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Financing International Cooperation

Today's world must combat climate change, manage surging migration, and confront a host of other threats to international peace and stability. Yet, because taxation and spending are overwhelmingly carried out at the national and local levels, needs that must be addressed at the global and regional levels are increasingly going unmet.

NEW YORK – Today, the provision of public goods and services at the global and regional level is dangerously inadequate. The United Nations system, the European Union, and other multilateral organizations are under great stress, because their budgets are inadequate to meet their responsibilities.

While a few free-market ideologues may still argue that profit-motivated corporations should run the world without governments, experience proves otherwise. Governments are essential to provide universal access to vital services such as health and education; infrastructure such as highways, railways, and the power grid; and funding for scientific research and early-stage technology. Governments are also needed to tax the rich and transfer income to the poor. Otherwise our societies will become dangerously unequal, unjust, and unstable – as is occurring in the US today.

Governments in successful high-income countries collect at least 25% of the national income in taxes to carry out these functions. In the world’s most successful economies, notably the social democracies of Northern Europe, governments tax around 50% of the national income. They use these revenues for three vital functions: public services, public investments, and transfer payments from rich to poor.