The Heritage Foundation’s Adam Michel outlines how the progressive plan for soaking the middle class:
Taxes on the rich cannot raise the necessary revenue to fund large European-style welfare states. If left on the current trajectory, U.S. government expenditures will require large tax increases on middle-class Americans. The current progressive agenda to further increase spending on health care, education, environmental policy, and income supports will require even higher taxes on a larger share of taxpayers.
If America’s spending continues to look more and more like that of Europe, U.S. tax policy will also need to shift. In European countries, lower-income and middle-class taxpayers pay an average marginal wage tax rate of 49 percent on income above $37,000 a year, and an average value-added tax (VAT) of 20 percent. Those same U.S. taxpayers face a marginal wage tax of 32 percent and an average sales tax of 6 percent. The only sustainable way to avoid a high-tax American future is to reduce the growth rate of federal spending.
- Americans shouldn’t be forced to pay higher taxes to fund big government. Congress should instead control spending.
- If American fiscal policy continues to follow the model of European welfare states, U.S. tax policy will also need to change.
- Americans can avoid higher taxes if Congress avoids new spending and reforms the largest drivers of spending—Medicare, Medicaid, Obamacare, and Social Security.
Washington’s finances cannot be fixed without a significant reduction in the growth rate of spending—or large tax increases on the middle class. The Congressional Budget Office estimates that spending will exceed revenues by $900 billion in 2019. The actual number will be even larger if Congress passes emergency or infrastructure spending packages this year.
If current policy continues, in 10 years, the 2029 budget deficit will likely exceed $2 trillion in that year alone.
Read more: Heritage Foundation
Image credit: American Wire.