David Kirkpatrick

October 23, 2009

Bruce Bartlett comes out in favor of VAT

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 4:13 pm

Bartlett is an interesting read these days. One of the major supply-siders back in the day, his economic positions seem to have shifted a  bit. He says, and I tend to agree with him, he’s only reacting to the conditions on the ground and his fundamental economic beliefs are no different than when Reagan held the White House. Of course a value added tax was one tax vehicle in the supply-side economic toolbox.

In a move that probably makes the heads of his old pals in the GOP explode, Bartlett writes in Forbes an extended defense of, and recommendation for, a national value added tax.

From the middle link:

few years ago, I concluded that the magnitude of our looming fiscal problem was so enormous that higher taxes were inevitable–and that was long before the recent crisis made matters vastly worse. Moreover, I concluded that the magnitude of this tax increase is so great that it would seriously cripple the economy if accomplished through higher rates on an already dysfunctional income tax system. Reluctantly, I concluded that a value-added tax (VAT) is the best way to raise the revenue that would, in any case, be raised.

When I first made this suggestion in a Los Angeles Timesarticle in 2004, I was building on a large body of tax analysis showing that the VAT is the best known way of raising revenue. When I say “best” I mean that it raises large revenues from low rates and has minimal disincentive effects. In economists’ speak, it has a very small dead weight or welfare cost–the economic output lost by the tax over and above the revenue collected.

Based on the experience in other countries, I estimate that a U.S. VAT could realistically tax about a third of the gross domestic product (GDP), which would raise close to $50 billion per percentage point. If we adopted Europe’s average VAT rate of 20%, we could raise $1 trillion per year in 2009 dollars.

May 2, 2009

Jack Kemp, RIP

Filed under: Politics — Tags: , , , , — David Kirkpatrick @ 9:59 pm

Longtime advocate of supply-side economics and one-time GOP veep candidate. And NFL quarterback for the Bills.

From the link:

Jack Kemp, the former football star turned congressman who with an evangelist’s fervor moved the Republican Party to a commitment to tax cuts as the central focus of economic policy, died Saturday evening at his home in Bethesda, Md. He was 73.

The cause was cancer, said his son Jimmy Kemp. Jack Kemp’s Washington consulting and lobbying firm, Kemp Partners, announced in January that he had cancer but did not disclose the type.

Mr. Kemp was secretary of housing and urban development under the first President George Bush and the Republican vice-presidential nominee in 1996. But his greatest legacy may stem from his years as a Buffalo congressman, especially 1978, when his argument for sharp tax cuts to promote economic growth became party policy, one that has endured to this day.

The nation, Mr. Kemp told the House that year, having embraced a supply-side economic theory, suffered under a “tax code that rewards consumption, leisure, debt and borrowing, and punishes savings, investment, work and production.”