consumption tax Archives - the patient investor

Leith van Onselen comments on Alan Kohler’s support for a proposed debt levy:

The first best solution is to shift Australia’s tax base away from productive enterprise (both individuals and companies) towards more efficient sources, such as land, resources and consumption. According to the Henry Tax Review, the marginal excess burden (i.e. the loss in consumer welfare relative to the net gain in government revenue) from the GST is just 8%, whereas it is near zero for taxes on land and resources. They also compare very favourably against the two biggest current sources of tax revenue – personal income tax (24% marginal excess burden) and company taxes (40% marginal excess burden) – offering the nation large productivity pay-offs from fundamental tax reform.

WSJ interview with Herman Cain:

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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.

Tag: consumption tax

No Alan, more income tax is not the answer | MacroBusiness

Herman Cain Explains His 9-9-9 Plan