Progressive Tax Rates Linked To National Happiness: Study

Detractors of Warren Buffett take note: The more a country taxes its richest citizens, the happier everyone in that country will be.

Such are the findings of a new study, led by University of Virginia psychologist Shigehiro Oishi, which compares 54 different countries and finds a correlation between progressive tax policies -- that is, higher tax rates for higher tax brackets -- and overall contentedness.

It may not be the case that a progressive tax system automatically leads to a happier population, however. The report emphasizes that what matters is what governments do with the tax dollars they collect.

"[A] key to a happy society is quality public and common goods," a draft of the report notes. "[E]ven if a society does not adopt a progressive tax, as long as it can afford good public transportation, education system, health care, and so forth, citizens are likely to be happy."

The study observed the highest rates of "life satisfaction" in Canada, New Zealand, the Netherlands and a number of Nordic countries, including Norway, Denmark, Finland and Sweden -- all nations that consistently rank high whenever countries are compared on the basis of happiness.

The study also noted that many of these nations tax their richest citizens at a much higher rate than their poorest. Several other nations displayed a correlation between progressive tax rates and happiness, including Israel, France and the U.K.

A number of organizations have ranked nations by happiness in recent years, and offered a raft of explanations for why certain countries seem more satisfied than others. An extensive Gallup study in 2010 concluded that while rich countries are generally happier, so are societies where interpersonal relationships tend to be strong.

In June, 24/7 Wall St. analyzed a quality-of-life survey performed by the Organization for Economic Co-operation and Development, and noted that natural resources, economic stability, a strong services sector and "a good balance of work and leisure time" are all correlated with national happiness.

In the study examining the link between happiness and progressive taxes, the U.S. ranked fairly high among nations for happiness, but has only a mildly progressive tax policy. Some two dozen countries have tax policies more progressive than the United States', including Belgium, Mexico, Germany, Pakistan, Vietnam, Japan and Morocco.

Comments

[David Balmer]

03:07 AM on 11/06/2011

If you are rich it really doesnt matter where you live, everything is fine. The question is this. If you are poor and living in poverty, where would you rather be? Believe me...being poor in Switzerland is much better than being poor in America, and that says it all. America doesnt think socially, they dont care about the poor, about the homeless about hunger on their own streets. Why? Because it means being SOCIAL and this is obviously something that America is allergic to. America could really be a much better place or country, but I just dont see it happening, especially with the anti social right trying to get it going in the wrong direction.

[David Balmer]

02:59 AM on 11/06/2011

Old, stable nations of northern Europe took five of the top 10 spots on our list. These include Finland, Sweden, the Netherlands, Norway, and Denmark. Switzerland is also on the list and has many characteristics in common with the Scandinavian countries.
Born and raised in America from the east coast to the west coast. Loved it, I admit that, but I did not know anything else. We Americans think we are the best, but honestly it is a bit "surface" really, like Las Vegas. All visual from a distance and then the closer you get, peeking around the shiny, glittering wall, you see unhappy workers etc. After moving to Switzerland 22 years ago out of love, I never went back to California. When I saw how people are treated at work, with protection and respect. When I see how the taxes are put to use, I become more of a SOCIAL fan. Switzerland is not some social state, they are in fact very capitalistic, and good at making products for profit. But the mix of socialism is just right, if you ask me. I go back home for vacation and see how the streets are and my OLD HOME really loses in comparison. So happy my 6 kids were born here and going through this system.

[sy49ers]

10:50 PM on 09/19/2011

We have a progressive tax system. I cannot think of one 1st world nation that does not. Based on the fact that most of the nations with the most satisfaction reside in the extreme northern parts of the northern hemisphere, one could make a statement that the cooler the temperature, the more likely people are satisfied. However, my guess would be that since all of these nations have less participation or influence on foreign policy in an ever-changing world, but reap the benefits of the U.S. hegemony, they live far more care-free lives.

[Genders]

11:02 PM on 09/17/2011

Tax the Rich: 50% above 1M$ 90% above 1B$ interpolated. ten year income averaging. tax capital gains as regular income, add inflation to basis. Remove the income cap on SS, add an income bottom.

