Hubbard Brand Tax Reform

Glenn Hubbard’s brand of tax reform:

My brand of reform would tax all income only once—wages at the household level and business income at the business level. That’s a big improvement over the convoluted mix of preferences (special provisions or tax shelters) and biases (double taxation or worse) under current law.

Indeed, unlike today’s devilishly difficult code, landmark changes can be simple. First, individuals would pay a tax on compensation, but not on income from savings (dividends, capital gains, and business interest). All businesses would be taxed on sales, less the costs of materials, wages, and a portion of capital expenses. Under an income tax, that capital expense would be a depreciated value over a period of years. Under a consumption tax, it would be 100% expensed. But both would end the double taxation of income on savings.

Following the link for the AEI’s Toward Fundamental Tax Reform.

posted on 24 May 2005 by skirchner in Economics

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