In answer to some questions about what Danish income tax rates actually are, Jacob Braestrup of the Confederation of Danish Industries offers this explanation:
The Danish top income tax bracket of 15 percent is what takes the top marginal tax to a total of 63 percent (from 49 percent – I know the difference is only 14 percentage points, but this is due to some complicated prior deductions in the tax base).
The top marginal tax kicks in (2007) at annual incomes of DKK 355,700 (USD 70,400), which is a pretty low thresshold internationally. As a result, close to half the full-time employed (and more than 20 percent of all taxpayers) pay the top tax.
Even so, the revenue generated is meagre – just over 2 percent of total tax revenue. This is so, mainly because a marginal tax rate of 63 percent discourages work in favour of leisure (highly educated Danes have one of the shortest average working weeks in the world – and the fourth lowest in the EU: some 32 hours/week)! And of course because it drives talented Danes abroad.
This last point adresses your blog-response where you refer to the expensive Danish welfare state. Without getting into a more detailed argument about this, I just want to point out that the very high marginal taxes are NOT what finances the Danish public sector.
Lastly, with regards to the survey of expats, I should mention that we also asked what keep the expats from returning. Again “high Danish taxes” were the third most cited reason among the 38 percent not expecting to return to Denmark (27 percent were expecting to return; the remaining 35 percent were unsure). 67 percent of the non-returners said high taxes contributed to some or a high degree to the decision. This was beaten only by “Culture and/or physical possibilities (e.g. climate)” [that Danish weather again ;o)] and “Family-related reason (e.g. family has settled abroad)” – at 77 and 80 percent respectively.
Then came “better career opportunities abroad” (63 percent) and “spouse works / would like to work abroad” (62 percent) – and finally at 60 percent: “Denmark does not allow dual citizenship” – a thing the Danish government might actually be able to do something about (like the high taxes).