Socialism is getting popular in the US. Socialism is viewed positively by 36% of Americans, especially young folks, according to Gallup. Many ISU graduates are excited about the prospects of an emerging socialist government in the US. Let’s look at what a Northern European model of socialism would mean for our graduates starting a family and trying to get ahead…
In the US, a couple with two kids earning $50,000 will pay almost no income taxes. Because they will qualify for the federal standard deduction and child tax credits, most will, in fact, receive $3000 in refunds, rather than pay taxes. Payroll taxes may amount to 7 or 8% but lower-income workers will actually receive more in benefits than deducted from their payroll taxes.
In Denmark, it may come as a surprise to our budding young socialist that their $50,000 (equivalent PPP) salary would be heavily taxed. They would lose 30 – 33% of their income to taxes and labor contributions, right off the top. That $50,000 equivalent salary would be immediately slashed to less than $35,000 after paying $15,000 or more in income and related taxes. Imagine saving $150,000 over ten years for your children’s future rather than having the government take it!
But wait! Our budding young socialist might cry. In Denmark, childcare is paid for, so that means the young Danish family come out ahead! But hold on Kemo Sabe. In Denmark, parents would expect to pay $750-$1000 per month out of pocket for two kids in child care. In Ames, they may expect to pay $1500 to $2000 for the same two kids.
So isnt that almost a wash? Isn’t the socialist government just taxing with one hand and giving back with the other? Not quite. In the US, a couple can decide that one spouse may want to stay home and care for the kids his or herself. And if so, that $2000 per month goes in their pocket, or savings for a house or new car, or their child’s future. The mom may decide to work part-time, or from home, which means $24,000 goes in their pocket. In Denmark, that decision is not even a consideration because the family would STILL PAY 35% of their income in taxes.
So it is important to keep in mind that you may want to be careful what you wish for. In a socialist model, not only is your hard-earned income being taxed away, but your personal freedoms are as well.
- Joe Monahan
Boone
