OECD: High Taxes Make People Happy

by Dual Income No Kids on May 17, 2009 · 0 comments

Hi All,

I saw this headline and immediately started talking about it with Miel. MarketWatch’ s Thomas Kostigan has a provocative editorial out. In it he claims that northern European countries are happier due to their very high tax rates. The main reason, Kostiagan asserts, is that the high level of taxation pays for social services which help to mitigate the risks of everyday life. From the article:

Northern Europeans pay some of the highest taxes in the world. Danes pay about two-thirds of their income in taxes. Why be so happy about that? It all comes down to what you get in return.

The Encyclopedia of the Nations notes that Denmark was one of the first countries in the world to establish efficient social services with the introduction of relief for the sick, unemployed and aged.

It says social welfare programs include health insurance, health and hospital services, insurance for occupational injuries, unemployment insurance and employment exchange services. There’s also old age and disability pensions, rehabilitation and nursing homes, family welfare subsidies, general public welfare and payments for military accidents. Moreover, maternity benefits are payable up to 52 weeks.”

For my part, I think Kostigans thesis is rather silly. At least here in the Discrict of Colombia I’ve found that public services are often badly managed, slow and of limited impact in addressing real world issues. Another problem more generally with Kostigans idea is that society tends to be more robust in Scandavia, e.g. families are stronger and there are fewer endemic problems like crime and regionalism. It’s a lot harder to build up your wealth when you are paying in 70% of your income each year!

At any rate, its an interesting piece so check it out at marketwatch.



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