Why I Love Paying More Than 50% Income Tax In Denmark

welfare state high taxes

I pay more than 50% of my income in taxes – and I love it.

I live in Denmark, a little country in Northern Europe with borders to Germany and Sweden.

I live in a welfare state. This means that we pay high taxes (most people abroad think it is outrageously high taxes!), but we also get quite a lot of benefits from the state. In fact, we have one of the largest public sectors in the world (relative to GDP).

Denmark has one of the highest equality rates in the world. Even though we are far from perfect, we are perhaps one of the best examples of a modern Robin Hood country. We have a progressive tax system, which means that the more you earn, the higher percentage of your income you pay in taxes. Money is being distributed from the richer to the poorer.

Tax in Denmark is paid automatically before you receive your monthly salary in your bank account. This has a psychological effect, as you never really see the money.

We happily pay our taxes every month even though more than half of our hard-earned money is taken from us (at least I know many that do).

One reason is that we know the money is put to good use. We have the lowest corruption rate in the world, so we are always quite certain that our money is being spent on welfare rather than ending up in the pockets of greedy politicians.

Another reason is all the benefits we enjoy:

Opportunities in the welfare state

Living in Denmark and being part of the welfare state gives you many opportunities. Education is for me one of the most important ones.

I grew up with a single mom in a small apartment in a suburb of Copenhagen. My mom didn’t have any savings and some debt. We always had food on the table and I enjoyed a great childhood, but how would my chances for getting a college degree have been in a country like the US?

Sure, in the US, I would have the right to the pursuit of happiness (and some people might succeed), but in Denmark I had the right to happiness.

I got a free education in Denmark all the way from primary school at the age of five to finishing my Master’s degree at the age of 25. I could choose any university in Denmark (or I could choose one abroad and get a stipend from the Danish state). I studied at renowned universities in the US and in the UK during my studies.

I spent exactly $0 on my Master’s education. When I graduated college, I had a student debt of exactly $0. Oh, and since I turned 18, I got $1,000 from the state every month to support me during my studies.

Because of the welfare state, I know several people who had troubled childhoods who later went on to become elite students at their universities – simply because the welfare state took care of them.

The welfare state gives everyone the same opportunities – no matter your or your parents’ backgrounds or wallet size.

In other countries, you would most likely take on debt to finance education and you would finish your education deep in debt. This system might work fine for some people, but what if I want to switch careers or if I fall sick and cannot work anymore? Who will pay my debt then?

Security in the welfare state

In Denmark, we enjoy a high degree of security. Not only in the case of low crime rates (did I mention we have one of the lowest crime rates per capita in the world?), but also when life hits you hard.

Imagine all the things that could seriously de-rail your life. I will argue that the welfare state has a solution for most of them.

If you get seriously sick? Don’t worry. All your health care is paid for no matter how sick you are, and you will receive money to live for from the state in case you run out of money. You don’t need an insurance to survive or to be eligible for this, but some people have an extra insurance giving them even more money if they get sick.

If you get fired from your job? Don’t worry. The state will help you with training and finding a new job. If you run out of money, the state will make sure to give you and your family enough money to have shelter and food on the table.

If you get an unexpected kid? Well, you should of course have some worries when you bring kids into this world, but the state will give you some money for each kid you have.

If you want to pursue early retirement and financial independence as I do? Fine, go ahead! And if you end up losing all your money on the stock market? The welfare state will be there for you again.

The point is that many people in Denmark enjoy a high level of security due to paying high taxes. It is like an insurance that covers most of the incidents that can normally ruin your life elsewhere in the world.

Flexibility in the welfare state

In Denmark, we enjoy a high degree of flexibility.

We can choose to live life at the pace that we want. You do not need to rush through the educational system (even though the state obviously would like you to). Many Danes take gap years, an extra year of school or something similar. This means that we usually graduate long after American students.

Since we do not have to take on debt to study (and get paid to study), most Danes are able to move out and live in their own apartments just before or after turning 20. Young Danes are usually quite independent and take control of their own lives at a young age.

Many Danes frequently change jobs (25% in the private sector change job every year). This is because we know that if things do not work out at the new job, we will at least be helped by the state financially in between jobs. High taxes and the welfare state makes us more flexible, and we might be more likely to take chances instead of being risk averse.

