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Old 08-17-2012, 11:30 AM   #1
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Question Taxes and Stress (USA vs Nordic Nations)

From The Big Picture:
During my last trip to Europe, I was aware of how modest the stress levels were, despite the EU crisis, the looming recession, collapse of the Euro, etc. Their extensive safety net meant that there was not a ”Stressed Out Middle Class” or even a “Working Poor.” If you have health care, retirement, education, unemployment and day care paid for by the state — and a 70+% tax rate — you don’t sweat minor issues like continental recessions.
How much of your income goes or went toward healthcare (including insurance), education (tuition and student loans), retirement savings and childcare (if applicable)? Add in your Federal, state, local and sales tax.

Does that leave you with more than 30% of your gross income?


For our Nordic members, does that 70% figure sound right for your total, all-in taxes? And does it cover the items listed?
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Old 08-17-2012, 12:59 PM   #2
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Heck I went to Canada last weekend camped out and even there I noticed how things were so much different.

1) Auto insurance is Government run. I was surprised listening to somebody who got a ding on their 20 year old faded Honda and sure enough the government insurance was going to fix it. I was like no way even auto insurance is socialized in canada.

2) It was hot and I wanted to take a shower to clean up after sweating all day. Went to the local civic center. A shower cost a buck but the place was a pretty nice health club all government and community run.

3) Health insurance and medical care. A few weeks ago I had surgery on my knee to remove a loose chunk of meniscus. With my incredibly expensive insurance my out of pocket expense was still close to $1000. Without insurance I would have to remain partially handicap and If I didn’t have the co pay deductible money I still probably wouldn’t get it fixed. Talking to somebody there had the same surgery no wait and no out of pocket expense.

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Old 08-17-2012, 01:29 PM   #3
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Originally Posted by Scrappy Jack View Post
For our Nordic members, does that 70% figure sound right for your total, all-in taxes? And does it cover the items listed?
Eh, I have such low stress levels around taxes that I don't care much... (just burn whatever end up in the pocket and hope the house loan will stay in check)

Of the cost of my employer, about half end up in my pocket, of which 20% then goes to sales tax (then add other special taxes on gas etc).
I don't get it up to 70% but not far from it. It will most probably differ a bit how you do the math (I don't feel like I need to know ).

Heck, my student loan of about $50k (living cost for 6 years of collage in the 90's, no extra fees) is something I only notice once per year when I get the payoff plan.

Doing the taxes once per year is done in 5 minutes and signed off on the web, by SMS or the old school way on paper (only needed if you have done things that is not automatically reported).

As long as the system is percieved as fair there is no problems with paying up and loosing some of your freedom (we can't even bear knifes in public ).
Nothing is perfect but the basic services actually works most of the time.
It's not as generous as it was in the 80's when the system was boosted by loans and inflation, but that's what we need to pay for today (we did most of it in the 90's and early 00's).
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Old 08-17-2012, 05:07 PM   #4
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I could basically just +1 on what Niklas said...

Pay about 30% income tax. 25% sales tax on normal items, 12,5% on food.
So in my day to day life I`m taxed approx 50% and get "free" everything from my birth to my funeral.

What I see as the most positive is that I, like the rest of our normal middle class workers, do not have to worry about losing my job or getting sick. I might eventually, if I never get well or jobs never comes back, have to sell my house and get an appartment , but I will never have to worry about ending up on the street. And also be able to own my home, not rent.

In the US it seems like the only ones who have something to lose are ones like me with a mortgage and family. Everyone else is rich with no worrys or so poor that the taxpayers are already providing for them...
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Old 08-17-2012, 05:23 PM   #5
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Quote:
Originally Posted by lassi View Post
in the us it seems like the only ones who have something to lose are ones like me with a mortgage and family. Everyone else is rich with no worrys or so poor that the taxpayers are already providing for them...
qft
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Old 08-17-2012, 05:51 PM   #6
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Quote:
Originally Posted by NiklasFalk View Post
Eh, I have such low stress levels around taxes that I don't care much... (just burn whatever end up in the pocket and hope the house loan will stay in check)
The stress was more in terms of broader financial security than taxes, specifically.

Quote:
Originally Posted by lassi View Post
In the US it seems like the only ones who have something to lose are ones like me with a mortgage and family. Everyone else is rich with no worrys or so poor that the taxpayers are already providing for them...
That is along the lines of what the (American) author was getting at. In the USA, he broke down the socio-economic groups in to 6 parts, from the "Top .1%" at the top to the "Impoverished" (aka permanently broke) at the bottom. In between, you had the Working Poor, the Stressed Out Middle Class, the Comfortable Middle Class and the Wealthy.

