As he campaigned for the presidency last year, Sen. Bernie Sanders praised Scandinavia’s cradle-to-the-grave educational, medical and social services as a model for America.
Sanders’ White House bid failed, and if anything, the United States is moving in the other way with the election of Donald Trump to the presidency and Republican control of Congress and most state governments.
Sanders’ Nordic dreams, however, are alive in California’s Capitol, where dominant Democrats are proposing, one-by-one, benefits that would approach those in Denmark, Sweden and Norway.
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With the Affordable Care Act, otherwise known as Obamacare, on the chopping block in Washington, California politicians, including Lt. Gov. Gavin Newsom, back universal health care not only for the 5 million persons who gained medical coverage under the ACA, but several million more – undocumented immigrants, mostly – who remain uncovered.
Senate President Pro Tem Kevin de León has an embryonic retirement plan already in place for private sector workers lacking employer pensions, and if it survives some legal hurdles, workers might see some modest benefits from their own “contributions.” But there’s little doubt that backers hope eventually to establish universal retirement security, something like what public employees already enjoy, which would be far more costly.
Assembly Speaker Anthony Rendon, meanwhile, is advocating a major expansion of early childhood education and child care with an eye on the expansive benefits of Scandinavian children.
On Monday, Rendon unveiled the latest quasi-Scandinavian idea – a “degree-not-debt” program for very low or no-cost higher education, including grants to cover students’ living costs.
All of these notions sound yummy, but there’s no free lunch. Their price tag would be tens of billions of dollars, and perhaps hundreds of billions.
California’s social democrats imply that we can afford a vast menu of new and expanded services by simply taxing the rich, but about 150,000 high-income Californians already provide more than a third of the state’s general fund budget by paying the nation’s highest state income taxes.
That’s because California voters have repeatedly shown that they are willing to tax others – such as the rich or smokers – but very reluctant to tax themselves.
However, we shouldn’t pretend that providing them with a new smorgasbord of governmental benefits won’t cost them – a lot. If we want to emulate Scandinavian benefits, we will have to also adopt Scandinavia’s heavy approach to taxation.
Scandinavians’ taxes are about 60 percent of national economic output, and their tax systems heavily rely on middle- and even low-income taxpayers with relatively flat income tax rates.
Sweden’s 31 percent income tax hits incomes as low as $2,700 a year, rising to about 60 percent above $88,000 – plus a 7 percent pension tax.
Additionally, its “value-added tax,” analogous to a sales tax, is 25 percent, with few exemptions.
Are we ready to swallow those high levels of taxation?