Nordic countries facts

The following is from a report that is coming out soon.

In a report by JP Morgan, Michael Cembalest reviewed the Nordic country and found that Nordic country are hardly socialistic even though they do have a robust welfare state. Cembalest noted “On many measures, the Nordic approach to the private sector is even more business-friendly than the US.”  That includes business freedom, starting new businesses, property rights protection, and free trade. 

Cembalest added, “Another sign that Nordic countries are not following a democratic socialist model: Nordic “state control” is similar to US levels.  As part of its assessment of competitive forces, the OECD analyzes the extent of state control and government regulation.  One method shows that Nordic governments exercise even less state control over the economy than the US, while another shows that over time, government regulation affecting competition in critical network sectors in Nordic countries has converged to US levels.  Either way, it’s clear from this data that the state control principles of democratic socialism (i.e., replacing private ownership with collective ownership of the means of production) are very much at odds with the Nordic free-market model.”

On tax policies, corporate and income tax rates are not much different than the United States, especially if you combined many States income tax in the United States along with the Federal income tax rates.  Cembalest noted, “Note how corporate taxes contribute just 2%-3% of GDP in both the Nordics and the US, and how little Nordic countries rely on taxing capital gains of individuals, regardless of income levels.  Finally, some Nordic estate tax rates are actually zero, with an average of 11% compared to US estate tax rates of 40%” Nordic countries biggest taxes are through VAT’s and payroll taxes and much of this is hit the Middle Class. The Nordic country do spend more on social Welfare State, but their economy is dependent upon not killing the golden goose that support the system, the private sector. 

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