CNN and National Journal, June 3, 2012
Hubbard: Romney a 'practical problem-solver' and
...
Romney is a practical problem-solver, says Hubbard. "I think the issue for
him is, how do you raise economic growth in the country and how do you make
it more inclusive?" he tells Fareed. "And once you raise those questions,
he's interested in practical solutions, not theoretical solutions."
Romney Economic Adviser Says Reforms Must Target the Wealthy
by Alexandra Jaffe
... Glenn Hubbard, an economic adviser to Mitt Romney, clarified
some of the details of Romney’s plan to improve the economy on
Sunday, insisting that all options were on the table when it comes
tax reform, but also asserting that such reform would have to focus
on wealthier Americans.... Hubbard indicated
that it’s “the very big deficits that the country should be afraid
of,†whereas small deficits are alright.
“If we can get federal spending to 20 percent of GDP by 2016, the
deficit will be very small. A healthy tax system and a healthy
economy would produce 18 percent, 19 percent of GDP in revenue. So
those won't be large deficits,†he said.
2-4-8 Response:
Hubbard gives Mr. Romney some good advice
If Mr. Romney can convince the American people that,
“all options were on the table when it comes to tax reform†and that the,
“bulk of the adjustment [will] be borne by upper income households†he will
be our next President. Mr. Hubbard has outlined sensible goals for short
term (FY 2016) taxes of 18% to 19% of GDP with spending at no more than 20%
of GDP [and presumably a balanced budget in his second term]. The Tea Party
can always vote for the other guy (lol) if they think Mr. Romney will not
move fast enough in balancing the budget.
The use of the term “affluent seniors†in discussing
limits on social security and Medicare is a palatable approach to this
politically difficult problem. Given the retired status of seniors it is
also clear that net wealth or a combination of net wealth and income would
be a better means test of “affluence†for purposes of program benefit
reductions. Indeed, net wealth is also a better measure of ability to pay
taxes for the investment class who do not have earned income and who
lawfully delay capital gains taxes for many years. It is also clear that net
wealth is the nuclear option in tax reform (i.e. powerful [$54 trillion
base], efficient, fair and controversial). It should not be used on top of
an already progressive income tax but it is the perfect complement to a low
flat rate income tax.
In the interest of space I conclude with a suggested
tax reform plan that can be described in one sentence simply to prove that a
little more effort could produce dynamic tax reform with bipartisan appeal:
Tax individual and corporate income at a flat 8% rate
(with no deductions, credits or loopholes), tax individual net wealth at 2%
(excluding $15,000 cash and retirement funds) and impose a 4% Value Added
Sales Tax (VAT) on business.
The 2-4-8 Tax Blend has the lowest rates and will
produce about $500 billion more than current federal revenue [around 18.5%
of GDP] with no need for payroll, estate, and capital gains taxes or
deferral of foreign income.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
|