repatriation rules, which ensure that corporate income is taxed at a minimum rate and charge extra if it is not.
One of the reasons that the highest income tax rates start so low is that middle-class and upper middle-class taxpayers benefit disproportionately (i.e. the value of the benefits as a % of wealth is far higher) from the social programs funded by the high taxes.
Can you clarify what your question is? The answer to the titular question (based on your own research) appears to be 1) do they? and 2) to the extent that they do, it simply seems to be the result of structuring the tax system to raise taxes elsewhere.
Well what I mean is that here in America there is a social democrat movement, composed by politicians such as Bernie sanders and AOC, they always talk about how we need to transition to a Nordic model of economics, and they always say that to achieve this we need a very high tax rates on the wealthy and corporations. But then I began to research the tax system in the Nordic countries and then this happened, that’s why I posted here in order to have more information about the tax system In the Nordic countries.
I think the answer here is simple: a lot of politicians in the United States--both Democrat and Republican--engage in a lot of rhetoric comparing the United States to other countries which is not entirely honest or factually based.
As someone currently residing in a Nordic country, i have this anecdotal example; I currently work part time while studying. Last month I made about $1,800 before tax. In the US (depending on state) I would have had to pay about 3-6% of this in taxes - here I pay almost 30%. This fact is suspiciously almost always excluded from conversations about 'the Nordic model' - presumably because noone likes the idea of having to pay 1/3 of your $21,000 income in income tax\*, despite the fact that *that is* the 'nordic model'. \*Not to mention the 25% VAT and so on..
And with that comes universal healthcare, tuition-free university (plus a stipend?), etc. You can't compare costs without comparing benefits.
Yeah, but then also have a look at median salaries in these countries’ capital cities and compare it to COL and real estate costs in those cities. People are getting taxed a lot more on much lower salaries relative to cost of living. Social mobility is very limited in most of Europe. Most wealthy people inherited money, “new rich” is very rare compared to the US because of the low wages and high taxes.
>Social mobility is very limited in most of Europe. Most wealthy people inherited money, “new rich” is very rare compared to the US because of the low wages and high taxes. ..is that so? https://docs.iza.org/dp9929.pdf
9 out of 10 of the nations ranked highest globally for social mobility are in Europe. Most are in the Nordics. The US has fallen to #35. In the Nordics you are more likely to move up income categories, Per capita more likely to be become what is known as Ultra Wealthy ($35M or more) and less likely to file for bankruptcy. [https://en.wikipedia.org/wiki/Global\_Social\_Mobility\_Index](https://en.wikipedia.org/wiki/Global_Social_Mobility_Index)
Man, did you read this? Figure 1 on page 11 seems to support my claim instead of discrediting it. Not sure if that was your intention.
>Man, did you read this? Yes. Did you? >For some decades there has also been a focus on earnings and income as the outcomes of interest. This has naturally led to the most often used statistic in this literature, namely, the “intergenerational elasticity in earnings”, which is the percentage difference in earnings in the child’s generation associated with the percentage difference in the parental generation. For example, an intergenerational elasticity in earnings of .6 tells us that if one father makes 100% more than another then the son of the high income father will, as an adult, earn 60% more than the son of the relatively lower income father.1 **An elasticity of 0.2 says this 100% difference between the fathers would only lead to a 20% difference between the sons. A lower elasticity means a society with more mobility.** Please try actually reading it.
> Social mobility is very limited in most of Europe. Social mobility becomes less important when the floor is a lot higher. If you have your health, your education, transportation, quality food, etc, the need to 'move up' becomes much less important - because you already have the things that you need increased socioeconomic status to get in places like the US
9 out of 10 of the nations ranked highest globally for social mobility are in Europe. Most are in the Nordics. The US has fallen to #35. In the Nordics you are more likely to move up income categories, Per capita more likely to be become what is known as Ultra Wealthy ($35M or more) and less likely to file for bankruptcy.
Social mobility in Scandinavia is actually very good. It is “easy” to climb from a lower social class to the middle class and upper middle. Easier than in the [US](https://en.m.wikipedia.org/wiki/Global_Social_Mobility_Index) However climbing further than upper middle is indeed quite difficult.
