Greg Mankiw is a Harvard economist who served with George Bush and wrote my Introduction to Economics text book. He also contributes a column to Sunday's NYTimes every once and a while. Yesterday's column was great - it was about simplifying and maximizing the efficiency of the tax code.
Here are some highlights:
"TAX CONSUMPTION RATHER THAN INCOME Almost four centuries ago, the philosopher Thomas Hobbes suggested that taxes should be based on consumption, not income. Income measures a person’s contribution of labor and capital to society’s production of goods and services. Consumption measures the quantity of those goods and services he gets to enjoy. Hobbes reasoned that because consumption better reflects the benefits a person receives as a member of society, it is the proper basis of taxation."
"TAX BADS RATHER THAN GOODS A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of."
I personally like the idea of a federal sales tax because it discourages spending, incentivizes savings and encourages the sale of used goods (which might not be good for the "economy" but I think it is generally more healthy for a person).
One Bush tax cut that should be permanently implemented (but currently is set to expire at the end of the year) is the 55% tax on inheritance. This tax is simply immoral. Your parents pay taxes their entire life. If they responsibly save money to pass on to their kids, the government should not take more than half of those savings (which have already been taxed at least once) when they die.
Here are some highlights:
"TAX CONSUMPTION RATHER THAN INCOME Almost four centuries ago, the philosopher Thomas Hobbes suggested that taxes should be based on consumption, not income. Income measures a person’s contribution of labor and capital to society’s production of goods and services. Consumption measures the quantity of those goods and services he gets to enjoy. Hobbes reasoned that because consumption better reflects the benefits a person receives as a member of society, it is the proper basis of taxation."
"TAX BADS RATHER THAN GOODS A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of."
I personally like the idea of a federal sales tax because it discourages spending, incentivizes savings and encourages the sale of used goods (which might not be good for the "economy" but I think it is generally more healthy for a person).
One Bush tax cut that should be permanently implemented (but currently is set to expire at the end of the year) is the 55% tax on inheritance. This tax is simply immoral. Your parents pay taxes their entire life. If they responsibly save money to pass on to their kids, the government should not take more than half of those savings (which have already been taxed at least once) when they die.
The inheritance tax is infuriating. It is similar to paying the mafia every month so they don't rob you. What's the logic behind it?
ReplyDeleteGuvmint: Anytime money changes hands within a family in our country, the guvmint gets a cut.
Mafia: Anytime money changes hands in our neighborhood, organized crime gets a cut.
God bless America.
Great article David! I would love a user tax in America! It seems so simple. Lets let drug dealers and other international travelers pay taxes too ;)!
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