The Nordic Model

If you read the post, Top 10 Socialist Countries, you may be wondering why you didn't see Sweden, Norway, or Denmark on that list of great socialist countries. During the 2016 election Bernie Sanders campaigned on putting in place several of the programs modeled after programs in these countries. Bernie used these programs to endorse the benefits of "democratic socialism", as examples where everyone's lives were better because of socialism.

The reason these countries didn't make the list of top socialist countries is that they are not socialist countries. They are not even good examples of the types of programs Bernie and his fellow socialist wish to put in place in America. Rather than having an economy ran by a central planning committee, these countries have economies driven by the market and operate under what is called the Nordic Model.

The socialist styled programs, including education and healthcare, under the Nordic Model are financed by high taxes. The highest marginal income tax rates in 2015 were 60.4% for Denmark, 39% for Norway, and 56.9% for Sweden. The bigger problem for these taxpayers is not the rate but how flat the tax rates are. In Denmark the 60% rate applies to all income over 120% of the national average income. The U.S. average income is around $50,000, so if this were applied here any income over $60,000 would be subject to a 60% tax rate. Norway and Sweden aren't as bad but the highest tax rates in Norway kick in at 160% of the national average and 150% for Sweden. The highest tax rate in the U.S. is currently 37% but it doesn't kick in until $500,000 for single tax payers and $600,000 for married taxpayers (that's 1000% and 1200% of the average if you're wondering).

Applying the Denmark tax schedule to the U.S. would for a person making $100,000 to pay $24,160 in taxes for the last $40,000 in income compared to $9,150 under U.S. tax rates (or an additional $15,000 on the last $40,000 earned). Similarly, in Norway you would pay an additional $3050 on the last $20,000 in income and an additional $8375 on the last $25,000 earned in Sweden.

In the U.S. liberals want to convince us that programs like free healthcare and a free college education will be paid for by making the rich pay "their fair share" of taxes. Based on countries that have these programs, countries that are called socialists when they aren't, it isn't true. While liberals praise the progressive tax structures for making the rich pay more of the tax burden, when the taxation requirements get so high everyone has to be taxed more.