GOOD CAPITALISM: PUBLIC BUDGETS

A stronger role for the state in a ‘good capitalism’, with a fundamentally new regulatory framework, calls for measures to ensure that the state has the equitable and sound revenue base it needs to prevent any rise of public debt as a share of gross domestic product. Tax policy here serves, on the one hand, to correct imbalances in income distribution and, on the other, to enable investments, in particular in education, research and development, infrastructure and social security. A sound state revenue base is the sine qua non for both countercyclical stabilisation of the economy, based on automatic stabilisers, and the provision of public services of the highest quality possible.

What needs to be done:

• Compulsory membership of all income earners in statutory old-age, health and unemployment insurance systems
• Adoption of Europe-wide minimum corporate tax rates
• Measures to further centralise financial policy in the Eurozone based on Europe-wide taxes and borrowing capacities at the EU level
• Deployment of a countercyclical fiscal policy at the European level, including coordination of fiscal policy in the European Monetary Union or the EU
• Expansion of the EU-wide system of revenue sharing, designed to assist individual countries experiencing difficult phases of development
• Adoption of a new Euro Stability and Growth Pact designed to correct current account imbalances