How about this for a “progressive” tax plan to keep long-term deficits at 3% of GDP without any unpleasant entitlement reform (via a 2012 Third Way report):
1. For joint filers, the top three income brackets rise to 50%, 41%, and 38%.
2. The Social Security payroll tax cap jumps from $107,000 to $170,000 and rises with wage growth.
3. Capital gains rates climb to 40% for the wealthy.
Do all that, and revenue as a percentage of GDP would, on paper, rise from 19.1% in 2014 to 22.7% in 2040, averaging 21% of GDP over that period. Contrast that with the postwar average tax burden of just over 17%.
OK, still an unsustainable amount of red ink. Time to tax the middle class (again assuming no negative impacts on work, savings, or investment):
1. Increase the payroll tax rate for Medicare by 1 percentage point (to 3.9%).
2. Increase all tax rates on ordinary income 5 additional percentage points, phased in over 10 years. Increase both tax rates on capital gains 10 more percentage points.
3. Impose a 10% national value-added tax, phased in over 5 years.
For example, the median income of jointly filing couples is $76,561.§ A family of that income level, which has two children and claims the standard deduction, pays a total of $10,406 in federal taxes. Relying on taxes alone to hold long-term deficits at 3% of GDP would require phasing in a 60% tax increase on the median-income family, raising its annual tax burden by $6,200, in 2012 dollars.