Dr. Gero Jenner, Austria Graz
To Prof. Robert Frank, Cornell University
Dr. Mr. Frank,
You wrote the following lines in Democracy – A Journal of Ideas: “Replacing the current income tax with a progressive consumption tax is the only way to cover our current revenue shortfall without demanding painful sacrifices from voters. Such a tax, which has been proposed both by conservative economists like Milton Friedman and liberal economists like Edward Gramlich, would be simple to implement… Taxable consumption would then be calculated as income minus savings… Phased in gradually, a progressive consumption tax would slowly shift spending from consumption to investment, causing productivity and incomes to rise faster.”
I fully agree but I don’t know whether you share Kenneth Rogoff’s conviction that “Cash is becoming increasingly marginalized in the legal economy, but there is a record amount of it in circulation—$1.4 trillion in U.S. dollars alone, or $4,200 for every American, mostly in $100 bills—and most of it is used to finance tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of a massive global underground economy.”
Whatever your opinion on the matter, there is one indubitable advantage connected with an economy switching to digital money: It offers a chance to an easy – totally non-bureaucratic – implementation of a progressive consumption tax. I have described such a change in taxing policy in my book “Wohlstand und Armut” but the chapter on taxes is available in English translation (http://www.gerojenner.com/wpe/?p=831#more-831).
To an American my outline of a tax system which may entirely rely on one central computer together with what I call a “debit+tax card” to be used instead of cash in all acts of every-day shopping may seem the brooding of an unreformed Marxist iconoclast – in fact I am immune to Marxist ideology but I do like the beauty of technical solutions which could serve to overcome the old problem of unjust and unecological income taxation.
Yours sincerely
Gero Jenner
20181027:
Dr. Gero Jenner, Austria Graz
To Prof. Kenneth Rogoff, University
Dr. Mr. Rogoff,
An economy based not on cash but on digital money offers all the advantages referred to in your book but it opens one more avenue: a possible tax revolution. Mr. Robert Frank from Cornell university hopes for a “progressive consumption tax” which would indeed make economies much more stable but such a tax depends on digital money. The following letter which I addressed to Mr. Frank may possibly elicit your interest as well.
Dear Mr. Frank,
You wrote the following lines in Democracy – A Journal of Ideas: “Replacing the current income tax with a progressive consumption tax is the only way to cover our current revenue shortfall without demanding painful sacrifices from voters. Such a tax, which has been proposed both by conservative economists like Milton Friedman and liberal economists like Edward Gramlich, would be simple to implement… Taxable consumption would then be calculated as income minus savings… Phased in gradually, a progressive consumption tax would slowly shift spending from consumption to investment, causing productivity and incomes to rise faster.”
I fully agree but I don’t know whether you share Kenneth Rogoff’s conviction that “Cash is becoming increasingly marginalized in the legal economy, but there is a record amount of it in circulation—$1.4 trillion in U.S. dollars alone, or $4,200 for every American, mostly in $100 bills—and most of it is used to finance tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of a massive global underground economy.”
Whatever your opinion on the matter, there is one indubitable advantage connected with an economy switching to digital money: It offers a chance to an easy – totally non-bureaucratic – implementation of a progressive consumption tax. I have described such a change in taxing policy in my book “Wohlstand und Armut” but the chapter on taxes is available in English translation (http://www.gerojenner.com/wpe/?p=831#more-831).
To an American my outline of a tax system which may entirely rely on one central computer together with what I call a “debit+tax card” to be used instead of cash in all acts of every-day shopping may seem the brooding of an unreformed Marxist iconoclast – in fact I am immune to Marxist ideology but I do like the beauty of technical solutions which could serve to overcome an age-old problem.
Yours sincerely
Gero Jenner