January 5, 2016
By Tim Worstall
The last time Ben Carson talked about his flat rate tax plan I was pretty sniffy about it. Simply because it wasn’t actually very good, it hadn’t been thought through in even the most basic manner concerning its arithmetic. Then the idea was that everyone would pay a flat rate of 10% and as I said at the time, this just simply cannot work:
With those things that we can’t really tax then yes, the Tax Policy Center is about right. The rate would need to be around 20%. As a flat tax that was paid by everyone on everything with no deductions or allowances. And this is obviously so: because the Feds currently get around 20% of everything then a flat tax rate would have to be around 20% of everything. Simple logic that flows from having a rough idea of what the rough numbers are in the economy.
Do note that this is before trying to fund the States, counties or cities as well….
He’s now back with a revision, or perhaps we should say this is the formal version of, it, where that flat tax rate rises to 14.9%. I have a very strong feeling that that’s not going to be enough but I’m perfectly happy to wait for the scoring from the Tax Policy Foundation and others that will undoubtedly be arriving in the next few days.
However, in that new tax plan there’s a couple of really great ideas and one that I’m really not sure about at all:
In some respects, Mr. Carson’s plan is similar to those of the other candidates, all of whom want to lower tax rates, broaden the tax base and place little or no emphasis on avoiding bigger budget deficits. But he goes farther, particularly with his willingness to rip up parts of the tax system that have been in place for a century.
In addition to eliminating the charitable deduction and investment taxation, Mr. Carson would also repeal the estate tax, the mortgage interest deduction, the state and local tax deduction, the alternative minimum tax and depreciation rules.
To economists of a certain stripe (which could probably be best defined as economists that I agree with) the best tax system is one with low rates, no allowances or different rates and absolutely no loopholes whatsoever. Because that’s the sort of tax system that would provide the least distortions to the economy. Getting rid of the local tax, mortgage deductions is a truly great idea. Eliminating the charitable deduction would probably do more to rid ourselves of the multiple generation inheritance of great wealth than anything else, especially when combined with that elimination of the estate tax.
Read the full article at Forbes.com: Ben Carson's New Tax Plan Looks Pretty Good, Even If Not Perfect