Since Danes enjoy a high standard of living and high purchasing power, almost anywhere we go in the world, the cost of living will be relatively cheap for us (except Norway and Switzerland – you wouldn’t believe what things cost there!). This gives us an enormous flexibility to travel and live abroad.

Paying high taxes gives us a welfare state that in turn gives us a large flexibility in how we want to live our lives.

“Sammenhængskraft” in the welfare state

“Sammenhængskraft” is a Danish word that I do not know how to translate. The dictionary defines it as “the act or state of sticking together tightly”.

“Sammenhængskraft” is often mentioned as one of our biggest competitive advantages. It is the feeling of belonging to society.

The argument for “sammenhængskraft” is that in countries with little distance between people socially/economically and culturally, the individuals participate in social relations that fosters compassion and humanity. People feel mutually bound to each other in a welfare state.

In Denmark, paying high taxes, having a welfare state, being relatively socially equal and culturally close, make people feel more included in society and thus engaging more with society.

An example is voter turnout. In the US, 55% of people vote. In Denmark, roughly ~85% of people vote. I am not going to go into the reasons behind this (and there might be many), but an argument is that the welfare state makes people see the benefits of paying taxes, thus wanting to participate in shaping society.

Another example is the low crime rate. The argument for “sammenhængskraft” is that if people feel more included in society and are being treated well, they will not want to or need to participate in criminal activities.

… and “sammenhængskraft” has been found to positively impact many other things (e.g. health, economic growth and integration – source is in Danish, sorry).

Something is rotten in the (welfare) state of Denmark… Right?

Ok, ok. Enough with all the positive adjectives and perceived advantages of the welfare state. There are some bad things in Denmark.

The weather in Denmark sucks. This “summer”, we have had the worst weather in decades with mostly rain and quite few sun hours. We usually only have a couple of good summer months per year with 20 to 30 degrees Celsius (68-86 Fahrenheit), but for most of the year the temperature is between -10 to 20 degrees Celsius (14-68 Fahrenheit). The winter months are particularly long with the sun rising at 8.30am and setting at 3.30pm – it is dark when we go to work and dark when we go home. No wonder “winter depression” is a topic that we always discuss in those months!

Unfortunately, global warming is not going our way either. It is predicted that Denmark will get colder and more wet weather in the future.

Why doesn’t everyone just rush to Denmark and reap the benefits of the welfare state? Denmark is a quite closed country, and it is quite hard to obtain a citizenship and residence permit. In recent years, Denmark has had an increase in support for right-wing parties (just as many other European countries) and is increasingly becoming nationalistic. If you read my blog, or this interview with me, you’ll know that I am very much against this.

The welfare state is not only a smooth machine handing out money to everyone. There are significant inefficiencies in our public sector and money is being wasted on stupid ideas, weird regulation and slow bureaucracy. However, the benefits of the welfare state are simply too many for this to be a problem that threatens its legitimacy.

… and of course, a negative aspect of the welfare state is the high taxes. As you know from above, I happily pay my taxes. I would have been nowhere without them.

However, taxes might lead some individuals to leave the country and work in countries with lower taxes after getting a free education (a net negative deal for Denmark). Also, some businesses might be scared away and choose other locations.

These are mostly theoretical problems and are not big issues currently. Mostly because many Danes choose to stay and work in Denmark, and choose to establish families in Denmark (so their kids can enjoy the benefits of the welfare state). Also, many businesses still find Denmark attractive (for example because of large talent pool of well-educated, independent employees).

That’s why I am happily paying more than 50% in taxes every month, and I hope to do it all the way towards early retirement.

I’m not saying that the welfare state is the only way to go, but it is a damn good way in my opinion.

26 comments

26 comments

Raúl November 9, 2019 - 22:58

Hi,

I liked your post and how you carefully detailed all the information.
However, I disliked your first answer to Vasilis: “You forget that our GDP per capita is four times bigger than Poland”. I found this comparison pointless (aside from the fact that I found it rude).

Let me explain:

Comparing Gdp per capita differentials between countries is totally pointless if you don’t have have a minimum orientation in regard to the average living costs.
I lived in Mexico, where the salaries are half of the ones in Spain. The point is that normally you need less than half the living costs in Spain to live, so the salary divergence in that case don’t really matter.

