Why do other countries choose to pay high(er) taxes?
In 2023, Denmark ranked as the second happiest country in the world behind Finland, according to measurements published in CNN and Forbes India. But why are they so happy? Denmark’s official website lists the benefits the government offers its citizens, benefits that may contribute to Danish happiness: subsidized child care; universal healthcare, including general practitioners, specialty care, and hospital services; free university tuition, subsidized public transportation; psychological care for young adults; and pensions and government-funded caretakers for the elderly. These comprehensive benefits constitute what is known as the “universal welfare model” that provides for all tax-paying citizens.
Looking specifically at education, it is easy to understand the extraordinary lengths the government goes to lift the burden of a college education for Danish students through a wide array of benefits. To incentivize pursuing an advanced degree, the government provides free tuition, starting from age 18, as well as 70 monthly stipends for up to six years to cover living expenses such as textbooks, groceries, etc. This program is known colloquially as SU (State Educational Grants), “an economic aid to cover living expenses for students at youth and higher education in Denmark.”
Maya Lassen, a recent high school graduate from Denmark, describes the Danish way of living as “very globalized, very influenced by other countries.” Although Danes still hold onto Danish traditions like dancing around the Christmas tree, Denmark, according to Lassen, “ is just a very laid back and safe community.”
She describes her home country as a small, island country where people regularly leave their babies outside in strollers, without fear of them being taken. She explains that the Danish easy-going culture extends even to politics, “Our politicians have also grown up in Denmark. They have the same culture. They post the most laid-back things on Instagram: selfies, and you know our mayor just posted a picture of her feet resting on her coffee table with a big bowl of candy.”
This relaxed, community-oriented culture is reflected in a government whose primary responsibility is to provide for all of its citizens, not just those who can afford to pay for a university education, elder care, childcare, and healthcare. Of course, any system that provides such generous benefits to all, enabling even the working class to enjoy what we would call middle class benefits, must pay for this level of social welfare at a higher rate than in the U.S. Denmark’s tax system is incredibly progressive, with taxes increasing as income increases and far fewer loopholes for the wealthy. The U.S. does have a progressive tax system as well, but our rates are markedly different. For example, the highest tax rate for personal income in Denmark is 52.07%, a rate that kicks in when one earns $85,443, whereas in the U.S. the highest income tax rate for the 2023-2024 filing season is 37%, charged to those with an income over $609,350. Republican legislators in America have also been on a quest for years to flatten the American tax system, decreasing corporate and income tax rates in North Carolina and at the federal level with the Trump and Bush tax cuts.
Despite the higher taxes required, “88% of Danes say they are happy to pay their taxes'' since they get so much in return. While these are high levels of public expenditures, Denmark’s official government website points out that their level of spending on social welfare remains lower than peer nations such as France, Finland and Belgium.
One can’t help but wonder how happy individuals living in other countries with different kinds of welfare systems could be if theirs was more like the Danes’.