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Rodney · 10-14-2004, 06:16 PM

Here's a better article on the subject, from the International Herald Tribune. Sounds like the Scandinavian countries have an interesting approach: they tax individuals up the wazoo, but they don't tax businesses and business income (or stocks) much. And they invest a lot in an educated workforce:

http://www.iht.com/articles/2004/10/...s/compete.html

Scandinavian economies thrive despite high taxes

By Elizabeth Becker The New York Times

Thursday, October 14, 2004
WASHINGTON Forget the stereotypes about Scandinavian socialism and how its high taxes and expensive public health care system are destroying private enterprise.
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It turns out nothing could be further from the truth.
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The Nordic countries have bested some of the world's hottest economies and dominate the top ranks of the list of most competitive economies in the world in a new ranking of the best places to do business.
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In the World Economic Forum's annual global competitiveness rankings released Wednesday, Finland retained its hold at the top of the world's economies, with Sweden, Denmark, Norway and Iceland winning the third, fifth, sixth and 10th spots respectively.
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In the World Bank's Doing Business Report, Norway, Sweden, Denmark and Finland were ranked in the top as well.
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Less surprising was that the United States was ranked No. 2 on both lists.
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So why are Denmark and Finland absent when talk turns to development success stories or good financial bets?
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"It's that old myth that social protection requires more business regulations and hurts business," said Caralee McLeish, a co-author of the World Bank survey. "In fact, we found that social protection is good for business, it takes the burden off of businesses for health care costs and ensures a well-trained and educated work force."
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The World Economic Forum came up with the same answer, although it was couched in economic terms.
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"The Nordic countries are characterized by excellent macroeconomic management over all," said Augusto Lopez-Claros, director of the global competitiveness program of the World Economic Forum. "They are all running budget surpluses, they have extremely low levels of corruption, with their firms operating in a legal environment in which there is widespread respect for contracts and the rule of law, and their private sectors are on the forefront of technological innovation."
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Strong, honest, transparent public institutions fits with the clichés about the Nordic countries. But one of the keys to the business success is their supposed Achilles' heel: taxes.
.
The governments' philosophy is to leave businesses alone, taxing them at some of the lowest levels in the world so they are competitive and efficient. They then levy the high taxes on personal incomes to pay for those social services that underwrite their labor force, according to Simeon Djankov, the co-author of the World Bank study.
.
"You have to look behind the numbers, ignore the Nordic reputation for tax burdens and you'll see they have established a system that does not distort production, that gives people an incentive to invest in businesses and in stocks because the taxes are so low," he said.
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Asian countries round out the ranks of success stories in the competitive line-up.
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Taiwan, Singapore and Japan were in the top 10, a particular jump for Japan which just three years ago was ranked 21st in the world. China dropped to 46 from 44 on the list.
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These Asian countries at the top of the list share some of the same attributes as the Nordic countries. They, too, place few obstacles for business enterprises and offer strong protection of property rights. They also place a high premium on education.
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Jukka Valtasaari, Finland's ambassador to Washington, said that his country's 140-year old emphasis on education, promising the same opportunity regardless of wealth or geography, underpins much of his country's success. It is a big reason why Finland has done so well in research and development, especially in telecommunications.
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"The ultimate economic statement we can make is to say we tap all of our talent," Valtasaari said.

10-14-2004, 06:16 PM	#12 (permalink)
Rodney Observant Ruminant Location: Rich Wannabe Hippie Town	Here's a better article on the subject, from the International Herald Tribune. Sounds like the Scandinavian countries have an interesting approach: they tax individuals up the wazoo, but they don't tax businesses and business income (or stocks) much. And they invest a lot in an educated workforce: http://www.iht.com/articles/2004/10/...s/compete.html Scandinavian economies thrive despite high taxes By Elizabeth Becker The New York Times Thursday, October 14, 2004 WASHINGTON Forget the stereotypes about Scandinavian socialism and how its high taxes and expensive public health care system are destroying private enterprise. . It turns out nothing could be further from the truth. . The Nordic countries have bested some of the world's hottest economies and dominate the top ranks of the list of most competitive economies in the world in a new ranking of the best places to do business. . In the World Economic Forum's annual global competitiveness rankings released Wednesday, Finland retained its hold at the top of the world's economies, with Sweden, Denmark, Norway and Iceland winning the third, fifth, sixth and 10th spots respectively. . In the World Bank's Doing Business Report, Norway, Sweden, Denmark and Finland were ranked in the top as well. . Less surprising was that the United States was ranked No. 2 on both lists. . So why are Denmark and Finland absent when talk turns to development success stories or good financial bets? . "It's that old myth that social protection requires more business regulations and hurts business," said Caralee McLeish, a co-author of the World Bank survey. "In fact, we found that social protection is good for business, it takes the burden off of businesses for health care costs and ensures a well-trained and educated work force." . The World Economic Forum came up with the same answer, although it was couched in economic terms. . "The Nordic countries are characterized by excellent macroeconomic management over all," said Augusto Lopez-Claros, director of the global competitiveness program of the World Economic Forum. "They are all running budget surpluses, they have extremely low levels of corruption, with their firms operating in a legal environment in which there is widespread respect for contracts and the rule of law, and their private sectors are on the forefront of technological innovation." . Strong, honest, transparent public institutions fits with the clichés about the Nordic countries. But one of the keys to the business success is their supposed Achilles' heel: taxes. . The governments' philosophy is to leave businesses alone, taxing them at some of the lowest levels in the world so they are competitive and efficient. They then levy the high taxes on personal incomes to pay for those social services that underwrite their labor force, according to Simeon Djankov, the co-author of the World Bank study. . "You have to look behind the numbers, ignore the Nordic reputation for tax burdens and you'll see they have established a system that does not distort production, that gives people an incentive to invest in businesses and in stocks because the taxes are so low," he said. . Asian countries round out the ranks of success stories in the competitive line-up. . Taiwan, Singapore and Japan were in the top 10, a particular jump for Japan which just three years ago was ranked 21st in the world. China dropped to 46 from 44 on the list. . These Asian countries at the top of the list share some of the same attributes as the Nordic countries. They, too, place few obstacles for business enterprises and offer strong protection of property rights. They also place a high premium on education. . Jukka Valtasaari, Finland's ambassador to Washington, said that his country's 140-year old emphasis on education, promising the same opportunity regardless of wealth or geography, underpins much of his country's success. It is a big reason why Finland has done so well in research and development, especially in telecommunications. . "The ultimate economic statement we can make is to say we tap all of our talent," Valtasaari said.