Emmanuel Saez on Social State - Dictionary of Arguments
Saez I 179
Social state/Saez/Zucman: there is no example of a successful model for retirement, education, and health care that is not heavily funded through taxes or mandatory contributions equivalent to taxes. In all advanced economies, total taxes have increased from less than 10% of national income around 1900 to between 30% and 50% of national income today, primarily to fund the three pillars of the social state: education for the young, retirement benefits benefits for the old, and health care for all.(1)
Saez I 184
How do other rich countries - where health insurance is universal or near-universal and the provision of public child care much more prevalent - fund these essential social needs? Payroll taxes are fairer than a poll tax, since they are proportional to wages, at least up to some limit. But they have a big limitation: They are typically imposed on labor income only. Capital income is exempt. Certain countries have tried to expand their payroll taxes to include some capital income into the base, but despite that effort labor carries the bulk of the burden of funding health care.(2) >Value-added tax/Saez.
1. Singapore is often cited as an example of an advanced economy with low taxes. The tax to GDP ratio in Singapore was only 13.5% in 2016. But this is misleading as Singapore imposes very large mandatory payroll contributions on workers’ earnings for health and retirement benefits and education expenses, called the Central Provident Fund (www.cpf.gov.sg), which are essentially equivalent to payroll taxes. The rates are very high, with a combined employee and employer contribution of 37% of earnings for nonelderly workers (see Organisation for Economic Co-operation and Development, 2019d, Global Tax Statistics Database):
-Organisation for Economic Co-operation and Development (2019b) Base erosion and profit shifting. Country-by-Country exchange relationships. Paris: OECD Press, 2019b. Available at www.oecd.org/tax/beps/country-by-country-exchange-relationships.htm (08/21/2020)
2. This is the case of France for example with its Contribution Sociale Généralisée (see Landais, Piketty, and Saez, 2011):
- Landais, Camille, Thomas Piketty, and Emmanuel Saez. Pour une Révolution Fiscale—Un Impôt sur le Revenu pour le 21e Siècle. Le Seuil: République des Idées, 2011._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.