The second case I disliked is the fact that you seem to speak in the name of all Danes. And I have several Danish friends, some of them thinking radically different from your viewpoint xD.
My suggestion is that when you want to use “GDP per capita” to compare with another country you should also take into account the “disposable income”, which is basically the net salary out of taxes, and if you use that data, you see countries such as Austria, most of Germany, Switzerland and even the UK ahead of ALL Scandinavia.

I know I came too late into the conversation but yet I expect your feedback.
Kind regards.
The fact that your GDP per capita is

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Carl Jensen November 13, 2019 - 21:35

Thanks for your comment, Raúl.

Comparing GDP per capita was not meant to be rude. Comparing GDP per capita between countries is a fair proxy for standard of living in my opinion. I could also have used median income, but since inequality is relatively low in Denmark, it would not have changed the result. However, instead of GDP per capita, I should’ve perhaps used GDP per capita PPP to be more accurate. The conclusion would’ve been the same though.

Taking disposable income into account is definitely also interesting to look at – and I have never claimed that Denmark performs better than all countries in the world on all metrics. I know that is not the case. I just claimed I love paying my taxes in Denmark for what I get in return.

Lastly, of course, not all Danes agree with me. However, since we live in a democracy, I would argue at least 50% agree with me otherwise the system would be different 🙂

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Vasilis May 7, 2019 - 12:52

You are telling me that it is (or was, I am not sure what is the current tax rate) OK for a Dane to pay 180% taxes for a new car??
Regardless of all the utilitarian arguments of the Danish state efficiency, you are paying a ludicrous amount of money. That is almost 3 times the price for the same car in Poland!

Some people who would like a car but do not have that amount of money, will not buy it. That makes them poorer.
A car is something more or less essential in our lives, it saves us time to do things we enjoy.

So, if you don’t need a car or if you are rich enough to not care about the high price, you are OK.
If you are poor, how is this good? How is this prosperity?

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Carl Jensen May 7, 2019 - 13:13

You forget a coupe of things here:

1) Our GDP per capita is four times higher than in Poland, so even if the car is three times the amount in Poland, we should to a larger extent be able to afford the same car – adding to this, Denmark’s income equality is higher than in Poland, so there’s a smaller difference between rich and poor
2) Most people in Denmark can afford a car if they want one regardless of the tax – you just need to buy a smaller, less fancy car, which is also positive for the environment
3) We have excellent public transportation and live in a small, flat country, so not everyone needs a car (myself included). I prefer bicycling which is better for my health and the environment

That being said, I don’t have the answer for what the perfect tax rate for new cars should be, but the current tax rate is not something that is making people poor in Denmark.

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Vasilis May 7, 2019 - 13:39

The fact that you are making 4 times more, does not make it OK to buy something 3x.

If this were the case, then if you pay everything 3x than in Poland, then you are not actually 4 times richer, but 1 times richer (+100%).
What If the car tax, or any other tax would be raised to x3.9? You would still be 10% richer than in Poland but I don’t think this is OK.

What is the point of being richer if you cannot spend your money the way you want? Prosperity is to have access to more products, in lower prices and better quality.

Danes have to work 3 times more than Poles, in order to buy a car. It doesn’t look like a good deal to me (for the Danes, obviously).

Again, I understand the utilitarian argument, but there are some things out of proportion.

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Carl Jensen May 7, 2019 - 13:53

You have to look at all taxes in combination and not focus on the effects of a single tax. If you really want to focus on cars, it is only great for the environment that we on average don’t drive as big cars as elsewhere. Adding to this, we get a lot of things in return for our taxes. Your argument doesn’t hold. We are not poor because of our taxes – quite the contrary.

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Vasilis May 7, 2019 - 14:17

I would argue that Denmark is not rich because of the taxes. The taxes are making you poorer but you are rich because you produce wealth, and that is because you have economic freedom. The Danish government is prudent enough not to spoil a good thing.

The reason you are richer than Poland, is because they had a communist government and that delayed their entrance to the free market. Not because of higher taxes than them.

About the car tax, I cannot agree with you that Danes are better off, if they cannot afford a car they want.