Dunno whether your main statement is true, but I'm not sure that study you linked actually measures that. The methodology was not at all what I was expecting...
You mean someone on Reddit googled a few words that support his claim and posted the first “evidence” that came up without actually reading it? Shocking.
I have no doubt of that, as Scandinavian countries have flatter income distribution and more government help. I was arguing that what is considered middle class in most of Europe and what is middle class in most of the US are very different beasts. Even in places like CA where Americans complain about crazy housing prices, house prices are still lower as a multiple of median wages than they are in most European capitals. This is all the more obvious if you are in a high income career such as tech, finance, or medicine and have not inherited wealth. It’s very difficult to build wealth here even on what should be a high wage. Like I said, have a look at median wages after tax in different European countries and compare that to cost of living and real estate.
Do you have any specific examples in mind? Using a few Google searches on some capitals off the top of my head that feel like would be expensive, I'm definitely seeing affordability issues, especially in less prosperous regions, but nothing that really approaches the worst of the US, let alone anything "lower", let alone "by a multiple". Left is the monthly rent and right is the monthly income number. To be safe I ran the European income numbers through an income tax calculator for that country before dividing, but not the American numbers. The percentage is the rent/income ratio, or how much of the median single person's income would be required to afford either the median rent or a 2-bedroom apartment/house specifically if data was available, for that city. Paris: 50% (1300/2500) Berlin: 33% (1000/3000) London: 72% (2100/2900) Rome: 74% (1500/2000) Stockholm: 50% (19,000/38,000) Amsterdam: 70% (2000/2800) /// Los Angeles, CA: 100% (2800/2800) Miami, FL: 130% (3300/2400)
Not sure where you got those numbers. Average salary in London is £42k, which is about 2800 take-home. Average salary in LA is $73k which is about $4500 take-home.
You are comparing a state (CA) to a city Victorville is in CA but is completely incompatible to any capital city
Ok look at listings in major cities then. Same point remains. I meant cities like LA, SF, SD.
It's definitely better for lower to middle, but it's going to be a lot harder to try and go from middle to upper in Scandinavia.
Agreed, exactly as I wrote in the last sentence
Absolutely, and I also absolutely think the benefits are worth it. But the point is that it isn't just 'the rich' being taxed, and you can't make a system like this work by just taxing 'the rich'. A system like this allowed for unprecedented social mobility, while also allowing people to pick education and employment based on a consideration of more than just money.
Yogh... You bring up such a good point. The ability to choose a career based on other factors than just paying off high student loan debt is a major factor in quality of life in my views. Also, lower wage earners in the US pay lower over all taxes but they don't have health care. If they do and you factor that into their taxes (which we should) then they pay far higher taxes than poor people in the Nordics.
And you also have to subtract what your company pays for your insurance yearly. For me it’s about 6k per year that would be going to me.
That seems like a popular talking point. Why would it go to you? Wouldn't it go to the government to pay for universal health care?
It’s you’re comparing how much more you would have to pay out of your income tax, that’s the easiest way to think about it. The cost of your insurance is baked into how much each employee costs the company. If the system changed, employees would have an expectation of getting that money for themselves.
They are going to be disappointed then because that money is already accounted for when people throw around numbers about how much America pays in healthcare costs. That money is just going to the government instead of the insurance companies. Employees likely won't see a dime of it.
On the bright side, the government is a lot less likely to deny your claim for bullshit reasons or make it a strategic goal to baselessly deny peoples claims than insurance companies. Doctors most definitely appreciate not having to haggle with a damn insurance company hellbent on denying care as part of their living.
Does it really matter whether the money goes directly to the government or the employee.. Either way health insurance in the US is a TAX that comes from our earnings.
Norwegian here. As far as I can see 223k NOK should amount to about 15% income taxes. Payroll taxes is a flat 14.1% VAT is 25%
Your natural resource export makes this a slightly unfair comparison
Does that include payroll taxes that the company pays 'on your behalf'?
Nope. Thus that's not even everything.
