Even before the ink from Obama's signature on the jobs bill dried, the debate was on as to just how much it would do to get people working and the economy moving.
Robert H. Frank, economics professor at the Johnson Graduate School of Management at Cornell University, says we need to come at the problem from another direction: a surtax on extremely high levels of consumption.
But even if limited to the very top incomes, Frank says a progressive consumption surtax at that level would produce immediate, off-budget economic stimulus by giving wealthy families powerful incentives to accelerate future spending. For example, a family that had been planning to build a new wing onto its mansion, or buy a yacht, would want to make those purchases now rather than be taxed on them later.
That "later" tax comes from Frank's proposal that the tax be enacted immediately, but that it not take effect until unemployment falls below 6 percent.
Frank elaborates on his proposal, as well as probable objections to it and what might happen to the economy once the surtax took effect in Hey, Big Spender: You Need a Surtax.
Consumption taxes are not new. And Frank has championed one on higher income earners before.
And since Washington, D.C., has decided that consumers are the engine that will drive the economy out of the current ditch, perhaps it is time to rethink the route we've been taking.
People used the previous rebates and now are using the Making Work Pay money to make ends meet rather than heading to shopping centers for spending sprees. So something that might spur spending among those with the most disposable income is worth a look.
But this surtax on the wealthy strikes me as just the stick to the failed carrot of bribing consumers with tax incentives.
- Tax provisions in new jobs bill
- Flight of 'golden geese' taxpayers
- Don't hate me because I'm rich
- Taxes, wealth and relativity
- A look at who's paying how much taxes
- 'Tax us more,' say some rich Americans
- The burden on the richest taxpayers
Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!