The great Danish tax paradox

Measured by a classic economic yardstick, Denmark received a shocking message in September when the World Competitiveness Report 2009-2010 was published. The combined tax burden is now so high that, according to the World Economic Forum, the country is 129th out of 133 countries in the global measurement of the most competitive tax systems.

In theory, these high taxes ought to frighten businesses away to cheaper pastures. They ought to completely wreck a country’s competitiveness and undermine the population’s desire to work. Classically educated economists have every right to ask how a country can be competitive and stand out as one of the world’s richest societies, when its inhabitants pay on average almost 49 per cent of their income and the highest paid end up paying 72 per cent of their last earned kroner, when you take VAT and duties into account?