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Tuesday, September 26, 2017

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America should follow the Scandinavian model of taxation


Scandinavian countries provide a stable environment for a low corporate tax rate. | Courtesy of Wikimedia Commons

During his presidential run, Bernie Sanders campaigned on the fact that places like Sweden, Norway, Denmark, etc. all have better tax systems than the United States. Sanders continuously brought up these countries to further his platform. 

So what makes these countries’ tax systems superior, according to Sanders?

He would answer that these countries’ superiority comes in how they tax the wealthy and use the subsequent money to prop up a generous welfare and healthcare system. These things are partially true. The average highest level income tax for people living in Sweden, Norway, Denmark, the Netherlands and Finland is 51%. Despite this incredibly high income tax rate, wealthy people remain in this conglomerate of countries.

But why do the wealthy people stay?

Base-level economics would tell us a high income tax rate would create a mass exodus of industry. These countries would then become business wastelands. However, corporations station themselves in these countries because they do not have to offer benefits, a minimum wage or education. The government already provides all these benefits.

These countries also retain a healthy middle class and a wide base of taxpayers because they have a generous welfare system and a widely educated populous.

One thing corporations like more than not having to pay their workers large benefits is not paying a high tax. This is where Bernie’s message becomes muddled. Bernie Sanders, again, said the U.S. should adopt the model these countries have because it’s a superior model. The fact remains the five countries Bernie loves so much have an average corporate tax rate of 23.5%.

This is a 15.8% lower corporate tax rate than the U.S.

The U.S. has a corporate tax rate of 39.3% — one of the highest in the world. The U.S. does not have universal college education, a broad welfare state or universal healthcare. Corporations in the U.S. are forced to offer benefits to their employees so they’re competitive. Though people in Scandinavian countries are heavily burdened with income taxes, they enjoy broad benefits, and corporations provide many jobs.

This leads to the inevitable conclusion that will upset people on the left and right: If we want an economy as stable as the Netherlands, the U.S. should raise its income taxes, but substantially lower its corporate taxes.

Governments should tax income, not profits.   

Columnist Cameron Barrett is an economics senior and can be reached at opinion@thedailycougar.com

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  • Mohammed bin Zayed Jones

    Do we really want to be anything European? Obviously Cammie does.

    Do we really want anything that Bernie Sanders says? Obviously Cammy does.

    Do we trust anything that Cammie says? Obviously not.

    • Cameron

      The conclusion of the article was an endorsement of free market capitalism and lower corporate taxes? Did you read the article?

      • Mohammed bin Zayed Jones

        Yes I read it Cammy.

        Nothing capitalist about it.

  • DIDuSAYMAGA

    LMAO Cameron thinks because he’s an economics major that his commie views will be accepted. Nah bruh, but I would suggest you go live in Scandinavia, let your hard earned dollars go to fund far-left socialist programs and then come back and report to us.

    • equalityforall

      This article had little relevance to and did not rely on Cameron’s position as an economics major. Perhaps you should consider a minor in English though? Seeing as your grammar needs corrections in several places.

  • Mohammed bin Zayed Jones

    What did I tell ya.

    CEOs are starting to develop SNOWFLAKE tests.

    https://milo.yiannopoulos.net/2017/03/ceo-snowflake-test/

  • equalityforall

    Scandinavian countries’ quality of life is undoubtedly superior to ours in America. Their system CLEARLY works because they pay higher taxes. There’s nothing wrong with it at all. I think we should move towards a smarter economic model, instead of continually trying to right ours. It has proven time and time again that it DOES NOT WORK.

    How american minds work:
    1) *pay taxes*
    2) complain about how we have to pay taxes, and it’s TOO HIGH for the minimal services we receive.
    3) continue to receive poor care from the government because no one wants high taxes
    4) complain about a lack of services
    5) demand to pay lower taxes because the government doesn’t help

    ….anyone seeing a problem with the system? If it doesn’t have money, it can’t get better.

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