It appears that the Scandinavian system is worth it. The question, however, remains: How do we pay for it? That answer can be split two ways—taxation and wealth creation.

Taxation

In 2015, Kyle Pomerleau wrote an article about the Scandinavian tax system. He noted that, for one, income taxes in Scandinavia are not higher and also are rather flat, meaning that it is not merely “the 1%” funding these efforts. Everyone chips in—and maybe that is easier to do when the countries have lower rates of poverty and more social mobility. Overall, these countries raise quite a bit more of their GDP—at least 19% and as high as 26%—in taxes, while the United States only rakes in 15%.

These countries also use a hefty “value-added tax system,” where goods are taxed at each level of production, not merely upon sale. A VAT system is not used much in the United States and is actually considered a regressive form of taxation. Interestingly, corporate tax rates are actually lower in Scandinavia, and perhaps this is a good way not to discourage investments. Also, oddly, estate taxes there are minuscule.

Overall, we see that the way that Scandinavians tax themselves is not quite as focused on the hyper-rich as Sen. Sanders’ proposals are. Does this mean that the United States should not only raise its taxes but make them flatter?

The United States certainly possesses the wealth to…pay for these programs.

In the short-term, it’s probably not that simple. Given that more inequality exists in the United States (which is to say that income distribution is less flat), a flatter income tax system would not align well. When added to a VAT system, which taxes commerce more heavily, a direct leap would probably have a rough start. A focus on narrowing the gap of income inequality through progressive taxation might be more effective at first. Additionally, a large portion of taxation for health care in these countries comes from city governments. The United States might be too large for that level of local control over the process to be effective.

Nevertheless, the main takeaway is that Scandinavians acquire the funds for these programs through a more rigorous system of taxation. This means that, if the United States were to mimic these nations, the government would have to demand more money from its people in a broad sense. The United States certainly possesses the wealth to do that, and in that sense, we can definitely pay for these programs. What is important, however, is determining the trade-offs in such a move.

Wealth creation

The main justification for any public program is that it meet a collective demand, often through the creation of new wealth. This comes by either adding something to the economy or reducing loss, and we have reason to believe that a bit of both occur.

In health care, for example, new wealth emerges from increased productivity of workers. A study showed that improving the health of employees over the course of a year increased productivity by £3.73 (about $4.81) for every £1 spent (about $1.29). If we map that effect onto an entire nation, the gains at high volume can become enormous, and that just focuses on per-day productivity. Healthier people can also work for longer periods of their lives, which heightens the potential for new wealth.

Infrastructure creates new wealth in two ways. In the short-term, the thousands of people put to work to develop the new roads, bridges, and subways receive pay from the government, which creates more liquidity in the economy and spurs commerce. When the construction is done, infrastructure either reduces the costs of commercial transportation or creates new opportunities for commerce altogether. A report in 1996, reflecting the benefits of the U.S. Interstate Highway System, determined that $6 in economic output were gained for every $1 committed to the highway. Research on urban rail systems, meanwhile, indicates that every 10¢ per capita spent on transit leads to about a $45 million increase in wages for a metropolitan area.

About $500 billion would be saved if health care were streamlined under a public system. This would be enough to cover the 30 million uninsured Americans.

The same is true of education. Data show that failing to complete high school results in lower earnings at the aggregate, meaning less revenue to be taxed. A joint report by the Education Department and Treasury Department in 2012 indicated that college degrees (and higher degrees) led to higher incomes for their holders. This is because many of the high-demand occupations, such as in STEM fields, require advanced education. Beyond that, more educated citizens can innovate better for their national economy and give a country an entrepreneurial advantage.

There are savings that occur from public programs. Public transit, for one, saves about $11 billion on gasoline per year. Households that use public transportation average about $8,000 in annual savings as well. When we focus on health care, several administrative costs disappear under a single public system. About $500 billion would be saved if health care were streamlined under a public system. This would be enough to cover the 30 million uninsured Americans. Moreover, with more coverage, the focus could shift to preventive care, which creates savings across the board.

The average person in the United States spends about $10,200 per year on health care. Danes only spend about $6,300 per year, and Finns spend just only just over $4,000. As percentages of GDP, these account for 17%, 10%, and 9%, respectively. As such, we can see that higher taxes do not necessarily lead to higher costs, especially if they have the benefit of eliminating private waste, while also covering everyone. If we combine taxation and health care costs as a percentage of GDP, that accounts for at least 28% in America. If we add infrastructure and the costs of higher education, that number gets closer to 29%. If you recall, the highest number for tax revenues in Scandinavian countries was about 26% and 19% at the lowest.