Please remember that I am going to put some observations here through the lens of a U.S. citizen. I will try to formulate my thoughts in a way that is inquisitive and appreciative of the societal differences and expectations but also my personal experience.
In America I hear a lot of complaints about taxes. Even young people I teach who don't really understand taxes. Due to the complication of the American government system taxes are hard to understand. In the economics classes I teach we talk about different types of taxes we pay, just a few are below.
Sales Tax
Payroll Taxes
Income Taxes
Real Estate Taxes
Excise Tax
Estate Tax
How much do we actually pay? Well that depends... Do you live in a state with State Income Tax? Is it a flat or progressive tax? Does your county have a tax? Does your state tax groceries and clothing? Do you own your home, because then you get a tax deduction on your taxes each year, but... you also pay real estate taxes. What I'm saying is taxes in America are complicated. It is also rare that I hear anyone say they appreciate what they get in exchange for paying their taxes.
In Finland the perspective is different. I have not heard one person complain about the taxes they pay... and they pay more than we do in the United States. In fact several people, from different professions have extolled the benefits of the system. We hear a lot about community responsibility for each other, parental leave, medical coverage, education and nature as benefits of this system. Finland has a Progressive Tax system, the more you earn the more you pay. This is also the case for other systems here, if you get a driving citation the cost is based on your income. Some taxes paid in Finland include the following:
Value Added Tax (VAT) Sales Tax (10-24% already embedded in cost of product, not added on at the point of purchase) 5th highest rate in EU.
Payroll Taxes
Inheritance Tax
Church Tax
Real Estate Tax
I wanted to see if I could create a valid comparison of taxes. This is not meant to be a scientific or all inclusive comparison by any means. I am looking specifically at the employees contributions, I am not going to compare the employers contributions. In both countries the employer contributes to Social Security and other taxes required. So here goes... I used a teachers paycheck from a U.S. School in Illinois with a gross income of roughly $55,000. In Finland based on today's exchange rate this would be €51,605. This is within range of a teachers salary in Finland. Now I want to break it down into the taxes paid.
Gross Salary | U.S. $55,000 | FI €51,605 |
Church Tax "Members of the Evangelical Lutheran Church of Finland pay church tax in conjunction with state and municipal income tax. Your church tax goes to your home town parish, whose tax rate determines how much you pay. The church tax rate varies between parishes, but generally between 1-2%." EVl.fi | X | -1135.00 |
Pension System Finland 7.15% Illinois 9%? Teachers in Illinois do not pay into Social Security they pay into the state pension system TRS. | -5522.00 | -3690.00 |
Federal Income Tax | -4840.00 | -3391.00 |
State 4.95% in Illinois Municipal 23.5% in Finland Income Tax | -2770.00 | -10588.00 |
Public Broadcasting Tax | X | -163.00 |
Unemployment Insurance | X | -774.00 |
Retirement Healthcare Funds THIS/Medicare | -1365.00 | X |
Health Insurance | -1800.00 | -790.00 |
Total Deductions | $-16,297.00 (29.63%) | €-20,530.00 (39.78%) |
Net Salary | $38,704.00 | €31,074.00 |
Finns get access to parks, libraries, emergency services, unemployment benefits, infrastructure maintenance and other services similar to those provided in the United States. So, what do they get in Finland for that nearly 40% of their salary that is different than and in addition to what we get in the United States?
Maternity Package (bedding, clothing for the season, baby care items, etc.)
Pregnancy Leave (30-40 days before due date) with a pregnancy allowance
Parental Leave (320 working days split between or all to one parent) with a parental allowance
Public education for free (no book or other education related costs)
Free School Lunch (some schools have this, some do not in the U.S.)
Childcare (cost is again progressive based on salary, the most a family would pay for daycare right now is less than $400 a month in Finland. Families with the lowest income pay nothing. For reference the average cost in the United States is around $1500 a month per child)
College/University/Vocational Education are free with a cost of living stipend
Universal Healthcare (specialized care may cost but there is a yearly cap of less than $700 per person per year for all medical expenses including hospital stays)
Organizations like Martha which offer classes and support free of charge to the community to enhance their quality of life
There is a partnership between the government the people and the land and it benefits each as they move forward. There is a lot of information about how Finns rank the highest in happiness around the globe and how connected to nature they are, but they also have a strong connection to each other. That's reflected in the quality and quantity of supports they have in place for their people. There is a deep understanding that the health of your neighbor impacts your health.
2023: I personally paid almost $20k in Federal Income Tax and $6k in State Income Tax
For me, I am grateful I can pay taxes. I understand the correlation between paying the numerous taxes I do and the benefits I receive as a result of those, including my experience through the Fulbright program. Do I like paying them, no, do I understand and value the services they provide to society? Yes. Would I be willing to pay more in taxes for my fellow Americans to have access to affordable healthcare, education and daycare? Yes. I am appreciative of the time to learn more about the culture and society of Finland. They have issues just like any other country, but they understand and value the health of their people and their land. I know my life experiences are intricately entwined with the lives of those around me. I am forever an advocate for a better life for everyone.
Sources:
The author of this website/blog/etc. is a participant of the Fulbright Distinguished Awards in Teaching Research Program (Fulbright DA), a program sponsored by the U.S. Department of State’s Bureau of Educational and Cultural Affairs (ECA) with funding provided by the U.S. Government and administered by IREX. The views and information presented are the participant's own and do not represent the U.S.
Comments