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The Economics of Bobby Jindal’s Tax Plan: Half Good and Half Not So Good

October 8, 2015

By Tim Worstall

Bobby Jindal has released his tax plan and it’s a rather strange one from a certain point of view. For it has within it something very good, the complete abolition of the corporate income tax. And then it backs it up with something that is economically dubious at best and politically entirely toxic. Which is to extend the income tax system all the way down to dollar one of income. It is entirely true that doing this would make the tax system better, in that it would speed up US economic growth, at least a bit. But I can’t see people taking to the idea politically: and there’s other ways of achieving the same revenue goals anyway.

The plan itself isn’t getting good reviews:

Bobby Jindal surges in the “hating poor people” primary: The regressive tax plan that’s propelling him to the top

Well, OK, that’s me being unfair. No Republican tax plan is going to find favour at Salon while it remains an identifiably Republican tax plan. The Wall Street Journal is a little kinder:

The presidential contender plans to unveil a tax plan Wednesday in Iowa whose goal is to make all citizens pay at least some federal income tax. That puts Mr. Jindal at the center of a long-running debate over who foots the cost of federal spending.

“We simply must require that every American has some skin in this game,” Mr. Jindal said in a written statement. “If we have generations of Americans who never pay any taxes, it will be very easy for them to turn a blind eye to absurd government spending and to continue to allow our government to bankrupt our nation.”

I have to admit that I don’t buy the argument myself. And given that I’ve spent much of the last decade attempting to get the working poor taken out of the income tax system (something that is working in my native UK!) I doubt that anyone would expect me to. Indeed, I actually argue that not only should income tax not start at $ one, I don’t think FICA should either. Better, instead, to make whatever the full year, full time, minimum wage is the starting point for any taxation upon incomes. I’ve argued that the two should be tied together by law too: so people can only raise that limit if they’re going to raise the minimum wage and can only raise the minimum wage if they’re going to reduce income taxation at the same time.

Read the full article at Forbes.com: The Economics Of Bobby Jindal's Tax Plan: Half Good And Half Not So Good

Issue Categories : Bobby Jindal, Taxes