As follow-up to my last post, Here's The Heritage Foundation's predictions:
The baby-boom generation will begin to retire in about 10 years, and the fiscal consequences will be profound. The combined deficit from Social Security and Medicare will rapidly expand, climbing to 1 percent of GDP in 2015, 2 percent of GDP in 2020, and 3 percent of GDP in 2025. To put that figure in perspective, 3 percent of GDP today would be almost $344 billion, or more than $3,000 per household.
Yep, truly unprecedented increases in tax revenue. Let's go to the numbers:
In 2004, the OECD publication reveals, Sweden once again had the highest tax-to-GDP ratio among OECD countries, at 50.7% against 50.6% in 2003. Denmark came next at 49.6% (48.3%), followed by Belgium at 45.6% (45.4%). At the other end of the scale, Mexico had the lowest tax-to-GDP ratio, at 18.5%, against 19.0% in 2003. Korea had the second lowest, at 24.6% (25.3%), and the United States had the third, at 25.4% (25.6%) (See Table 2).
The average? 36.3%. By contrast, America's national tax rate ate up 28.4% of GDP during the dismal economy of 1999 (growth rate: 4.2%). 28.4%, happily, is 1% more than The Heritage Foundation thinks we'd need to cover the Boomers. And so there ya go, the solution to the unsolvable: raise taxes to the level they were at during the massive growth of the economy, create some smarter programs, and the Baby Boomers will make much less noise. And the sooner you do it, the smaller the hike could be.
Man. Pundits.