The Stressed Out Middle Class might make a pretty good living but "are one major health event or divorce away from bankruptcy." I would add lawsuit to that mix.

I am estimating I pay about...
20% in effective Federal income tax (after deductions and exemptions)
5.5% in Federal Medicare and Social Security (OASDI) taxes (aka FICA)
1.2% in health premiums (health, dental, vision)

No state or city income taxes. My local sales tax is 6.5% but obviously not paid on 100% of my gross income. On the high side, I would call that 5% of my gross income per year.

Figure I save something on the order of 15% per year in my contributions toward long-term retirement savings. That does not count shorter term investments or savings or the contributions made on my behalf by my employer.

I paid cash for college tuition, so no loans. I think the total could be done for under $25k for a 4-year degree after looking up current in-state tuition, fees and misc expense values, but not counting room and board. I am not sure how to convert that in to a % of gross income, though.


There are lots of miscellaneous taxes (property and gas most prominent) and fees that are hard to pin down. I'd ballpark maybe 50% all-in on taxes and contributions to the items that might be covered by a Nordic style social safety net.
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Old 08-17-2012, 05:55 PM   #7
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That makes me wonder: what does the Norse or Swedish state-provided pension look like?
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Old 08-18-2012, 07:22 AM   #8
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Quote:
Originally Posted by Scrappy Jack View Post
That makes me wonder: what does the Norse or Swedish state-provided pension look like?
The changed it a bit here some years ago (the demographics would have drained the older system). Now it's a three stage system with a basic level, a level based om how much you've worked (fixed %age) and then you can have extra saving systems on top.
Getting 65-70% of your salary when you retire is common without too much worries. At least that's my view of it (could be wrong, but I'm not stressed about it, at all).
The only stress is to have paid of the loans to reduce the living cost by then (to get some freedom and not have to change/move too much).
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Old 08-18-2012, 10:20 AM   #9
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Do you guys have issues with freeloaders living off the system?

Here in West Virginia (one of the poorest states in the US) the sheer # of druggies and people who are just too lazy to work that live off welfare is mind boggling... and the welfare isn't even that good!
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Old 08-18-2012, 10:54 AM   #10
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Originally Posted by Handy Man View Post
Do you guys have issues with freeloaders living off the system?
Freeloaders are perceived differently by different people.
I perceive the problem to be reasonable, and the activities to make things fair seems reasonable.
It's as with any insurance system, no one likes others to abuse the system you are part of but at the same time you would like to be able to get help without being violated to the extreme to prove that you are not abusing the system.
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Old 09-01-2012, 05:04 AM   #11
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If I understand it, Norway's economy and people are subsidized to a large extent by their oil holdings. The income allows the government to offer generous health and welfare benefits over and above that which taxation only would allow.

The U.S. is in the process of closing down dozens of coal plants, has shut down large swaths of offshore drilling, slow-walks energy development of Federal land and hasn't allowed a new nuclear plant in decades. Perhaps if we were energy independent--as I believe Norway is--perhaps we'd see more dollars staying within our borders, and a commensurate increase in general welfare of the citizens.
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Old 09-01-2012, 05:09 AM   #12
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Your premise assumes Norway. Sweden has little-to-no-oil reserves (Niklas), and unfortunately destroys your premise. Aka, the guy you are trying to make a point on isn't even from the country you are trying to argue with.

Sweden is making a big deal about being the world's first oil-free economy for a reason, Cordy.

Source: http://www.eia.gov/countries/country-data.cfm?fips=SW

Finland...

Source: http://www.eia.gov/countries/country...?fips=FI&trk=m

Same deal.

Iceland...

http://www.eia.gov/countries/country...?fips=IC&trk=m

Even worse.

Heck, let's take a look at Denmark.

http://www.eia.gov/countries/country...?fips=DA&trk=m

Even Denmark barely has an oil surplus, and their reserves are quickly depleting. Norway's oil reserves are an anomaly in the Nordic countries, and trying to argue that that particular anomaly is the cause of the system in all of them is a little bit silly IMNSHO.

Last edited by blaen99; 09-01-2012 at 06:54 AM.
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Old 09-01-2012, 12:39 PM   #13
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That's kinda why I was only talking about Norway. If you wanted to talk Sweden, then maybe you could say that if the U.S. had a flatter tax base like Sweden, then we'd be in at least a fairer situation.
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Old 09-01-2012, 01:21 PM   #14
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Quote:
Originally Posted by cordycord View Post
That's kinda why I was only talking about Norway. If you wanted to talk Sweden, then maybe you could say that if the U.S. had a flatter tax base like Sweden, then we'd be in at least a fairer situation.
lolwut?

