Economists at the Penn Wharton Budget Model have proposed a comprehensive set of reforms aimed at reducing federal debt by 38% over the next 30 years while simultaneously growing the GDP by 21%. The plan, outlined in a recent report, includes 13 specific tax and spending reforms designed to achieve these ambitious goals [d41ab03b].
Key components of the proposed reforms involve lowering the top individual tax rate from 37% to 28%, raising the Social Security retirement age to 70, and increasing the Medicare eligibility age to 67. These changes are expected to significantly impact after-tax incomes, resulting in gains for the bottom 20% of earners and the top 1%, while middle-income earners may see a decrease in their after-tax income [d41ab03b].
Additionally, the proposal includes a $50 per ton carbon tax starting in 2025, which aims to address environmental concerns while generating revenue. Another notable aspect of the plan is the recommendation to double legal immigration, which proponents argue could help bolster the economy and reduce retiree poverty from the current rate of 11.3% to zero [d41ab03b].
This reform initiative comes at a time when the U.S. is grappling with significant national debt and economic challenges. The Penn economists assert that their approach can mitigate the adverse effects typically associated with austerity measures, providing a balanced pathway toward fiscal responsibility without stifling economic growth [d41ab03b].
As the discussions around these reforms unfold, the implications for various demographics, particularly middle-income families, will be closely scrutinized. The balance between reducing federal debt and ensuring economic equity remains a critical focus for policymakers and economists alike.