How Republicans could accept a more European America

One of the great questions of the previous thirty years is why inequality in the Anglo-Saxon world has increased so dramatically.  Answers and remedies are frequently brandished in the blogosphere from both sides of the isle, with the right tending towards a blase attitude and the left hyperventilation.

I have offered my thoughts in these posts, and they boil down to this: inequality of opportunity, not necessarily of income, is the main problem and a result of political forces, and I am not convinced that higher taxes on the top earners is the best answer.  What I’ve suggested, and Bruce Bartlett recently concurs, is that the most politically feasible answer is to pass a strong Value Added Tax whose revenue funds services (public transit, unemployment insurance, job training, schools, etc.) that disproportionately help disadvantaged Americans.  Barlett explains, rightly, that conservatives should accept that we will need to look more like Europe:

I think we should simply give up trying to redistribute income on the tax side and accept that it can only be done meaningfully on the spending side. This would require both the right and left to give up some of their pet ideas. The left would accept that the only purpose of the tax system is to raise revenue and the right would accept that a fairly extensive social welfare state is here to stay. In essence, conservatives would raise the revenue and liberals would spend it. That’s more or less the way it works in Europe, where conservatives accepted the welfare state in return for having it financed conservatively through a value-added tax. Liberals accepted this regressive form of taxation in return for conservatives accepting the legitimacy and permanence of the welfare state.

The fact is that our tax base is too narrow and our social services too meek; a VAT seems like a good way to address liberal and conservatives complaints.  On the other hand, a VAT also cuts against planks each side holds as central to their belief: no more taxes for conservatives and no regressive policies for liberals.  A compromise that tastes bitter to each side is a pretty hard one to pass.

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