About other taxes, no one wants to pay high taxes. Do you remember the “fat tax”? Do you remember why they took it back after 11 months? Because the Danes didn’t want to pay the extra tax and they found other ways to buy fatty products. As a whole, the fat tax was doing more bad than good.

Do you think that Danes would not take the chance to buy a cheaper car, if they could? Even if that meant that they would somehow cheat the Danish state?

Carl Jensen May 7, 2019 - 15:14

The taxes are a prerequisite for our welfare state that produces wealth. Danes can afford all types of cars. No, the vast majority of Danes would not cheat the state.

pedro bartholomai May 5, 2019 - 14:48

Hi Carl. Great article with lots of information about your country which I feel very close to since part of my family is Danish.
Let me ask you this: how does the tax structure in Denmark impact on business and the chances of making any business endeavor profitable? Argentina has tremendous tax pressure all across the board (on citizens,businesses,property and etc) . In theory it is to sustain a so-called welfare state too. But we have over 30% of poverty rates, inflation etc etc. Pro-free market economists blame these woes on too much State intervention and left wing theorists blame it on all sorts of international and imperial conspiracies, evil forces who are “out to get us”…Starting any business in Argentina is expensive, cumbersome, cost of labor is very high son if you can get away with it you will hire your employee off the books (the logic is instead of paying those costs to the system you pay the employee a little more and you pay lower contributions) Employers are also easily sued with phony labor lawsuits (“unfairly laid off” etc).
I understand Denmark is one of the countries with most economic freedom in the world so I guess my question boils down to how is that compatible with the tax structure you have. Thanks again for the insightful article! Cheers!

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Carl Jensen May 7, 2019 - 13:01

Hi Pedro,

Interesting to hear your perspective. I don’t think the difference between Denmark and Argentina regarding economic freedom or ease of doing business can be explained by the differences/similarities in tax structure. I guess the answer can partly be found in the history of our countries (path dependence if you want) and in the institutions present today.

I don’t know enough about Argentina to make a comparison, but I believe Denmark is well-functioning from a business/economic freedom perspective because of high trade/investment/financial freedom in open markets, a good degree of regulatory efficiency, strong protection of property rights, government integrity (for the most part) and a fair judicial system. Adding to this, Denmark is one of the least corrupt nations in the world. I believe we got here because of historical events ultimately leading to the welfare state with strong institutions. In essence, I believe that there’s so many things influencing how our welfare state is functioning other than just tax.

Hope this makes sense 🙂

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Andrew April 11, 2019 - 18:09

So, serious question from a central USer..how does the tax system work in Denmark? Here, i pay 19% tax on income, 8% sales tax(more for things like gas and liquor), then property tax around 5% a year for any automobile or property I owned during that year. Employers also pay almost 10% of income for each employee as a tax as well, cutting the bottom line of wage down by that 10%.
Is this 50% tax in Denmark all things included, or is that just the income tax? I figure a realistic figure here, all things considered, is around 60% of currency we earn and use goes to taxes in different ways

I would also like to point out a few things that others haven’t. You said the average healthcare plan in the US is 5k/year, and it just isn’t. The highest end, best healthcare plan i have been offered by any of my companies was 4200/year. I pay around half of that now.

We don’t have to pay the $2913821870 a year for higher education that you think we do. some universities cost that, but they’re rare and usually not necessary. I’m finishing up my degree with $0 in student loans, have worked full time since i started uni, and pay around a weeks pay per semester for school(sometimes less).
Although the “work hard and you will succeed narrative is basically dead, it still works sometimes. I try hard and study beyond school extensively with almost all my free time, volunteer for local events in my field, and do other projects and share them. That’s enough to put me ahead of most of the job market in my subject with only an associates degree. If we had free masters degrees for everyone, I’d be put at the bottom of the totem pole simply because I don’t have the same school-based education as the millions that graduated every year, even if I had extensively more knowledge and experience on the subject.

More simply put, I can get the same knowledge and experience by working harder in 2 years than a masters can get you in 6 years. BUT in a completely free education society, this is for nill because the masters degree that a lazy non-committed person can get will put them at the top of the list of applications.

