We have reached the point that lawmakers rarely even attempt to pay for their priorities. (Sen. Joe Manchin (D-W.Va.), in his heroic effort to change the Build Back Better legislation from a budget-busting bill into the deficit-reducing Inflation Reduction Act, is the leading exception.) But most often we hear nonsense like tax cuts pay for themselves, or certain priorities are so important they should not be paid for, or we should just print more money, or in the case of the president, we don’t hear much justification — he just makes abrupt changes by executive order.
We are going to have to make a change.
The best thing Congress can do to ease inflation and reduce recession risk is to enact a deficit reduction package designed to help stabilize the economy. It would require savings of roughly $7 trillion over a decade to stabilize the debt-to-GDP ratio where it is now, over $13 trillion to bring it down to 80 percent, and about $15 trillion to balance the budget — a goal that is sadly no longer reasonable this decade given how large the problem has become. Normally one would want to phase the changes in quite gradually, but in the face of inflation, some large upfront savings would be desirable. We have developed one possible outline with the Committee for a Responsible Federal Budget’s Fiscal Blueprint.The Hill
I have concluded that a substantial percentage of the American people are just selfish. They want more and more from government programs and fail to realize government is not the source of anything – taxpayers are. Scandinavia is a model for both generous social programs and the broad-based taxes to pay for them. You can’t be responsible and have one without the other.
Scandinavian countries provide a broader scope of public services—such as universal healthcare and higher education—than the United States. However, such programs necessitate higher levels of taxation, which is reflected in Scandinavia’s relatively high tax-to-GDP ratios.
Adopting such public services in the United States would naturally require higher levels of taxation. If the U.S. were to raise taxes in a way that mirrors Scandinavian countries, taxes—especially on the middle class—would increase through a new VAT and higher social security contributions and personal income taxes. Business and capital taxes would not necessarily need to be increased if policymakers were following the Scandinavian model. In fact, the corporate income tax rate would decline.
It does not come as a surprise that taxes in Scandinavian countries are structured this way. In order to raise a significant amount of revenue, the tax base needs to be broad. This means higher taxes on consumption through the VAT and higher taxes on middle-income taxpayers through higher social security contributions. Business taxes are a less reliable source of revenue (unless your country is situated on top of oil). In short, Scandinavian countries do not place above-average tax burdens on capital income and focus taxation on labor and consumption.The Tax Foundation