Paul L. Caron

Wednesday, July 7, 2010

High Taxes Lead to Happiness

MarketWatch: The Happiest Taxes on Earth:

The Organization for Economic Cooperation and Development says people in Denmark, Finland and the Netherlands are the most content with their lives. The three ranked first, second and third, respectively, in the OECD's rankings of "life satisfaction," or happiness.

There are myriad reasons, of course, for happiness: health, welfare, prosperity, leisure time, strong family, social connections and so on. But there is another common denominator among this group of happy people: taxes.

Northern Europeans pay some of the highest taxes in the world. Danes pay about two-thirds of their income in taxes. Why be so happy about that? It all comes down to what you get in return. ...

It may not just be taxes, of course, that lead to happiness. There are other factors to consider. But better social services and less worry about having to pay for things such as medical bills, retirement and education do help with the happiness factor.

Yet, we are so dead set against paying more taxes that it's even spawning nationwide protests. Tea party, anyone?

Maybe it's time that we looked at taxes differently. We have to pay them anyway. So they might as well make us happy. If Northern Europe is any benchmark, the more we'd pay the happier we just may be.

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They may be happy because they are at least getting some good things for their taxes. E.g., decent schools, health care, university. We in the US pay all these taxes and generally get substandard services or none at all. Few believe that lack of funds is the reason for this, such as in our public schools, which already are relatively high-spending.
Also note these countries all have lower coporate tax rates than the US. Perhaps that is why they are happy.

Posted by: Daniel | Jul 8, 2010 9:50:36 AM

I also suspect the tax base in these countries is broader than the US's, where half pay no federal income tax. There's a fairness factor in these countries that simply doesn't exist here because of this fact. I think that most of us would be "happier" with the taxes we pay if only we thought that at least everyone else was chipping in too.

Posted by: Aah no | Jul 8, 2010 5:18:04 AM

Also, I'd like to point out that all that " tax related happiness" is leading to demographic suicide. (Or may it's just a cultural coincidence) At any rate, Europe already has problems and the fertility rate in Northern Europe is well below replacement levels.

Immigration can soften the below, but I don't see the kids 30 or 40 years from now being quite so happy.

Posted by: Amy | Jul 7, 2010 2:59:53 PM

agree with first post. only works if population growth is predictable and immigration is tightly regulated. porous and open borders would drive the country into bk within a few generations.

Posted by: anon | Jul 7, 2010 11:20:18 AM

Sure they're happy. They're living in countries of wealth redistribution where the majority are spending the tax money of a minority any way that they want. That's great while it lasts and as long as they have no guilt about taking money from others using the force of government. At the rate we're going under Obama, we're going to be "the happiest" people in history.

Posted by: Woody | Jul 7, 2010 8:00:54 AM

What utter nonsense. For just one variable, the net in-migration in each of the countries in the OECD is about half the rate of the US.

Posted by: drtaxsacto | Jul 7, 2010 7:01:21 AM