Also, americans(not sure if Dens are the same) are a very commercialized, ‘I want stuff’, society. we’ll gladly take being sick or having a minor disease if it means we can get the latest iphone, iwatch, have 3 cars, and vacation to mexico once a year. I’m not like that myself, but I imagine that’s a large reason we don’t approve of the way Denmark does its government, almost forcing you to live a particular way.

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Carl Jensen April 15, 2019 - 11:31

Thanks a lot for a serious comment with good questions and arguments, Andrew 🙂

Reagrding tax in Denmark, the tax of +50% I mention is only related to income tax. We have a progressive tax system, which means that the more you earn, the more you have to pay in tax relatively.

The tax rate is a combination of lots of different things, but let’s keep it simple. I believe that the lowest possible tax rate in Denmark is around 37% for single parents and the highest around 56% for anyone (we have a tax ceiling of 52% for personal income, but there’s a few things on top of that). I am in the top 1-2% of income earners in DK, so I pay one of the highets tax rates.

On top of this, we also pay other taxes that I do not include, for example 27-42% tax on capital gains and 85-150% tax on car registration, as well as more hidden taxes such as 25% VAT on all goods, sugar tax, etc. However, we don’t pay any tax on real estate gains, which historically has been a good business for many people including myself (especially in urban areas).

Good point about the healthcare plans in the US. I believe it was from a quick Google search, so the 5,000 USD was a rough estimate, but I don’t believe I am that far off when you look at the average (young vs. old, pre-existing condition vs. healthy etc.), am I?

You are right that not everyone has to pay a lot to study in the US (although you still have to pay), but in order to get into prestigious universities, you have to pay a lot. In Denmark, everyone can go to all universities (given that their grades are good enough), so we don’t have “elite universities” in the same way as you might. Your point about not having to study 5 years (the duration of a Masters degree in DK) is good and I agree that not everyone needs 5 years of educaiton to become a good employee. In DK, it is only 15% of the population that holds a Masters degree, so even though it is free, it is far from everyone who can and wants to take one (or needs one) to get a job. We also have many shorter educations (from 2 years duration) that 30% of the population take to make them ready for jobs in particular fields. So I believe the same is possible in Denmark with working hard and getting ahead of some people with a Masters degree.

Sadly, we are also a “I want stuff” society, so most Danes also want the latest iPhone, have many cars and vacation all over the world – and they actually do that too. I guess the difference is that there are certain areas where we do not want to compromise where we believe everyone has a responsibility towards society as a whole, where you believe it is more up to the individual. I guess there are advantages and disadvantages of both systems, but it is interesting to hear different perspectives 🙂

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Dustin March 14, 2019 - 17:18

I live in America and I can see why high taxes seem justified for the benefits you pointed out. But for me, and many people like me here in America, the opportunity of happiness is much more appealing than the right of happiness.

I worked hard in high school and got accepted to an engineering college to pursue my dream career. I work on the weekends to pay for tuition and have little-to no fee time and I’m honestly as happy as you seem in your post. If everything was given to me I would lose the desire to work hard and distinguish myself from others.

I’m happy I pay significantly lower taxes than those in Denmark even though I’m exposed to unpaid college tuition, healthcare, and governmental safety nets because actually receiving money I worked for gives me a sense of individuality. I don’t have to rely on the government for a monthly allowance or pay for some other college student who doesn’t work as hard as me to go to school and I’m happy, secure, and flexible knowing I can live my life without strings attached.

This is where our cultures are different: people who live in Denmark pay high taxes and are satisfied with their lives and are happy, and that’s fine, but Americans take on more risks and are never satisfied with their lives, so they strive to accomplish their goals and end up finding happiness along the way.

The later sounds more like an adventure and makes for a more interesting and meaningful life.

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Carl Jensen March 16, 2019 - 09:58

Your comment is the perfect example of the difference between the mentality of most Danish and American people.

Did you know that Denmark has just as high GDP per capita as the US? We are just as productive as you even though you believe we sometimes rely on the government and in your view don’t “work hard” and just are “satisfied with our lives” – it’s a classic American perception of Scandinavian countries, so I don’t blame you. But let’s face the facts, we are just as productive (!) even though we have free health care, education etc. 🙂

You are speaking from a position of priviledge. I’m glad you had the opportunity to work hard and get an education. Not everybody has those opportunities. If you become physically or mentally ill, you might not be able to. There’s so many things out of your control. That’s where we make sure most people have a worthy life in Denmark. That’s why the number of people living below the poverty line in Denmark is one of the lowest in OECD (5%) while it is one of the highest in the US (18%). Nearly every fifth person living below the poverty line in the US? That doesn’t sound like an interesting and meaningful life to me.

