Lane Kenworthy’s “Social Democratic America”
Although Kenworthy’s theory of history suggests that reforms will come piecemeal and not in one big slate, he does provide one of the most complete descriptions of what a future social democratic America could look like. Among other things, he proposes the following:
- Universal health insurance
- Universal system of one year of paid parental leave
- Universal early education
- Increased Child Tax Credit
- Universal sickness insurance
- Eased eligibility criteria for unemployment insurance
- Wage insurance for unexpected drops in income
- State-run supplemental defined-contribution pension plans with automatic enrollment
- Extensive, personalized job search and (re)training support
- Government as employer of last resort
- Minimum wage increased modestly and indexed to inflation
- Earned Income Tax Credit extended farther up the income ladder and indexed to average wages or GDP per capita
- Higher benefit level for social assistance (i.e. TANF-like programs)
- Reduced incarceration of low-level drug offenders
- Affirmative action shifted to focus on family background rather than race
- Expanded government investment in infrastructure and public spaces
- More paid holidays and vacation time
Kenworthy estimates that financing his various reforms would require the government to increase revenues by 10 percent of GDP, which is a considerable hike, but would still leave American tax levels below many of those already in place in western and northern Europe. There are many ways to get this kind of revenue, but Kenworthy favors the following:
- Value Added Tax of 12% (5.0% of GDP)
- Return to 2000 federal income tax rates (2.0% of GDP)
- New tax brackets at the top of the income distribution (0.7%)
- Elimination of the mortgage interest tax deduction (0.6%)
- Carbon tax (0.7%)
- Financial transactions tax of 0.5% on trades (0.5%)
- Increase the payroll tax cap so that it covers 90% of earnings (0.2%)
- Increase the payroll tax by 1 percentage point (0.3%)