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.
Reprinted with permission from - The Heritage Foundation - by Adam Michel