Weathering storms together: the stories behind Scandinavian support for high taxes

Abstract

Scandinavia’s high tax model thrives on shared narratives, experience, and priorities. Equality, trust, and a demand for good quality public services both create and reflect a cohesive and content society, writes Sandy Goldbeck-Wood The Scandinavian social democracies are widely admired for their world class public services, which are supported by high levels of taxation, productivity, and education, and equality of income and opportunity. In 2021, for example, Norway had a tax-to-GDP (gross domestic product) ratio of 42.2% compared with 33.5% in the UK and 24.5% in the US.12 Conversely, income inequality is notably low in Norway, which has a Gini coefficient—a measure of income distribution within a population—of just 22.7 compared with 32.6 in the UK and 39.8 in the US, where inequality approaches that in many Latin American and African countries.3 But is this egalitarianism translatable to other settings? Can other nations longing for better public services learn from this? In the Scandinavian virtuous cycle of welfare, equality, happiness, and trusted governments and institutions, it is hard to distinguish cause from effect. The fact that Scandinavians expect, and get, high quality public services “free” or with small co-payments, and baulk at paying privately for health and education, is both cause and effect of social democracy. Any lessons are likely to be complex and cultural, and perhaps contestable. The most striking aspect of Scandinavian taxation is not its top rate, which for example in Norway at 38% is not exceptionally high, but the number of people who pay this rate. The income level at which people start paying the higher rate in Norway is just 1.5 times the national average income, compared with 8.5 times in …