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Is taxation actually higher in the Nordic countries for entrepreneurs? If you bootstrap yourself to $100k as a 1-man company in the Valley, the taxes come out
by mjn 13y ago
Is taxation actually higher in the Nordic countries for entrepreneurs?
If you bootstrap yourself to $100k as a 1-man company in the Valley, the taxes come out to something like:
$7,000 CA income tax
$14,000 self-employment payroll tax
$16,000 federal tax (after deducting eligible portions of the above two)
-------
$37,000 (37%)
In Copenhagen, it would come out to [1]:
$8,000 labor-market contribution (AM-bidrag)
$24,000 municipal tax (kommune + healthcare tax)
$7,000 national tax (grundskat+topskat)
-------
$39,000 (39%)
The tax is 2% higher, but the Danish version of the healthcare tax buys you healthcare coverage starting now, while the American one only buys you Medicare in the future. So I think you actually come out ahead in the Danish system.
[1] http://www.tax.dk/beregn/skat13.htm http://www.tax.dk/beregn/skat13.htm
- cperciva 13y agoInterestingly, in British Columbia a self-employed individual earning $100,000 with no deductions pays: $6,721 BC income tax $4,712 CPP (government pension plan payroll tax) $16,844 federal income tax ------- $28,278 (28%) Sounds like Canada is the low-tax paradise so many US entrepreneurs claim to be looking for.
- deleted 13y ago[deleted]
- jdminhbg 13y agoYou are missing 25% VAT in Denmark, vs 7.5%-10% sales tax in California.
- mjn 13y agoTrue, although a VAT is complex in its effects. Since it's applied throughout the supply chain on added value, not only at the point of sale, it acts partly as a sales tax, partly as a corporate tax, and in some cases as an excise tax. It may push up final prices to consumers, but it may also push down wages, or push down corporate profits, or have effects anywhere else through the supply chain, depending on each party's pricing power at various stages. How it impacts an individual also depends on how they spend their money. I spend a large proportion of my money on rent, airfare, and foreign trips, none of which incur Danish VAT, so it hits relatively little of my spending.