Naïve about leave

Since my maternity leave has officially started, I am indulging in some TV catch-up, and today that included watching the season finale of American Idol. I got a little confused as the line-up made me think I was stuck somewhere between the ages of 10 and 16 – every act conjured up childhood memories*.

This being the first day of my maternity leave, it has been spent milling about for the most part. In Norway, maternity leave starts 3 weeks prior to your expected due date. Parents have the choice of taking either 46 weeks at 100% of pre-leave salary or 56 weeks at 80% salary. You can read more about maternity leave benefits in Norway here.

Daddies aren’t left out either. As of July 1, 2009, men can take up to 10 weeks in paternal leave permission (this comes out of the 46 or 56 total week allotment).  Dad even gets an additional two paid weeks of omsorgspermisjon to help mom get back on her feet immediately after birth. Basically, fathers in Norway get more fully paid maternity leave than mothers in the US or UK. You can read a little more about paternity leave in Norway here.

Why is the leave allowance so long here in Norway and so comparatively short in other places? On the one hand, it would be super to say it is because of the value placed on the family unit in countries like Norway. Unfortunately, that would be both naïve and incorrect. Have a look at this map:

The maroon area represents countries with at least 18 weeks of paid maternity leave.

What do the majority of those countries have in common?

If you guessed that their politics were historically rooted in either socialist or communist** regimes, you’d be right.

But even more fundamental than this histo-political information is why it matters. In a nutshell, birth rates tend to decline over time in strong communist or socialist regimes. When birth rates decline, there are less people to pay tax into the communal pot that will then be returned to the population in the form of social benefits. Basically, if there aren’t any new taxpayers being born, the whole system will collapse.

So countries like Norway recognized this negative birth rate*** and had to come up with a plan to get people back in the bedroom to produce the next generation of taxpayers. Ask any Norwegian who has adult children and they will scoff at how long parental leave is now – it wasn’t always that way. Ask someone with older children and they, too, can remember their own leave even in the last decade not being as long as current mandates. But to get people to have more kids, the government provides extra incentives such as longer parental leave rates, subsidized barnehage (day care), child benefit payments, and extra financial support if you are a single parent.

Does this level of social benefit for procreation’s sake leave recipients with a sense of disproportionate entitlement when it comes to other benefits? Kanskje. But that’s for another post.  I have to go see who won American Idol.  Not to worry, though – I have 46 weeks to ponder this.
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* Shout out to Hall & Oates for representin’… they were my first concert and Daryl was my first crush – other than Johan from the Smurfs, but I guess he technically didn’t count since he was animated.
** Notice I said communist OR socialist . They are not the same thing, folks, despite silly propaganda that will try to convince you otherwise.
*** A negative birth rate means that more people are dying than are being born.

Give it up

The New York Times published an article last week about the ‘growing trend’ of Americans renouncing US citizenship. But in true sensationalist style, it was over-reporting on an underwhelming issue.

The article states that 743 expatriates renounced US citizenship last year. This would be remarkable if it didn’t comprise less than 0.01% of the 5.2 million Americans living abroad. Not one percent. Not even one-tenth of one percent. One-one hundredth of one percent. In fact, these 743 folks represent a mere 0.0002% of the total population of approximately 309 million American citizens. Based on those figures, I'm not sure I would call this spate of renunciations an epidemic.

I have to assume it was a slow news day.

What’s even more disappointing is that it wasn't just over-reporting - it was actually re-reporting. Virtually the same article was written by another NY Times journo back in 2006. Like, really… the same article. I would write my freshman level college students up for lack of originality had they pulled a stunt like this. I get that sometimes you have to recycle a story, but, come on… the same anonymous Swiss resident business executive and leader of a political interest group were the only two sources each NYT journo could find over a two and a half year stretch?

I’m all for a little hyperbolic reporting (heck, I get most of my news from Perez Hilton and the Daily Mail, so I don’t judge), but at least make it significant. And, for the love of Pete, make it original.

Death and taxes

Only two things are certain in life... there’s little we can do about the first but wait, but for the second… well, there’s little we can do there either.

A common complaint of expatriates living in Norway is the notion that income taxes are sky high. This is true, compared to say, Qatar, where there are no personal income taxes (PIT), or Paraguay, where PIT maxes out at 10%. But is Norway really much higher than other countries? Some nifty little wizards at KPMG have compiled a report addressing just that.

According to the 2009 Individual Income Tax and Social Security Rate Survey, Norway has a PIT rate* of 40%, the UK 40%, and the US 35%**. However, these are not the highest PIT rates. Denmark has a PIT rate of 62.3%, Sweden 56.7%***, Netherlands 52%, and Austria, Belgium, and Japan 50%. But that’s only part of the story.

When you consider a combination of the highest tax rates based both on personal income tax and social security tax, the highest-taxed locations might surprise you (well, it did me, but I am easily surprised). KPMG found that “When taking both the personal income tax rate and social security rates into account for employees earning 100,000USD, the countries with the highest rates were Slovenia (54.9 percent), Croatia (53.5 percent) and Hungary (48.1 percent).”

In fact, if you consider both PIT and social security tax, on 100,000USD of gross income, one would pay 32.9% in Norway and 25.3% in the US. While a difference of more than 7% might seem quite large, it is worth noting that I am getting a lot for that 7.6% differential in Norway. I am pretty sure that difference is worth inexpensive-to-free health care, subsidized-to-free childcare and schooling, and even a gratis university education from a public institution (how I wish I would have had this kind of benefit before Sallie Mae and I met).

There’s really nothing witty or clever to joke about regarding tax rates so I won’t bother trying (although please feel free to comment if you do have some humor to share about this). However, it’s good to know that I am not being gouged by the Norsk tax system quite as badly as I thought I was. Cheers, Norge!
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For some reason a discussion of taxes requires a lot of footnotes. Of course it does.
* Note that this is the highest tax rate in countries with graduated tax systems.
** This is the federal tax rate only and does not take into account state income taxes.
***The PIT rates for Denmark and Sweden include a social security component as this is rolled into the PIT rate. They get a lot of free stuff for their tax dollars so don't feel too sorry for them.