Millionaire’s Plan to Cut Danish Taxes Lies in Tatters
Millionaire’s Plan to Cut Danish Taxes Lies in Tatters
(Bloomberg) -- Lars Seier Christensen, a Danish multimillionaire who co-founded Saxo Bank and owns the nation’s best restaurant and a piece of its top football team, suffered a rare reversal in trying to shape his country’s politics.
The 56-year-old Swiss resident’s Liberal Alliance Party is committed to reducing the tax burden in Denmark, the second-highest (after France) in the OECD club of rich nations. That dream all but died June 5, when voters ejected the governing center-right coalition of which Christensen’s group was a part.
The swing to a government pledging more taxation, not less, adds fuel to the debate about democratic socialism versus unfettered capitalism, amid a populist wave that’s reshaped politics in the U.K. and the U.S. As income inequality grows even in Scandinavia, voters there are coming down on the side of the welfare state.
Christensen, a board member of the Ayn Rand Institute who has praised U.S. President Donald Trump for his “refreshing” approach, argues that Denmark’s high taxes prevent it from growing richer. Greater wealth among the employed, he says, would create a broader foundation from which to provide welfare to the needy.
“Denmark could easily achieve a level similar to the wealth of Switzerland or Singapore if we had the right economic policies,” Christensen said in an emailed response to questions. He said the election outcome was swayed by the reliance of so many people on what he called government handouts.
“As a result, most parties cater to the receivers rather than those who pay,” he said.
Liberal Alliance was a small but vocal member of the outgoing government, in which the party’s leader, Anders Samuelsen, was Denmark’s foreign minister. It lost more than two-thirds of its backing in the election, and Samuelsen didn’t get enough personal votes to make it back into parliament.
On Thursday, Liberal Alliance made headlines again in Danish media as recriminations broke out among members looking for someone to blame for the poor election result. The party is now being run by a 27-year-old who used to lead its youth branch.
Christensen says it’s “hard to see how a center-right coalition can be rebuilt any time soon” in Denmark. He’s not sure whether “Denmark is a lost cause just yet, but this election worries me a lot.” Christensen characterized the result as potentially “the most radical left-wing experiment in Denmark since the 1970s.”
While Christensen says his party suffered a near-death experience in the election, he argues it still has a future because of a platform of issues that extends beyond tax cuts, including promoting start-ups and a smaller role for government.
Denmark, once grouped with Venezuela in a Fox Business Network news item on the perils of socialism, has another statistic alongside its heady tax burden: One of the world’s happiest populations, in which families don’t need to worry about health-care bills or education costs. There’s also very little corruption, so most Danes are confident their taxes will be properly redistributed.
Karina Kosiara-Pedersen, a politics professor at the University of Copenhagen, says that “a substantial share of voters think that public spending cuts have gone too far." To protect the welfare model, Danes accept that "taxes are needed,” she said.
A cornerstone of Denmark’s economic success is its flexible labor market, in which employers can relatively easily hire and fire. But that only works if there’s a functioning welfare net to catch those between jobs, Kosiara-Pedersen said. As a result, Danish businesses generally also support welfare spending, funded through taxes, she said. And the free education system ensures the availability of skilled labor.
A healthy economy helps sway the argument. Peter Kurrild-Klitgaard, a professor at the University of Copenhagen, says Danes are more likely to push for public spending when times are good, and for lower taxes when they’re bad. Denmark has enjoyed at least nine years of modest but solid growth and almost uninterrupted declines in the jobless rate.
Christensen says he worries that Danes take prosperity for granted. He also says he might return to Denmark some day, “no matter how impossibly and irrationally my fellow Danes behave.”
To contact the reporters on this story: Nick Rigillo in Copenhagen at nrigillo@bloomberg.net;Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Paul Sillitoe
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