People who live in countries with higher taxes enjoy lower rates of poverty, have more equal income distribution, more economic security for workers and can expect to live longer, suggests a new study from a left-leaning think tank.

Written by two Toronto tax law professors for the Canadian Centre for Policy Alternatives, the report, released Wednesday, is blunt.

"Tax cuts are disastrous for the well-being of a nation's citizens," say authors Neil Brooks and Thaddeus Hwong.

The study compares four high-tax Nordic countries (Sweden, Norway, Denmark, and Finland) with six low-tax Anglo-American countries (the U.K., U.S., Canada, Ireland, Australia and New Zealand).

The four Nordic countries scored better than the lower-taxed countries on most of the 50 indicators measured in the report, including:

  • Rate of poverty, equality of income distribution, and economic security for workers.
  • GDP per capita.
  • Rate of household saving and net national saving.
  • Innovation, including percentage of GDP spent on research and development.
  • Growth competitiveness as ranked by the World Economic Forum.
  • Rates of secondary school and university completion.
  • Rate of drug use.
  • Leisure time.

The more lowly taxed countries came out on top in seven of the 50 indicators, including their sense of freedom, their suicide rates and the number of people reporting they are very happy.

Canada below OECD average

Of the high-income OECD countries studied between 1990-2002, Japan and the U.S. had the lowest tax rates, at 26.8 per cent and 28.0 per cent of GDP respectively.

Canada was ranked in the low-to-intermediate level at 35.7 per cent, close to the levels recorded in the U.K., New Zealand and Spain.

Countries with higher tax revenues included Norway (41.9 per cent), France (43.4 per cent) and Finland (46.2 per cent). Sweden topped the list at 50.5 per cent.

Report compares Finland, U.S.

The report also compares social and economic conditions in Finland with those of the United States, which has one of the lowest tax rates of industrialized countries.

The U.S. has a greater percentage of people living in poverty, lower incomes for the elderly and the disabled, less economic security for workers, fewer women in professions and senior civil service and "shockingly" unequal income distribution, says the report.

In the U.S., 17 per cent of individuals live below 50 per cent of the country's median income; in Finland, that number is 6.4 per cent.

Finland, by contrast, reports a lower percentage of people living below the poverty line, more equal income distribution between the elderly and disabled and the rest of the population, high economic security for workers and more women in senior civil and legislative positions.

Americans also have one of the lowest life expectancies among industrialized countries, two years behind Finland and three behind Canada.

"The United States spends over twice as much of its GDP on health care than Finland (15 per cent versus 7.4 per cent), and yet U.S. health care outcomes remain far worse — indeed, worse than most other industrialized countries," it says.

Workers in the Anglo-American countries also spend more time on the job, clocking on average 1,824 hours per year. This is 274 hours more than the Nordic average.

Canadians spend 1,736 hours on the job every year.

"By cutting taxes, the Conservative government is taking Canada in the wrong direction," says Brooks. "It wants to make Canada more like the United States, yet our findings show that Americans bear severe social costs for living in one of the lowest taxed countries in the world."

Best known for its annual alternative budget, the Canadian Centre for Policy Alternatives has issued news releases in support of the Kyoto Protocol, and against the softwood lumber agreement and NAFTA.