Footing the Bill

Abstract

Chapter 8 briefly takes up two questions about funding the proposals advanced in Chapters 6 and 7: how to structure the funding of new and existing benefits—specifically, those that could but need not be funded through employer payrolls—and how to raise whatever public revenues are needed. The problem is this: Payroll-based funding tends to unnecessarily speed job losses and affords limited latitude for redistribution; but it has political advantages as seen with Social Security. Payroll-based benefits are seen by beneficiaries and voters as earned and owned, and they require little or no public appropriations. The chapter proposes hybrid funding mechanisms, including new uses for “wage subsidies,” that attempt to finesse this dilemma. And it suggests some more and less familiar ways of taxing the biggest winners in a more automated economy to support programs in support of those being left behind.