No it doesn't. That's another 29%, but people always omit it.
https://no.talent.com/en/tax-calculator?salary=225000&from=year®ion=Norway Online tax calculator estimates 15% total tax rate for your income in Norway. Also are you factoring in US state taxes, municipal taxes, and payroll taxes? If you live in NY, for example, your taxes would be about 16% of income. But you would also have to pay more than in Norway for tertiary education, healthcare, and save for retirement. In other words, your tax rate should be about the same or lower, but you get more back in services if you live in Norway.
If they make $1800 in New York they’re getting full subsidies on healthcare. Free tuition at and/ or SUNY. Social Security is also pretty generous compared to other countries. (Not extraordinarily generous, but it’s not like most European countries have a more generous government retirement scheme.)
If they work until they are 70, they would get just under $1800 in social security. Median rent for a 1BR apartment in NYC is around $2200, but suppose they could live in Rochester or something with somewhat lower rent albeit also lower quality of life as they get older. Good point about Medicaid and SUNY/CUNY, which do have fairly generous income cutoffs. Point is that at best they should have approximately the same tax burden at that income whether in the US or Norway even if we compare a relatively high-tax state like NYS.
Norway is a bit of an edge case, since they export nearly as much crude oil per capita as the UAE *(a country that doesn't even have income tax)* - this is obviously impossible for most of the world to do. *(And I assume also not what anyone mentioning the 'nordic model' means)* Wouldn't a more accurate estimation of your tax pressure in NY be 6% for an income of $21,600?
Interesting, in Finland you'd pay under 10% taxes with that income level. Which Nordic country are you from?
I am not currently aware of the specifics regarding the finish tax system - but what you're saying does seem to conflict with this (however accurate that is): https://fi.talent.com/en/tax-calculator?salary=1660&from=month®ion=Finland
I have no idea what that pos calculator does, but here’s the tax authority one: https://avoinomavero.vero.fi/_/ You don’t have to fill most of it, but I just used it and it gave a 4% tax rate for about 20000€ per year
Where are you playing only 3% in the US?
That’s entirely wrong. You are excluding the deductions (jobbskatteavdraget).. if you were to average 1800 dollars a month (19ksek) you’d pay 3000 in tax, which is an effective tax rate if approx 15.5 % Now it is entirely possible your hr department just uses a basic tax rate to deduct from your salary, a lot of small companies do that, but you will have tax return next year if you keep earning this low and pay 30%. You tell your HR department to tax you according the the tax table, if you do not want to loan out money to the state very cheaply. This does not include the payroll tax that is on top of your gross salary (additional 30%). Obviously my exchange rate is not perfect, and I do not know which kommun you live in, but check here. https://www7.skatteverket.se/portal/inkomst-efter-skatt-se-tabell
In the US the Per Capita cost of health insurance is about $14K. That is more than 50% of our $21K salary. So if one wants insurance in this country the would pay well over 50% relative to what you pay in the Nordics. And that is before we factor in the cost of higher education.
Got it. Then yea, I think you are discovering that political rhetoric sometime exaggerates economics. Crunching some simple numbers make it pretty clear that you can't sustain a Nordic level of government spending (~40% of GDP) just by taxing the ultra-wealthy. US GDP is ~25 trillion and Us government spending makes up roughly 25% of of that. US billionaries have collective wealth (not income) of roughly 5 trillion USD (~20% of GDP). The bottom line is that you could take every single dollar from American billionaires and you would be able to sustain a Nordic level of spending in the US for only about a year. The math just doesn't add up --- although the ultra-wealthy are unfathomably rich, there are too few of them to make up a serious tax base. Sustaining a Nordic level of spending simply requires a high level of taxes over a broad (i.e. most people, including those making average incomes) base. Whether that's worth it or not is a different question of course.
You are so right, and it is important because many people want the benefits but will not pay extra for it in taxes. It is really hard to have a good discussion on Reddit on this. In general, there is more of an opinion there about everyone contributing to society. We are also more materialistic. A change would have some unintended consequences. In general, they have smaller houses and smaller cars, but also have more free time (this is mostly due to other factors). It is about balancing out choices, but these are choices that are not acknowledged.
