Business Leaders Explain How to Create Jobs: Arthur B. Laffer
September 2, 2010
Columnist Donald Lambro asked America's major business associations, chief executive officers and top economic analysts to name the three best ways to create jobs and expand the U.S. economy. Here's what economist Arthur B. Laffer had to say:
- The United States should move toward a true flat tax where taxes on things such as income, corporations, payroll and Medicaid are eliminated in favor of two flat-rate taxes of 11 percent on business net sales (value added) and personal unadjusted gross income (with some deductions). A true flat tax with a rate of 11 percent would be static revenue positive by about 3 percent of gross domestic product (GDP) and would spur enormous economic growth.
- Once a flat tax is put into law, America should also have a federal, state and local tax amnesty program to bring tax cheats into compliance with the new tax codes. It is estimated that such a tax amnesty program would raise a one-time amount of somewhere between $600 billion and $800 billion, and $50 billion annually on an on-going basis.
- Additionally, the Federal Reserve should do what needs to be done to return to responsible monetary policy. This entails selling upwards of $1 trillion in Federal Reserve assets to contract bank reserves back to where total reserves are approximately equal to required reserves. Such actions will help ensure a stable value of the dollar going forward.
- Tax reform, along with spending restraint, sound money, free trade and a rational regulatory policy would lead to a period of exceptional prosperity and asset appreciation.
Source: Donald Lambro, "Business Leaders Explain How to Create Jobs," Human Events, August 5, 2010.
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