You really didn't just suggest that, did you? Sweden's tax rate, as Niklas noted, is somewhere around 70%. Actually, all the Nordic countries have very high tax rates, regardless of oil or not.

Secondly, Who Pays Taxes in America? | CTJReports

I'm getting the feeling, Cordy, that you are taking stances without background info on them here.
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Old 09-01-2012, 05:26 PM   #15
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Quote:
Originally Posted by cordycord View Post
If I understand it, Norway's economy and people are subsidized to a large extent by their oil holdings. The income allows the government to offer generous health and welfare benefits over and above that which taxation only would allow.

The U.S. is in the process of closing down dozens of coal plants, has shut down large swaths of offshore drilling, slow-walks energy development of Federal land and hasn't allowed a new nuclear plant in decades. Perhaps if we were energy independent--as I believe Norway is--perhaps we'd see more dollars staying within our borders, and a commensurate increase in general welfare of the citizens.
We do have a lot of oil and natural gas reserves as well as 92% of our energy consumption is generated by our own hydroplants. The last 8% is not green because we are part of a stupid energy-pool with some of the other neighbouring contries using gas\nuke\coal forcing us to sell our green energy cheap in the summer and buy back expensive coal\gas\nuke power in the winter when our reserves are low...

BUT; We don`t spend the incomes generated the oil production on our continental shelf. It is pumped into an investement fund currently worth about 600 billion USD which divided by a 5 million population creates a nice safety net for us, but no more than 4% of it`s value can be transferred to our gov budget each fiscal year. We pay our way with taxes like the other northern european countries. I will happily admit that we got a nice break with the oil and a big part of the private industry in Norway gets it`s jobs by supplying directly or indirectly to our oil industry.

The nordic model is under pressure though. Immigration from africa and the middle east, where the moral and understanding of contributing before receiving is weak to say the least, may push us to remove some of the benefits less fortunate can receive today.
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Old 09-01-2012, 05:46 PM   #16
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Other than Norway, do the other Scandinavian countries run a large debt and deficit?

Do the future finances look unsustainable like the USA's Medicare?
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Old 09-01-2012, 06:11 PM   #17
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Originally Posted by JasonC SBB View Post
Other than Norway, do the other Scandinavian countries run a large debt and deficit?

Do the future finances look unsustainable like the USA's Medicare?
No.

Source: EconoMonitor : Ed Dolan's Econ Blog » How Smart Fiscal Rules Keep Sweden’s Budget in Balance
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Old 09-02-2012, 01:12 AM   #18
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Quote:
Originally Posted by blaen99 View Post
lolwut?

You really didn't just suggest that, did you? Sweden's tax rate, as Niklas noted, is somewhere around 70%. Actually, all the Nordic countries have very high tax rates, regardless of oil or not.

Secondly, Who Pays Taxes in America? | CTJReports

I'm getting the feeling, Cordy, that you are taking stances without background info on them here.
No, I'm not suggesting Sweden's tax rate, but Sweden has a flatter tax base than the U.S. In other words, everyone is treated more equally in regards to taxes, although I don't approve or recommend their tax rate.

Rather than play "competing links", I'll simply say that I believe in equality of opportunity rather than equality of outcome. When 49% of Americans either don't pay Federal income tax or actually get money back, it does not bode well for the health of this country, nor does it reflect well on our core values.

Please understand that I'm not itching for a fight, just airing my views.
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Old 09-02-2012, 01:45 AM   #19
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Quote:
Originally Posted by cordycord View Post
Rather than play "competing links", I'll simply say that I believe in equality of opportunity rather than equality of outcome. When 49% of Americans either don't pay Federal income tax or actually get money back, it does not bode well for the health of this country, nor does it reflect well on our core values
This has been proven factually incorrect numerous times on here, and my link from the post you quoted even completely debunks it.
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Old 09-02-2012, 02:56 PM   #20
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Quote:
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This has been proven factually incorrect numerous times on here, and my link from the post you quoted even completely debunks it.
Ya that's my point. Your link is complete junk and I have links to back it up. Want to go back and forth 20 times? Dumb.

Bigger questions--do you believe in equality of opportunity or equality of outcome? How much of what you or I make should we be able to keep?

My original post relates to energy. Why, after Jimmy Carter adopted the Department of Energy over 35 years ago, do we not have an energy policy that keeps energy costs low? This impacts the poor disproportionately, and yet liberals the apparent "champions of the poor" have done everything in their power to stifle energy independence. Perhaps we could disband the DOE and "re-redistribute" the nearly $30 billion dollars that they spend every year back to the people.
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