Your comparison between our cultures couldn’t be more wrong. We take on equally many risks, we work hard and are never satisfied with our lives (remember the GDP per capita?), and we indeed find happiness along the way (we are consistently ranked top 3 happiest people on Earth – I believe the US is closer to #20). One of the main differences is that we have a safety net called “the welfare state” that takes care of us if we get into trouble (if we lose our job, if we get sick, if we have poor parents) and make sure that everybody has equal opportunities, no matter your parents’ ability to bribe you into a renowned college 🙂

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Marc February 19, 2019 - 17:52

He left out that everyone, rich, middle class, and poor pay those high taxes. Americans refuse to tax the poor; Denmark does. They tax income up to $7,800 at 8%; after that the rate jumps to 52% and goes up to 72%; no politician in America would support that.

He also left out that businesses pay no more than 25% tax. There are no payroll taxes, because they hurt job growth by increasing the cost of labor; both individuals and businesses pay only income taxes. There is a 25% VAT sales tax, which makes the cost of goods higher in Denmark than in America. Households are limited to one car, the registration fee is 105% of the value of the car, and gasoline is $6-$8 per gallon.

Denmark is a net exporter of petroleum, which is extracted off shore; this natural resource production boosts tax revenue, creates jobs, and makes Denmark energy independent . It also produces approximarely 20% of its electricity from windmills.

Denmark has less than a 40% public debt to GDP ratio; America has 100%. Anually, American tax payers pay over $220 billion in intetest payments on the national debt. In order to “be like Denmark,” the U.S. would need to pay off $60 trillion in public debt.

Would most Americans be willing to pay 52% or more income tax, 25% VAT sales tax, 105% auto registration, $6-$8 per gallon for gasoline, tax businesses at 25% or less, and pay off 60% of the U.S. national debt? No, they would not. If one wants to speak about Denmark, one must list all the facts about it, not only the ones that people want to hear.

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Carl Jensen February 21, 2019 - 21:22

I’m not really sure what the purpose of your comment is, but I believe you are missing the point here. The article is about why I love paying taxes because of all the great things it gives me and everyone else in the Danish society. People shouldn’t be scared about high taxes alone. It depends on what you get out of it. In Denmark, health care is absolutely free for everyone covering every single illness you can think of – no matter if you are amongst the top or bottom 1% or if you have a pre-existing condition. In the US, you pay ~5,000 USD on average for a private health care insurance per year. And don’t even get me started about our free education and what you pay for education. You see? The taxes are actually being used on something.

Paying more than 52% in income tax, 25% VAT sales tax, 105% auto registration, 25% business tax etc., because we actually get something in return for that. At the same time, everyone gets the same opportunities. Now, I’m not the one to say which system is best, but it’s just important for you to know that high tax numbers don’t scare me when you know what you get for it.

I might misunderstand you, but are you seriously saying 100% public debt-to-GDP ratio is a good thing? The US is facing a serious debt crisis that will impact future American generations seriously, and your constantly rising debt of now USD +22 trillion is like driving on a highway with the emergency brake on.