Tax corporations same as people, that's what they get for claim they are persons.

Of course progressive taxation works. The USA became the greatest economy in history with progressive high taxes on income and it took only 30 years of Reaganomics tax cutting to crash the economy.

Yes rich peoples houses cost more to protect, as do their bank accounts, business, etcs..

Concentration of wealth into too few hands destroys the republic, and results in plutocracy.

"When economic power became concentrat­­ed in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." John Adams

"As riches increase and accumulate in few hands . . . the tendency of things will be to depart from the republican standard." Alexander Hamilton

"I hope we shall . . . crush in [its] birth the aristocrac­­y of our monied corporatio­­ns." Thomas Jefferson

Pay your due to the republic that made every second of your life possible and enabled your wealth, or leave.

[LoyalBob]

11:21 AM on 09/12/2011

Maybe if everyone pays their fair share and we put some of the dollars wasted on the US war machine vis-a-vis policing the world we can actually improve our own infrastructure.

[wsdave]

12:32 PM on 09/10/2011

"It may not be the case that a progressive tax system automatically leads to a happier population, however. The report emphasizes that what matters is what governments do with the tax dollars they collect."

It's not whether your tax package is big or small, it's what you DO with it that matters.

[hazyafternoonsunshine]

03:48 AM on 09/10/2011

We don't get to actually be happy, we just get to pursue it.

[loki]

01:45 AM on 09/10/2011

Here the rich are on a higher tax level than many, the difference is, the many have to pay their taxes while the rich have loopholes and shelters not available to the rest of the populous, and thus end up paying next to nothing, or less, in taxes. But they will be the first to whine about how they are taxed at a higher rate. They just neglect to say they never pay it.
and when a poor person buys things, they dont get the benefit of writing it off as a business expense or charging it to the share holders and company. So the poor end up paying more in sales taxes too. Buy a car, pay the tax. Rich buy a car they have it as a corporate car and someone else pays the tax, if there is even a tax paid on it. They hide and lie about everything just to avoid paying taxes, and increase their own personal wealth, all the while complaining that they have such a tax burden they cant hire people. Which they wouldn't hire if they were in a tax rate that matched what they actually pay in taxes, nearly 0.

[Pat Bateman2000]

01:31 AM on 09/10/2011

People over here in the US would rather be poor and miserable and call their tax rates Socialism because they genuinely get back what they give in taxes. I'm not sure what is wrong with that exactly. Someone needs to explain it to me.

[wsdave]

11:21 PM on 09/09/2011

"It may not be the case that a progressive tax system automatically leads to a happier population, however. The report emphasizes that what matters is what governments do with the tax dollars they collect."

These are the only two sentences in the whole article that matter.

[abbadabba]

07:20 PM on 09/09/2011

Honk if you hate hate.

[grammasher]

07:55 AM on 09/10/2011

That's it, isn't it? We have a media industry that spends the bulk of their time pitting us against each other. Ratings, I guess.

[brux]

07:12 PM on 09/09/2011

Duh !

[emak]

06:22 PM on 09/09/2011

Love these articles

Buffet, new champion of the left, please point me to all the OpEd pieces on paying a bigger share in the early 80s when Reagan slashed the rates and Buffet was actually amassing his fortune

'Several other nations displayed a correlation between progressive tax rates and happiness, including Israel, France and the U.K'

Was this before or after the riots a few summers back in Paris and we can't forget the peaceful protests in London just a few weeks back.

As far as those 'happy' countries, it is probably true, but it is not just the 'rich' that are paying. EVERYONE pays.

Here is a look at the tax range across income, notice top income brackets start UNDER 100K and really anyone that makes over 40K is paying a hefty amount.

