Presidential candidate Ben Carson released a three-page tax plan yesterday. Based on the limited information the plan includes, it looks like the best GOP plan so far.
Individuals and businesses would be subject to a simple 14.9 percent flat tax. The tax base appears to be of the Hall-Rabushka (HR) design, which is the gold standard of simple and pro-growth tax structures. I say “appears to be” because the Carson three-pager gives some hints, but not full details.
The defining feature of HR is that income is taxed once and only once. The current double taxation of savings and investment would be ended. Capital income would be taxed at the business level under HR, while labor income would be taxed at the individual level. Robert Hall and Alvin Rabushka proposed the HR tax structure back in 1981, as I discuss here. Rabushka, by the way, is a Cato adjunct scholar.
Ben Carson seems to have avoided the dangerous business VAT structure of the Ted Cruz and Rand Paul tax plans. He appears to be critiquing Cruz and Paul in this passage:
Unlike proposals advanced by other candidates, my tax plan does not compromise with special interests on deductions or waffle on tax shelters and loopholes.
Nor does it falsely claim to be a flat tax while still deriving the bulk of its revenues through higher business flat taxes that amount to a European-style value-added tax (VAT).
Adding a VAT on top of the income tax would not only impose an immense tax increase on the American people, but also become a burdensome drag on the U.S. economy.