Publisher’s Note: The following was our editorial comment on November 5, 2015. With Sanders atop the national field of Democratic candidates for President, we thought the message remained relevant.
Bernie Sanders calls himself a “Democratic Socialist” and is happy to explain what he thinks that is.
Sanders: “If we go to some countries, what they will have is health care for all as a right. I believe in that. They will have paid family and medical leave. I believe in that. They will have a much stronger childcare system than we have, which is affordable for working families. I believe in that. What I mean by Democratic socialism is looking at countries in Scandinavia that have much lower rates of child poverty, that have a fairer tax system that guarantees basic necessities of life to working people… Essentially what I mean by that is creating a government that works for working families, rather than the kind of government we have today which is largely owned and controlled by wealthy individuals and large corporations.”
It’s a nice sounding populist message. After all, who wouldn’t want to live in a place where everything is free and everyone is healthy? Unfortunately, there’s no such thing as a free lunch. Somebody has to pay for free college, universal health care, family leave and government-funded child care.
Sanders often says he will make evil corporations and Wall Street fraudsters pick up the tab. And he repeatedly cites Denmark as the shining example of how it can be done.
So UVM economist Art Woolf offered some insights into the Danish system in a recent article published by the Burlington Free Press. He points out that wealthy Danes and wealthy Americans pay about the same amount in income taxes - approximately 50 percent.
But higher spending in Denmark overall “means high taxes not just for the rich, but for everyone,” Woolf explains. And that onus falls squarely on middle class shoulders.
Woolf’s tale of the tape: “Vermonters are concerned about our 7 percent sales tax and 9 percent meals and rooms tax. That’s a pittance compared to Danish consumption taxes. Danes pay a 25 percent value-added tax, which is similar to a sales tax, on everything.”
Similarly, a Danish car tax is “180 percent of the purchase price,” such that “a $25,000 Toyota Camry will cost you an extra $45,000 in taxes in Denmark.” Total cost in Vermont: $26,500. In Denmark: $70,000.
Fuel for your Camry will cost $6/gallon.
And how about Bernie Sanders’ war on corporations and Wall Street? Surely the Danes know how to stick it to their job creators, right?
Not so, Woolf shows. “Denmark has figured out how to finance a generous welfare state without unduly impacting its economic growth and economic competitiveness, as have other Scandinavian countries. And it’s not by taxing billionaires and corporations. There aren’t enough billionaires to get the revenues they need to finance their expenditures, and the owners of corporations are very sensitive to tax differentials. It’s not hard to move a business from Denmark to Sweden. Or the Netherlands, France, Spain, or Germany. The Danish corporate income tax rate, at 23.5 percent, is well below the United States’ level of 35 percent (not including what states add on) and it’s scheduled to go down to 22 percent next year.”
So Sanders, self-described champion of the working man, is proposing a system that lowers taxes on evil corporations, maintains tax levels for the very wealthy, and significantly raises taxes and cost of living for the lower and middle classes.
Is that what his rabid supporters mean by “Feel the Bern?”