Democratic party presidential hopefuls, such as Elizabeth Warren and Bernie Sanders, argue that they can create an American welfare state without raising taxes on the middle class. Bernie, in fact, likes to point to Denmark as his model, even though the country runs on a market economy.
Well, a new study by the Tax Foundation finds that ordinary Scandinavians are highly taxed across the board. If the United States really wanted to duplicate Scandinavia’s generous welfare systems, we would need to significantly raise income taxes on the middle class to broaden the tax base, add a VAT tax (mostly paid for by the middle class), and lower corporate taxes.
In Bernie’s beloved Denmark, 24.5 percent of tax revenue as a percent of GDP came from personal income taxes and social-security contributions, compared with only 16 percent in the United States. Denmark’s top statutory personal income tax rate, which kicks in at 1.3 times the average income, is 55.9 percent. In the United States, that would translate into taxing everyone who makes more than $65,000 at 55.9 percent.
Denmark’s corporate tax rate is 22 percent, compared with a combined state and federal American corporate tax stands at 25.9 percent. (The real corporate tax rate, of course, is zero, but that’s another story.)
There are fewer than six million people in the nation of Denmark, as opposed to about 330 million people in the United States. The idea of transferring that kind of massive wealth to fund programs of that scale to be efficiently run by our federal government is implausible. The idea that you could do it without drastically raising taxes on most Americans is just laughable.