Denmark Center-Right Coalition's Plan to Cut Taxes Spiked After Election Swing to the Left | Financial Buzz

Denmark Center-Right Coalition’s Plan to Cut Taxes Spiked After Election Swing to the Left

Denmark is known for many lovely things. Butter cookies. The birthplace of Lego. Castles. Bicycles. And of course, a general sense of optimism and satisfaction that routinely places it at or near the top of the annual World Happiness Index survey. But there’s another side to the quirky Scandinavian country. It has the second highest tax burden in the OECD, trailing only France and ahead of everyone else.

For a little while, it looked as though the tax dial was going to turn down a notch or two, courtesy of one Lars Seier Christensen, a Danish multi-millionaire and unabashed Donald Trump fan who campaigned on a platform that promised economic growth if the employed and wealthy could only be unfettered from their heavy taxation shackles. Think of it like a kind of “affordable party bus rental for all” policy. However, on June 5 Danish voters gave the center-right coalition that included Christensen’s Liberal Alliance Party an electoral thumbs down, and instead threw their support behind several left-learning parties — which basically killed the dream of Making Denmark Great Again (at least through trickle down economics). 

Some Danish political pundits believe that the country’s shift to the left was less about trying to manipulate behavior at the top of the economic pyramid, and more about protecting vulnerability at the bottom. Denmark has surprisingly pro-employer labor laws that allow companies to hire and fire virtually at-will. However, the fundamental reason the citizenry tolerates this workplace unpredictability, is because the country has generous and accessible welfare programs for those who require a safety net. Naturally, these programs are funded by taxes, and the prevailing view is that if the wealthy stopped paying into the system, folks who need help would be left to fend for themselves.

Another reason why Danes might have been less inclined to heed Christensen’s message, is because unlike the vibe in Hamlet’s day, at the moment nothing is rotten in the state of Denmark — at least not economically. On the contrary, the country has experienced several consecutive years of modest economic growth. Generally, the Danes are more open to tax cuts when times are bad, and more open to increased social spending when times are good — a sentiment that Christensen calls “impossible and irrational behavior” (which probably isn’t going to sit too well with some FC Copenhagen fans, since Christensen owns a piece of the top soccer club).

Ultimately, time will tell whether Danes decide to give trickle down economics a whirl and, hope that the invisible hand of the economy doesn’t end up touching the economic ball in the penalty area. For now, however, it looks as though the Danes are content to spread the wealth as they pop butter cookies, relentlessly protect bats from harm, put sour pickles on hot dogs, and continue being impossibly and irrationally happy. Good times (or make that, gode tider).