New Tax Reform: The Government fails to lower the marignal tax from 63 %. However, new taxes are issued on everything from computers to gummi bears.
The reform shuffles some taxes around, but fails to address the two main problems: The general level of taxation and the high marginal taxes. The American economic policy seems quite foolish at the moment, but the Danish has for years appeared completely self-destructive. It simply makes no sense to tax the citizens this hard no matter how much you are pro or against government spending.
Update: I see now that the middle marginal tax in fact has been removed, so the highest tax is now 56 %. However, all gains are counter-moved with new taxes. Additionally there are wild protests against the reform – as it creates ‘inequality’ – and the opposition vows to roll back the reform when they come to power. Which is probably very soon.
Bottom line: When it comes to taxes, politics in Denmark basically treats citizens like cattle they can boss around any way they want to. Not a nice thing to do.
“However, all gains are counter-moved with new taxes”
Well, theoretically this is true. However, there’s no doubt that in the short run, the reform is not fully financed. One of the reform’s main financial components, the reduced mortgage deduction rate, which makes up about a third of the total amount (9 billion), will not be implemented until 2012. As you say yourself, it is unlikely that the opposition parties will not roll back the reform if they come to power, and it is not at all unlikely that they’ll win the next election. If this happens, the end result will most likely be that the reform was never even close to being fully financed.