Americans generally talk about taxes as money that disappears.
You earn it. The government takes it. You have less.
That is certainly one way to look at taxes.
Denmark offers another.
Denmark is hardly a low-tax country. In 2024, taxes equaled 45.2% of GDP, the highest percentage among OECD countries.
Yet Denmark combines those taxes with universal healthcare, heavily subsidized childcare, tuition-free higher education for qualifying students, and financial support for many students while they attend school.
The interesting question isn't whether Americans would want Denmark's tax rates.
It is what Denmark gets in exchange for them.
Consider education.
Danish and qualifying European students generally do not pay tuition at public universities. Denmark also provides eligible students with grants toward their living expenses.
That isn't free, of course.
Taxpayers are paying for it.
But that distinction is important. A cost does not disappear simply because the government doesn't pay it. Americans pay college tuition, health insurance premiums, deductibles, childcare expenses and numerous other costs directly.
Denmark has chosen to pay for more of those expenses collectively.
That raises a question that gets lost when we compare tax rates:
What is the total cost to the household?
There is also an economic argument.
People with less wealth tend to spend a larger percentage of additional money they receive.
Federal Reserve research published in 2025 found that increases in wealth among the bottom 80% of households generated considerably more consumer spending per dollar than increases in wealth among the wealthiest 20%.
That matters because one person's spending is another person's revenue.
The restaurant needs customers.
The contractor needs homeowners willing to hire them.
The bicycle shop needs people who can afford bicycles.
Businesses ultimately need a broad population with enough money to purchase what businesses produce.
This does not mean high taxes automatically produce a strong economy.
They don't.
Taxes can be poorly designed. Governments can waste money. High taxes can discourage work and investment. Denmark itself continues to debate those tradeoffs.
Nor does Denmark prove that its system would work equally well in the United States. Denmark has fewer than six million people. The United States has more than 340 million, with a very different political structure, economy and population.
But Denmark does raise a question worth considering.
When Americans compare our tax burden with countries such as Denmark, are we comparing the entire transaction?
If one household pays higher taxes but receives healthcare, education and childcare through those taxes, while another household pays lower taxes and purchases more of those services separately, comparing their tax rates doesn't tell us which household ultimately spends more.
We need to know what each household paid — and what it received in return.
The Parting Glass
Perhaps the argument over taxes starts with the wrong number.
We tend to ask how much of our income the government takes.
Denmark suggests another question deserves equal attention:
What do we receive in return?
A lower tax bill is unquestionably a lower tax bill. But if it also means paying separately for healthcare, education, childcare or other services, comparing tax rates alone tells us surprisingly little about which system actually costs a household more.
I don't think the lesson from Denmark is that America should simply raise taxes.
The more interesting lesson is that taxes should be evaluated like any other expenditure.
What did we pay?
What did we receive?
And was it worth the price?
Perhaps the real measure of a tax system isn't who pays the least.
It is who gets the best value for what they pay.
#Taxes #Denmark #Economics #PublicPolicy