Taxing Capital and Cutting Military Spending Can Fully Fund Progressive Social Programs While Reducing Inequality
Source: Nancy Folbre. "Tax the Rich and Slash the Military Budget." October 18, 2026. jacobin.com
The Gist
People often ask how progressives would pay for big programs like universal childcare and Medicare for All. The author, summarizing a study by two economists, says the money can come from taxing corporations, investors, and the ultra-wealthy at higher rates and from cutting military and immigration-enforcement spending. She argues this would cover the costs with room to spare while also reducing inequality.
Conclusion
The progressive agenda (universal childcare, Medicare for All, social housing, and related programs) can be fully funded without adding to the deficit by taxing wealth and capital at rates comparable to wages and by cutting military and immigration-enforcement spending. Funding a fairer economy and reducing inequality are therefore the same project, not competing goals.
Premises
- Wealth and income in the US are extremely concentrated, and the current federal financing system taxes labor heavily while taxing wealth and capital lightly, so it drives inequality further.
- The government borrows what it does not collect in taxes, largely from the wealthy households who went untaxed, and then pays them interest. This compounds inequality.
- Many of the thirty Game Changers policies need no new money or have dedicated funding mechanisms, so only childcare, a child allowance, social housing, and a small part of Medicare for All require general revenue.
- Cutting military and ICE spending would free $208-413 billion a year, leaving a general revenue need of about $557-614 billion.
- A package of capital-focused taxes (a 35% corporate rate, a higher minimum corporate tax, a 4% buyback tax, stronger IRS enforcement, a financial-transactions tax, a minimum tax on households worth over $100 million, and closing the stepped-up-basis loophole) would raise $702 billion to $1.425 trillion a year, exceeding the requirement.
- Borrowing for productive investment pays for itself, whereas borrowing for waste (excess military spending, fossil fuel subsidies, corporate giveaways) deepens inequality. The estimates are conservative because they omit the savings from many policies' long-term benefits.
Assumptions
- The revenue estimates are accurate and will not shrink much through avoidance, capital flight, or reduced investment in response to higher taxes on capital
- The military and ICE cuts are politically feasible and would not compromise national security
- Static accounting of costs and revenues is adequate, and behavioral and macroeconomic effects will not significantly undermine it
- Reducing inequality is a legitimate policy goal, and taxing the very wealthy at higher rates is fair
- Social returns on the programs exceed their costs, so they count as productive investment
- Concentrated wealth translates into political power that blocks reform, so inequality and fiscal policy are linked