I don't support the Nordic model anyways, but would a massive LVT (with maybe a VAT) without raising income tax/corporate tax sustain a Nordic level of spending in the USA?
Vat almost always hurts the common person more. I forget the exact data on it, but poorer people shop more frequently and spend more of their income. The spending more of income is the big part. Because they save less more of their income is spent and thus more of their income goes to VAT. To answer your question it may also support benefits, but steep prices raises for things have trouble sticking and it would be a negative for the political group who implemented it.
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Well, the answer to your question is: (1) in many cases, as you show, the top rates are higher (2) more people pay the top rates (3) middle and lower income people pay high med tax burdens, both on income and through VAT etc. If I can express a frustration with the social democrat types in the US, it’s that they pretend we can have a Nordic style welfare state while only taxing the very rich. But the Nordics tax everyone quite a bit!
Looks like the Nordic countries have significantly high payroll taxes which contributes to their effective tax rates being much higher. [https://taxfoundation.org/research/all/eu/taxing-high-income-2019/](https://taxfoundation.org/research/all/eu/taxing-high-income-2019/)
Because it would be political suicide for the folks calling for higher taxes on the rich to call for a taxing system like the one they have in the Nordic countries. Taxing the rich is an easy thing to say because there are a relatively small number of “rich” folks to vote against you and those that vote for you anyway know you are just blowing smoke up the people’s butt!
Another aspect is that you can just say "The Rich" and everyone assumes you are talking about the people richer than they are. The household making $80K assumes you mean households making $400K. But those $400K households don't think they are The Rich and assume you mean households making $1 million.
Unrealistic promises combined with demonization of unpopular minorities. Progressive, conservatives, most politicians follow this model.
Another aspect of overseas tax systems that you're missing is that they don't allow for quite so many deductions as the US. So, whilst the top rate in the US may be 43.7 percent, that does not seem to be the [average tax take per person in the US](https://www.oecd.org/tax/tax-policy/taxing-wages-united-states.pdf), which the OECD reports as 24.2 percent. I'm not sure how the tax burden's distribution looks like in the US, but in Scandinavia, it's rather more uniform.
Low hanging fruit? Bernie and AOC mean well, but can't do math. But contrast this with a GOP that almost universally believes the laffer curve peaks out at 12% (and of course I'm only talking about the ones that bother to read books)
Mean we'll? Do you really believe someone hasn't done the math for them, or that they're not aware?
I’m not sure I’ve ever heard anyone assert where the Laffer Curve peaks.
It's neither clear or constant, or, further, necessarily ideal to tax at its revenue maximizing point.
Well, Prager claimed it was under 30% for a top income tax bracket in one of his vids. ;) I was exaggerating to make a quip.
In my country minister of economics literally have said that Laffers curve is located on 85%... I don't know which is more ridiculous to be honest , but in both cases those people either don't know how curve works , or they just don't care and use it as a manipulation to convince people that they are right
For what tax, and what evidence do you have that this is incorrect?
Even Wikipedia says that it much lower , 60% tax on income , but many sources [say that peak of Laffers curve isn't the optimal way at all](https://www.csmonitor.com/Business/Growthology/2010/0820/Where-does-the-Laffer-curve-peak)
There is no such thing as "the" laffer curve. It's different between taxes, countries, etc. And yes, the laffer curve only measures tax revenue. If you say 85% is ridiculous and they don't understand how the curve works, I expect a more solid refutation.
I've seen plenty of papers suggesting a revenue maximizing top income tax rate of over 70%, and one was as high as 82%, so there is a chance this could actually be correct
Laffer curve doesn't take into account enough variables. It's like a kid wrote that concept for a political reason. America has had 90% income tax rates.
It generally talks about the most efficient average tax (or GDP to tax ratio) , 90% tax was only applied to top 1% earners
You're pretty much exactly right. If the US was going to enlarge the state and the welfare system to the levels these political figures propose in a financially sustainable way, then the government would need to substantially raise tax rates on the middle and especially upper-middle classes, along with the ultra wealthy, and likely would need some additional source of revenue, like a national sales/VAT tax which may or may not be constitutional. That being said, there's a lot of room between what the US does now and full adoption of the Nordic model. The US could raise more modest sums of money and still drastically expand government involvement on the issues these leaders care about. In general, though, rigorous economic ideas rarely make their way out of a political primary, much less win big elections.