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Rob March 14, 2019 - 03:26

What I got from Marc’s comment was that this article paints a depiction of half the story. It makes sense that you’re speaking about what you enjoy, but it also gives an incomplete depiction to people who don’t know the trade-offs. If this is the first and only information people get without the other side of the story, then they are prone to believing the grass is magically greener on the other side. Nothing wrong with expressing what you like, but it is also fair for people to express the trade-offs. People in America are complaining right now about a 3% increase in federal taxes under Trump, you’re talking multiplying people’s taxes at least twice. Also, there is a whimsicalness to the depiction of this country. There is no historical context explaining how Denmark arrived to it’s current economic and social positioning. After capitulating to Germany after 6 hours in WWII, they benefitted from the US coming to save the day. That is vitally important to acknowledge if you’re going to talk about Denmark’s spending priorities and why Denmark can afford to prioritize and spend money on their citizens in the way they do. It must be nice not to have to worry about defense of the world essentially. The US may be vilified for military spending…but when there is a wrong in the world or Russia decides to annex a country no one looks to Denmark to stop them. The world always calls on and looks to America to respond, and that costs trillions over time. All of that to say one can not say oh I love the way that Denmark spends its tax dollars compared to the US, then completely ignore that US tax dollars have been subsidizing Denmark and many other countries defense. What if the US took a non-interventionist approach, I wonder if Denmark would last another 6 hours on their own? Nothing against them, I just think a dose of reality is important to help show there is no magic here just one of the benefits of someone else paying for stuff. This comparison is like idealizing the spending of someone who lives with their parents, has a job, and doesn’t pay rent. With no context, one might conclude that something is wrong with the parent’s spending because they can’t afford all the things they want nearly as much as the person living rent free.

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Carl Jensen March 15, 2019 - 20:23

This is my favorite article because of all the viewpoints represented 🙂

I’m not really sure what you argument is exactly.

If you are saying that Denmark is not a good place to live because we depend on other people to protect us militarily if we are invaded by other large countries, then you are absolutely right. We are 5.7 million people. Of course, we cannot defend ourselves against hundreds of millions of people invading our country? And just for the record, I have no faith in Trump defending us if anything were to happen anyway. The current US president questions the future of the transatlantic alliance and shows more warmth towards dictators than democratically elected presidents.

The US spend 3.1% of their GDP on military, we spend 1.2%. I can’t see how that has anything to do with how we spend the remaining part of our high taxes on health care, education etc. for all? It’s not the military spending that makes the difference between our two countries for sure.

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Max June 12, 2018 - 09:13

Nice, I live in the Netherlands and our situation is completely similar. In fact, our situations are so similar that I sometimes think we might as well be the same country. Have you ever heard Dutch people speak? It’s quite an odd sensation, because it sounds like he’s speaking Danish, except that you’re not hearing any of the words (that’s what Danish sounds like to me anyway).
It seems like the welfare states perform best on pretty much any measure (equality, security etc.) but I do wonder what’s the order of causation here. Are we doing so good because of our welfare state, or are we able to sustain a welfare state because we are already very prosperous nations?

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Carl June 12, 2018 - 21:23

Very interesting, Max! 🙂 Yes, I have a few good Dutch friends. We are very similar in many ways!

I believe there’s a lot of path dependence that has led us to welfare states in some parts of the world. I don’t think prosperity is the main reason although I think it is definitely be a contributing factor. I recently read a good post about some ideas of why it emerged (it is summarized in the last paragraph): https://www.linkedin.com/pulse/sociology-why-did-welfare-states-emerge-when-nigel-wade/.

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Kristine @ Frugasaurus March 5, 2018 - 08:14

Great post! I always feel a little happy when I realise there are more Scandinavian personal finance bloggers out there. Yay for taxes! 😉

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Carl @ MoneyMow March 11, 2018 - 21:53

Same here – and we are a growing bunch! 😉

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Zach @ Four Pillar Freedom November 9, 2017 - 23:59

Graduating debt-free is definitely a major advantage that Denmark students have over those in the U.S. where most students graduate with $30k+ in loans.

I learned a boatload about Denmark in this post that I previously didn’t know, thanks for sharing!

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Carl @ MoneyMow November 12, 2017 - 21:02

I’m happy you learned something, Zach! It is definitely an advantage for young Danish students to graduate without debt, but of course we pay indirectly for our education through taxes afterwards 🙂

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Robin Anderson February 8, 2019 - 21:44

Is there a financial incentive for your best students to become physicians? In the U.S. we are experiencing a physician shortage (for a variety of reasons) and I just wonder if Denmark has the same problem.

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Carl Jensen February 9, 2019 - 12:14

Good question, Robin. I do believe we have an incentive to take a higher education, but I’m not sure I’m the right one to answer on behalf of physicians. I know we have a shortage of physicians with 30% retiring in the next 10 years and 70% reporting that they cannot take in more patients, so I do believe we have a shortage. I just don’t think it’s because of our taxes.

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