AEI Ideas: James Pethokoukis- 'If You Want Government to Spend Like a Nordic Nation, it Also Has to Tax Like One'

Source:The New Democrat- American Socialists, or European Socialists?

Source:The New Democrat 

"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." 

From AEI Ideas 

"Self-proclaimed Democratic Socialist Sen. Bernie Sanders on his 2016 presidential primary challenge against Hillary Clinton." 

Source:ABC News- U.S. Senator Bernie Sanders (Democratic Socialist, Socialist Republic of Vermont) the only self-described Democratic Socialist member of Congress. But not the only Socialist in Congress.

From ABC News

One thing with having a not only a Democratic Socialist, but a self-described Democratic Socialist running for president for the Democratic Party and doing well, (Bernie Sanders is not the first Democratic Socialist Democrat to run for president) is that you have someone with the political guts to say, ‘taxes will not only go up if I’m president, but they’ll go up on the middle class.’ 

Bernie Sanders, is a very smart guy whatever you think of his politics. He knows that there’s only so much that you can tax the rich and only so much the IRS will ever see from that for a couple of reasons. The rich won’t want to pay all of these new taxes, especially to pay for the cost of living of middle-income workers. And they’ll send their money oversees to countries where they wouldn’t be taxed as high. Senator Sanders, knows this, but the question is will he share that with voters.

So of course middle class taxes would go up in a democratic socialist administration, if somehow a President Sanders could get his programs through Congress. A new Democratic Senate wouldn’t be enough, he would need a new Democratic House as well. With a lot of new so-called Progressive Caucus members, or Democratic Socialists being elected to both chambers, which won’t happen. I mean Paul Ryan will be Speaker of the House in the next Congress. Even if Democrats win back the Senate in the next Congress. 

But putting that aside voters who are looking at Bernie Sanders, especially middle-income and lower middle-income, people making lets fifty-thousand-dollars a year, or less, need to know what voting for a Democratic Socialist for president comes with. A bigger more centralized government in Washington. With a smaller private sector and higher taxes on everyone.

As Jim Pethokoukis mentioned in his blog post, taxes in Scandinavia even if their welfare states are progressive, are regressive. They’re roughly flat and come with high sales and payroll taxes, to go along with flatter income taxes. Where everyone pays taxes including lower-income workers. So forget about the ten-percent tax rate in America which is our lowest tax rate. That would be more like 20-25, maybe, 15, would be probably be the best to hope for. 

But if you’re making forty-thousand-dollars a year right now and are lets say a teacher, or police officer, you’re currently paying ten-percent. Under a President Sanders if he got his economic plan through Congress, that worker would at least be looking at a fifty-percent tax increase. With the promise of better public services. Even if they can no longer make those decisions for themselves in the private sector.

Socialists (so-called Progressives in America) point to Scandinavia all the time that there high tax, big centralized government, big welfare states work so well over there. So we should do that here. While always leaving out some really huge facts. Let's take Norway and Sweden: physically big countries roughly, especially Sweden which is roughly the size of Turkey and Afghanistan. But in Sweden’s case only have about ten-million people. Sweden is also a large energy producer with oil and gas, the same thing with Norway. They’re not just large energy producers, but large energy exporters. 

Scandinavia government’s bring in a tone of revenue for their government’s and can afford to be very socialist and generous’ with their taxpayers money. America, huge country with a huge population, that still imports energy from other counties. We can’t afford to that generous with our taxpayers money.

For the life of me I don’t understand why Hillary Clinton is not making this argument with blue-collar voters. Whether it was in Iowa, or New Hampshire and wouldn’t she then take that to South Carolina and Nevada. And tell voters in these states that they would be looking at steep tax increases even if a President Sanders could get his economic plan through Congress. That this plan is not just radical, but it's unrealistic, but it also wouldn’t work. 

American companies and foreign companies, would conclude that America is simply too expensive to invest in. But not only that, because their workers, who still have jobs, because their employers managed to stay in the country, don’t have to spending money to buy our products anyway. And then Hillary should say she has a much better plan for the middle class. That is about higher wages and job creation. Not higher taxes and bigger government. But maybe this is what she’s struggling right now.