COPENHAGEN, Denmark — As chief executive officer of the Happiness Research Institute, I talk to a handful of journalists every week from around the world. As Denmark consistently ranks among the happiest countries in the world, many of the journalists will look at me with disbelief and ask, “Danes pay some of the highest taxes in the world, so why are they so happy?”
Denmark has one of the highest tax rates in the world, which is often mentioned as one of the biggest objections against the Danish welfare model. The average annual income in Denmark is about 39,000 euros (nearly $43,000) and as such, the average Dane pays a total amount of 45 percent in income taxes. Danish income taxes are based on a progressive tax system, so if you make more than 61,500 euros (about $67,000) per year, an additional tax rate of 7 percent is added over this threshold.
Neverthless, a Gallup survey from 2014 showed that almost nine out of 10 Danish people happily pay their taxes to some or a high degree.
Investing in quality of life
The reason behind the high level of support for the welfare state in Denmark is the awareness of the fact that the welfare model turns our collective wealth into well-being. We are not paying taxes. We are investing in our society. We are purchasing quality of life.
The key to understanding the high levels of happiness in Denmark is the welfare model’s ability to reduce risks, uncertainties and anxieties among its citizens and prevent extreme unhappiness.
The Danish welfare model provides opportunities for its citizens to pursue their happiness from advanced starting positions disregarding economic, social, gendered or cultural backgrounds. Let me give you some examples.
Education is free and even at university level, there is no tuition fee. Meanwhile, every Danish student receives around $900 per month from the state. This means I won’t have to worry about how to finance my kid’s education. It will be their talents and dreams that shape the path of their careers, not the size of my wallet.
READ MORE OF THIS 2016 REPORT: Why Danes Happily Pay High Rates of Taxes | Best Countries | US News