> The high cost is largely due to the very steep VAT (unlike the US, but like almost most everywhere else, the prices of goods in the shops include VAT) which is 25%.
Compared to the US, maybe to some extent. But Norway is also extremely expensive compared to most other European countries, many of which have VAT in the 20% (UK) or above range (Sweden, Denmark)
The other explanation is salaries: The median salary is extremely high, and the salary curves are very flat. The result is that most people have a very good living standard overall despite the price levels (in fact, recently in a poll, people on average reported to be paid about 100k/year more than they feel they need..), but salary contributes to driving up prices far more than it does most other places as that person at the tills serving you, or picking up litter on the street, actually earns a decent salary.
> in addition, the personal income tax has a high lowest-rate (which i believe is 28%, and a max rate of 50%).
That's quite misleading. This rate applies to taxable income. Taxable income is calculated by taking your gross income, subtracting the minimum deduction (currently ca. NOK 84,000 / $13,600) which is not taxed at all, and any other deductions, which includes all interest on debts including mortgages (which means you effectively get a 28% deduction on interests on your debts). (edit: and a long laundry list of other things)
Also the marginal top tax rate is only applied on amounts above a certain threshold, meaning your tax only starts getting close to the top tax rate if you're earning in the millions and have an inept tax planner.
Compared to the US, maybe to some extent. But Norway is also extremely expensive compared to most other European countries, many of which have VAT in the 20% (UK) or above range (Sweden, Denmark)
The other explanation is salaries: The median salary is extremely high, and the salary curves are very flat. The result is that most people have a very good living standard overall despite the price levels (in fact, recently in a poll, people on average reported to be paid about 100k/year more than they feel they need..), but salary contributes to driving up prices far more than it does most other places as that person at the tills serving you, or picking up litter on the street, actually earns a decent salary.
> in addition, the personal income tax has a high lowest-rate (which i believe is 28%, and a max rate of 50%).
That's quite misleading. This rate applies to taxable income. Taxable income is calculated by taking your gross income, subtracting the minimum deduction (currently ca. NOK 84,000 / $13,600) which is not taxed at all, and any other deductions, which includes all interest on debts including mortgages (which means you effectively get a 28% deduction on interests on your debts). (edit: and a long laundry list of other things)
Also the marginal top tax rate is only applied on amounts above a certain threshold, meaning your tax only starts getting close to the top tax rate if you're earning in the millions and have an inept tax planner.