How Europe pays for its welfare state

Editorial

The Wall Street Journal

Some Democratic presidential candidates “insist that America could afford a European-style welfare state if only it taxed the rich more heavily,” said The Wall Street Journal. But a close look at Europe’s taxation policies shows that countries have “learned the hard way that the rich aren’t rich enough to pay for their entitlements,” and balance their budgets by heavily dunning the middle class. Germany, for example, imposes a 42 percent rate on married households earning $124,000, whereas in the U.S., such a couple pays 22 percent. Sweden’s top rate of 55 percent kicks in with individual earnings as low as $47,000, and in the U.K., taxpayers earning just $64,000 pay a 40 percent rate. Governments also slap workers with hefty payroll taxes they call “social insurance contributions” that are far higher than America’s Social Security and Medicare deductions, and impose a Value Added Tax of 21 percent on all consumer purchases, regardless of a buyer’s income. As a result, Europe’s tax system takes more than half of most people’s wages and is far less progressive than the U.S.’s. Beware politicians who claim they can finance free college, day care, and health care for all by taxing billionaires. “The middle class will pay, because that’s where the real money is.”

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