WSJ interview with Herman Cain:
[gigya src=”http://s.wsj.net/media/swf/VideoPlayerMain.swf” width=”512″ height=”363″ quality=”high” wmode=”transparent” allowFullScreen=”true” flashVars=”videoGUID={C0F27595-4101-4E21-83A0-A65A8C53D4F0}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false”]
His plan ticks many of the right boxes:
- Low corporate tax rate
- Low flat personal tax rate
- Broad-based consumption tax
- Remove the Fed’s dual mandate and limit them to protecting the dollar against inflation
Consumption taxes are often seen as regressive — because everyone pays the same rate — but can easily cater for the poor/unemployed through food stamps and/or changes to unemployment benefits. The worst thing is to create an administrative nightmare with a two-tier system where some items (e.g. basic food or medicines) are exempt from the tax.
not bad
A good start. I think you would find a low rate asset tax would be needed to provide the revenue for basic government function PLUS welfare which is (lets face it) wealth redistribution. I support an asset tax levied on only the Government Bond rate nominal return. So if the corporate rate were (say) 25% and the Bond rate were 2% the tax levied would be 0.25%.
A key benefit of such a tax would be the disincentive to speculate on investment in non-income producing assets (for capital gain). This was the kind of speculation that led to the GFC in 2008.
Asset taxes are difficult to implement:
You have to keep it really simple otherwise the tax industry will create more holes than Swiss cheese — and the cost of collection will sky-rocket.