American democratic socialists cite Scandinavia but ignore its broad tax foundation

Senator Bernie Sanders and Rep. Alexandria Ocasio-Cortez argue that democratic socialism is the logical extension of FDR’s New Deal and cite the Nordic welfare states as evidence that expansive public benefits can thrive alongside capitalism. The article details how Scandinavian countries achieve this through tax rates of roughly 40-45 percent of GDP, relying heavily on value-added taxes and progressive income and payroll taxes that involve the entire population.

U.S. democratic socialists, however, tend to propose financing their agenda by imposing higher taxes on billionaires, ultra-millionaires and large corporations, a markedly narrower base. Historical American reforms such as Social Security and Medicare were funded by dedicated payroll contributions, reflecting a similar principle of shared financing. The piece highlights that New York City’s past attempts to expand services on a limited tax base eventually led to fiscal crises, underscoring the need for broad-based revenue.

It also notes that the DSA’s own literature envisions moving beyond social democracy toward collective ownership, further complicating the funding question. Ultimately, the analysis warns that without adopting a comprehensive tax structure akin to the Nordic model, the DSA’s policy ambitions may remain unrealistic.