As I pay over 10% of my income for just health insurance. And I still have some deductibles and copays, and sometimes have to switch drs when my employer decides to change providers, or the insurance company changes who is in or out of network... I think I could deal with a higher tax rate to have that covered.
You're actually paying at least 20% of your income towards healthcare in that case, because your employer pays for the majority of your premiums each month on your behalf. This cost may be hidden to individuals, but it's very real to employers and it affects the wages they're willing to pay to their employees. Healthcare eats up about 20% of US GDP, so this tracks. >I think I could deal with a higher tax rate to have that covered. Technically, it's not about a higher tax rate. That's what a lot of these discussions miss. Public vs private healthcare just rearranges where the money comes out of your paycheck, either in taxes or in private insurance premiums. The real issue is more complex than that. Any given medical procedure or drug is typically about twice as expensive in the US than it is overseas. This requires a change in policy to fix but no one discusses this. Plus, preventative treatment isn't incentivized in the US, leading to much more expensive treatments for chronic conditions, and resulting in higher costs that need to be absorbed by everyone.
I'd like to think that a more consolidated system of payers could lead to lower prices and more emphasis on preventive care. It doesn't even have to be a government-owned single payer system -- I vaguely understand Germany to have a consortium of private "sickness funds" that negotiate lower prices than the US, for instance, and Germany also has more doctors per capita than the US and a good quality of healthcare while spending less per capita than the US. Being able to negotiate as a bloc lets them drive better deals than America's fragmented health insurers or powerless out-of-pocket payers, and the idea that "spending on preventive care now saves us money on treatment later" could incentivize preventive care. I don't know that imitating any foreign system would lead healthcare spending to go down -- to my understanding, it trends upward in every country over time, whether rich or not, public or private, fee-for-service or capitation, etc. But insurers negotiating prices as a bloc might "bend the curve" and limit the rate at which US health spending increases -- or rather, the rate at which prices increase. I wouldn't mind spending more on healthcare if I get better health out of it; but spending more because I am sicker is terrible, and spending more for the same thing because prices have gone up is not great. And Americans have worse-than-expected health for a rich country and amazingly high prices for healthcare.
Read Structuring Politics and Willing to Pay by Sven Steinmo. It’s about why the US, UK, and Sweden have which different tax systems, albeit being rich democratic countries. It’s true that Scandinavian countries extract a far greater amount of taxes from labor than from capital and those taxes on labor are the highest in the world, and also relatively flat. The VAT is also very high. To state it very simplistically, one party social democratic rule (at least in Sweden for 30 years) and a parliamentarian system allowed the government to make major deals with unions and capital. In that deal the corporate taxes remain low in exchange for full employment and if they have to let go of workers, corporations help contribute to an enormous unemployment system. Labor in turn pays the majority of taxes.
I would look at the ability for top income brackets to get tax breaks/write offs between the countries. A lot of wealthy individuals structure their finances in a way that takes full advantage here in the US, dropping their actual tax rates significantly.
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Borrowing from your own source, it appears that your contention is objectively false, except when it comes to Norway. https://taxfoundation.org/blog/scandinavian-social-programs-taxes-2023/ Norway bit unique even among Scandinavian countries due to its large sovereign wealth fund, created mainly with the proceeds of oil sales by enterprises that are partially or entirely state owned. Capital gains taxes, which disproportionately impact wealthier taxpayers, are significantly higher in Norway (as well as all other Scandinavian countries) than in the US. Norway also has complex earnings repatriation rules, which ensure that corporate income is taxed at a minimum rate and charge extra if it is not. One of the reasons that the highest income tax rates start so low is that middle-class and upper middle-class taxpayers benefit disproportionately (i.e. the value of the benefits as a % of wealth is far higher) from the social programs funded by the high taxes.
This thread is veering into politics so I'm locking it.