Tag Archives: national debt

Iceland; Socialism works!

By Leon J Williams

Since the economic crisis Iceland has been on the verge of bankruptcy, it’s banking sector collapsed followed by huge international anger at the government allowing their banks to fail, rather than as with the US and UK which bailed out those banks with taxpayers money.

So since these times how have the three countries fared?

I have taken a little look at unemployment, national debt and tax rates for Iceland, the US and the UK from 2010-2012.

Unemployment
……….Iceland   USA      UK
Peak     9.4%      9.4%     8.1%
Now      5.4%      7.75%   7.8%

Debt (as % of GDP)
……….Iceland   USA       UK
2010     123.8     94.2      82.2
2011      99.1      102.9     82.4
2012      97.3      106.5     88.4

Tax Rates (up to)
…………… Iceland    USA      UK
Income tax      46.24%     15.3%    50%
Corporate tax   20%        39%      24%
VAT             25.5%      0%       17.5%

Movement
……….Tax   Debt   Unemployment
Iceland   ↗       ↘          ↘
USA       ↘       ↗          ↘
UK        ↘       ↗          ↘

Iceland’s unemployment rate has fallen by 4% the most during this period and is the only country of the three whose overall tax has increased and is the only country whose national debt has fallen.

Some will say this is clear that the policy of socialism of increasing taxes for everyone (not just the poor) works and in a sustainable way.

Often the specific type of socialism is referred to as ‘Nordic Socialism’.

Whether or not this is a form of socialism or not it should help put to bed the myth that the right-wing churn out that you must lower taxes so that businesses will employ people which will in turn reduce government debt as less people depend on the state.