A recent Wall Street Journal editorial got me thinking again about the link, or lack thereof, between taxes and happiness (or lack thereof).

The Journal picked up on a rather abstruse piece of research which showed that the subjective measures of happiness so beloved by behavioral scientists (as featured in questions like “How happy do you feel on a scale of 1 to 4?”) are not just vague hogwash, but do actually correlate with objective measures of quality of life, such as environmental conditions, quality of schools, and crime rates.

But what caught the eye of Journal editor Allysia Finley wasn’t the study’s Earth-shattering conclusion that when people say they’re happy, it’s probably because they are actually happy. It was a ranking of states by happiness. Finley stood that list side-by-side with a 2008 Tax Foundation ranking by tax burden, and guess what? “Three of the top five unhappiest states — New York, Connecticut, and New Jersey — have the highest state-local tax burdens. On the other hand, four of the top five happiest states — Louisiana, Florida, Tennessee, and Arizona — are among the states with the lowest state-local tax burdens.”

(I’m not aware that anyone has studied the happiness levels of entrepreneurs and business leaders, but I’d add here that long-suffering New York and New Jersey have notoriously unfriendly business tax regimes, ranking among the worst in the nation in a more recent Tax Foundation study — see my blog here.)

Finley goes further, adding a political dimension. It seems that if you’re selfish enough to vote Democrat, you could be putting your state’s happiness level in jeopardy. “Eight of the ten happiest states lean right, while eight of the ten unhappiest tilt left,” she notes.

I’d be more inclined to take this line of argument without my usual backhoe-sized pinch of salt if it weren’t for the fact that it contradicts the Denmark Syndrome.

Just about every time anyone tries to rank the happiness levels of various countries around the world, Denmark seems to come out on top. Or if it’s not Denmark, it’s Norway, or Finland, or some similar place with a climate that would make a Scotsman quail and a tax code to match.

Danes pay some of the highest taxes in the world — as much as 50 percent to 70 percent of their income — notes this ABC News report. Corporate income taxes account for 2.9 percent of GDP, versus 1.8 percent for the United States, according to U.S. Congressional Budget Office figures. But that didn’t stop Denmark from taking first place in an OECD study of well-being published in May (covered here by Forbes). Finland and the Netherlands came in second and third. (See also a World Values Survey by the U.S. National Science Foundation, reported here.)

Various theories have been proposed to explain the Danes’ relentless cheerfulness, ranging from low financial expectations to high social interaction to the beneficial effects of a diet rich in seafood (notably herring), but a mild tax regime is certainly not among the contenders.

No doubt people of different nations vary in their sensitivity to taxation and the degree to which they regard it as an infringement on their personal happiness. But until somebody comes up with a convincing explanation of the Denmark Syndrome, I’d have to say that the jury is still out on the tax/unhappiness connection. ###