By NextBestFitPhase 4: Wave 4: everyone · Step 4.5
Switch every tax to its full rate
Year 4 · IRS; TreasuryDiscuss this step
fiscallikelihood: mediumimpact: medium
Recession cuts revenue
Payroll, income, and top-end capital-gains revenue all fall in a downturn while health spending doesn't.
Early warning signs
- Unemployment above 6%
- Reserve below 1 month
Mitigation
- 2-month reserve
- Counter-cyclical general-revenue transfers
Implementation risks
| Risk | Mitigation |
|---|---|
| Revenues fall short in a recession. | The reserve and counter-cyclical general-revenue transfer. |