Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
The WaPo’s Max Ehrenfreund has a great Q&A with sociologist Lane Kenworthy, author of Social Democratic America — a book I have written about a few times. The following bit gets at the idea that it wouldn’t be just the rich paying for the progressive dream of greatly expanded government, Scandinavian-style:
One difference between these two candidates’ [Hillary Clinton and Bernie Sanders] platforms and the social-democratic agenda in your book is that both are talking a lot about raising taxes on the rich, while in the Nordic countries, the middle and working classes pay more in taxes, too.
The tax strategy that these countries have tended to pursue is to spread the tax burden around, and in fact, their overall tax systems are pretty much flat. Almost everybody pays roughly the same share of their pre-tax income in taxes. You have a progressive income tax, but that’s offset by regressive payroll taxes, and especially regressive consumption taxes, which are very large in these countries.
Everybody feels like they’re paying in and getting something out of the system, so the system becomes more legitimate. You’re less likely to get this kind of us-against-them argument from conservatives. Even high income households don’t tend to hate this kind of system.
If you’re going to have a really big government, as these countries do — government spending is the neighborhood of 45 to 50 percent of GDP — if you’re going to do that, you just have to go where the money is. There’s obviously no way you could do that just by tapping money from the rich. Sanders has said that and is acknowledging that.
If we’re talking about a big expansion of public insurance, you have to tax the middle class as well as the rich. In the short turn, for a smaller expansion, I don’t necessarily think it’s a terrible idea to say you’re going to get most of that revenue from the rich. It is possible.
I don’t like Hillary Clinton’s promise, “I’m not going to raise any taxes on anybody in the bottom 95 percent.” I don’t think that’s a smart or productive thing to do, but the general orientation — to raise as much of the additional revenue as you can from those at the top — I don’t necessarily oppose.
Indeed, Kenworthy favors roughly $1.5 trillion in increased annual spending — or 10% of GDP — for a variety of programs, half of which would be paid for by a VAT. Oh, he does briefly explore getting all that dough from the rich. But the “rich” wouldn’t just be millionaires and billionaires. He defines the rich as the top 5% — hundred-thousandaires — not the top 1% or 0.01% or 0.01%. Their average tax rate would need to more than double to nearly 70%. And this static analysis assumes no negative economic impact. When the Tax Foundation looked at the Bernie Sanders tax plan — similar in annual cost to the Kenworthy plan — with a dynamic analysis, it found “after-tax incomes of all taxpayers would fall by at least 12.84 percent.”