Is the taxation in Nordic countries really as bad as they say? I prefer to hear answers from actual Nordics.
All Nordic countries are different, except perhaps Finland and Sweden, which have almost identical average wages and price levels at the moment. Legislation and labor code have long been very much alike.Tax calculations are produced in different ways and taxes are spent in slightly different ways, but it wouldnu2019t surprise me if the tax percentages were within a reasonably close margin.The following calculation is for Finland.As local tax payers do, go to the income tax rate calculator 2019.Fill in municipality, parish (if any) and year of birth. Weu2019ll leave all else blank.On earned income, weu2019ll just fill in the first box in the form. Say, 40,000u20ac ($45,000) for a median income in the private sector.You could play with other variables like capital income, but this is a very basic example.Next are deductions. Common deductions include home loan interest, student loan interest and commuting expenses. Weu2019ll just claim annual 300u20ac ($340) from trade union membership fees and unemployment fund payments.Rates used for calculation:Resulting income tax for 2023 is 18.5%, of which 18.0% is municipal tax.Full disclosure, .815 x 40,000 isnu2019t your annual net salary. There is withholding tax we need to take into consideration. That covers pension, unemployment and health insurance, and is paid by your employer. (Hereu2019s probably where practices vary between countries the most).So weu2019ll visit another online calculator. This oneu2019s only in Finnish and Swedish, not English.Same example salary, same example age. No deductions. Add the income tax percentage calculated before and you get an estimated annual net salary of 29,300u20ac. Thatu2019s 27% tax on income. All included.Hereu2019s a taste of what u2018allu2023 entails. The Social Insurance Institution of Finland in English online. (Apparently they also have an Instagram account!)You might be interested to know how much you spent on healthcare there?Itu2019s indirectly supported by the municipal tax, but the health insurance, specifically, came to 988u20ac ($1,120) a year, which was suspended from your income in monthly installments of 82.33u20ac.For 80% of the population this will do. Approximately 20% have a private health insurance.Thereu2019s more than income tax, of course. Letu2019s check out the tax payer info online. Only brief summary available in English there, sorry.Hereu2019s the whole tax contribution sorted by source.Finlandu2019s taxes in 2023. million euros34,404 from income tax31,848 from consumption27,068 from mandatory social security payments, incl. the withholding tax we saw earlier.Property tax is in the bottom-right corner, there. Everything else is pretty insignificant.Weu2019ve already broken down the two big ones. Zooming in on consumption now.20,404 MEUR tax revenue from VAT (value added tax)4,324 from energy (gasoline, electricity)1,340 from alcohol. The state monopoly liquor store online1,169 from taxes on vehicles u2026962 from tobacco productsu20261,021 MEUR from national lottery and gambling.Yes, gambling. Tax revenue from horse races and slot machines is used for supporting sports and culture.Tax contribution being made in a supermarketVAT is a tax on consumption. Those who do not consume, do not pay. Value added tax is generally 24%, but reduced on basic necessities:14 % on groceries, restaurants and meal services10 % on medicine, accommodation, transportation, books, sports and recreation.VAT is not paid for exports.Hereu2019s how it plays out in general price levels.Cost Of Living Comparison Between United States And FinlandFinnish people on average have 16.29% less disposable income than Americans. That difference suspended from your salary covers an array of social services, incl. universal health insurance in EU, higher education, nine months parental leave, subsidized daycareu2023 things Americans tend to pay more out of pocket for.With subsidies, preschool and daycare is 63.41% cheaper in Finland.Hereu2019s the widest margin in USAu2019s favor:Gasoline is +141.15% more expensive in Finland. I certainly noticed the difference on a road trip in USA earlier this year.Jeans and domestic beer are also much more affordable in USA. Groceries are more affordable in Finland and EU in general. With 14% VAT and all.To answer your question, is it bad? I recognize that thereu2019s a significant chunk of my income gone every month, but I donu2019t feel bad about it considering what Iu2019ve gotten in return. I was a net receiver for the first 25 years of my life. Now I pay back. I also support the services that my parents as pensioners need.I like that I have information available on what my contribution amounted to and what itu2019s spent on.What do you think, does it look bad?Edited to add:Look, it comes down to different mindsets. Living in the USA I would probably groan about taxes too, because the way the society is set up, you need a lot of disposable income to afford good living. Anything that hampers with that, incl. taxes, leaves lower/middle income earners with less options.This isn't the way it works in Europe. Tax-funded services prthe kind of security and opportunities that lower/middle income earners would struggle to obtain. This is most clearly demonstrated in health care and education.