March 02, 2009

Weird Home Computer Tax in Danish "Reform"

After the American Century

With the world's highest taxes, Denmark periodically goes through the ritual of pretending to lower and simplify taxes. What always seems to result is a more complex tax code than before. I will not try to explain the new law, because after reading through it, I am not certain I understand it. That is why Denmark is a paradise for tax accountants, because you literally cannot figure out what the rules are yourself.

Rather than write about the whole complex package, I want to single out one remarkable new tax that has been added. (In any tax reduction plan in Denmark new taxes are always added). This one is for 5000 DK a year, almost $1000 for anyone who gets a computer or telephone from their employer. I hope I am misreading it, but it might mean that even if you have paid for your home computer, as I have (because the humanities faculties generally are broke), just using the Internet hookup would unleash the tax office on me. That's right, if I have a home office and check emails from home at night or on the weekend - that is, if I want to work a bit overtime, the punishment will be almost $1000 a year.

Now if the real purpose of the tax law was to get people to work less, this might make sense. But the stated purpose of the law is to encourage people to work more, to increase the work people are willing to do by lowering the tax rate. Denmark's baby boomers are marching into retirement soon, and the country cannot afford it unless people work for more years and more hours during those years.

This tax seems particularly stupid because it is aimed at anyone whose work involves communicating with Asia or North America (two rather large markets). Think about time zone differences. Send an email at noon from Denmark to Los Angeles (where it is midnight), and the reply will probably come after 21:00. Under the new law, if an employer wants someone to read and respond to that email, and gives them a computer to do it with, the cost will suddenly be $1000. As I read the law, just one message a year would do it. Nothing seems to be in the law about modulating the tax to take account of whether you have the home computer 24/7, only sometimes on the weekends, or just during a busy month. Apparently, it is all or nothing.

What will people do? They will not accept a computer or phone from their employer any more. Instead, they will try to get by with an older machine, typically with older software, that they have at home. Instead of using the same institutional network both day and night, they will sign up for a separate system that costs less than 5000 DK a year. Corporate security will no doubt be compromised. Messages needed at work will occasionally be inaccessibly at home.

This "reform" will make Denmark less efficient. It may well retard the spread and use of the Internet. It will encourage people not to work at night or on weekends. It will hurt the efficiency of international contacts and likely hurt exports. It can easily compromise corporate IT security, as employees use home systems to avoid the extra tax. It could easily make the university a bit less efficient. This is another example of an inane Danish "reform" that was worked out in a private room between a couple of political parties without the benefit of public discussion.

I get hundreds of emails from students in the off hours, and I guess this means I should not answer any of them until I get to the office, no matter how important, such as the one I got an hour ago asking urgently for a letter of recommendation. Thank goodness in the future I will not read such messages until it is too late. Less work for me to do, and no job at all for the student!

The marvel is that Denmark on the whole is such a great place, despite its tax system.