New Zealand
21% ($32k+) - 39% ($68K+ TOP RATE)
Finland
34% ($46K+) - 51% ($85k+ TOP RATE)
Sweden
54% ($56K+) - 61% ($87k+ TOP RATE)

Not sure how you measure happiness, but if you want to tie it to tax rates at least paint a realistic picture, rather than some 'progressive' system that has 90% paying 20-25% rates and 10% paying 75%, that never existed anywhere. It is more that either citizens of ALL income levels pay high taxes or they don't

[Mile End]

06:58 PM on 09/09/2011

You do realize that you're just reinforcing the correlation made by this article in the first place.

I'd just like to point out that Republicans so often harken back to the '50s and '60s, the good old days. The highest marginal income tax rate at that time was 90%, and it did not - in the least - prevent people from building businesses and becoming very successful. If Republicans are to be believed, Americans were even happier then. So which side of this premise do they want to come down on? They can't have it all ways.

[emak]

01:48 PM on 09/12/2011

Not necessarily disputing the correlation, I am disputing the 'liberal' sell job that we will magically get all those government services that the Nordic countries and other EU member states have while keeping 98% of people tax bill static and tweaking the top 2%.

As for that age old 90% bracket that had zero impact on overall tax revenue as a ration to GDP because very few were ever paying that rate. Hence the Alternative Minimum Tax law to force the top families in the US to pay at least some federal income tax.

It is not about just the printed rate, because our code is like swiss cheese and anyone can get around paying. It is whether the US as a whole believes in paying more to get more or relying on the individual.

We have not made a choice either way and trying as a whole to get more without paying more.

[Canuckphd]

10:43 PM on 09/09/2011

Sorry, but I disagree. Here are Canada's federal marginal tax rates:
$0 – $10,527, 0%; $10,528 - $41,544, 15%; $41,544 - $83,088, 22%; $83,088 - $128,800, 26%; over $128,800, 29%. As you can see, the "very poor" (below $10,528) pay no federal taxes, so not everyone pays. Additionally, lower income Canadians receive direct cash tax credits for regressive flat taxes that they pay; e.g., federal and provincial sales taxes.

[emak]

01:44 PM on 09/12/2011

Yes and in the US with our write-offs people under $47K pay no federal taxes.

This is not a dispute with the very poor vs everyone else, this is an argument that I don't see Canada having special $1M+ brackets or Sweden imposing 'millionaire and billionaire' tax. See here in the US we are trying to raise tax revenue to GDP except have no one pay except a few % and that will never work.

It is a mindset, either you believe the government can provide more beneficial services and everyone buys into that or you don't

[Adam Dray]

03:26 PM on 09/09/2011

Whoever wrote this article is beyond full of crap...YAY higher taxes!!...NOT...what are you STONED?????

[onionboy]

06:25 PM on 09/09/2011

Facts and research are too difficult for you to understand?

You don't agree so you want to pretend it's not true?

[Dosadi]

06:45 PM on 09/09/2011

A stupid man's report of what a clever man says is never accurate because he unconsciously translates what he hears into something he can understand.

-- Bertrand Russell

[Bianca Patzelt]

07:29 AM on 09/10/2011

LOL!

[ReDaRa]

03:41 PM on 10/07/2011

F&F. Lol.

[tshnh]

03:25 PM on 09/09/2011

so let me see if I get this right, people are happier when the government takes from those who work hard and gives it to those who don't, I get it but why should I pay your way, get a freakein job or better yet get the government out of my back pocket and I will give you a job

[Sara Vandermolen]

03:44 PM on 09/09/2011

You seem to imply that the poor are also unemployed. This is often not the case. Yes, some unemployed just live off the coattails of others, but many, many more are struggling very hard to get or keep jobs. Have you ever heard of the working poor? These are people who work 16-18 hour days at multiple jobs just to keep their families fed. They can't get better jobs because they can't afford further education or training, and there wouldn't be time to attend classes even if they could afford them.

By the way, how many mulch-millionaires can afford extra percentage points off of their incomes?

I don't know whether it is right or moral to take from the wealthy who have (presumably) earned their wealth. I also don't know if it is right or moral to let people starve when many are working harder, longer hours than the rich people. I DO know that it is not as simple as you make it out to be.

[seanny53]

05:06 PM on 09/09/2011

A right winger discards any study that doesn't agree with his own opinion.