9-9-100? Prof Pushes 100% Consumption Tax on Rich
If Herman Cain has been harshly criticized for his 9-9-9 plan, which includes a 9% national sales tax, should we expect Robert Frank to come under fire? After all, on Morning Joe today, the Cornell University professor proposed a progressive consumption tax that could go to . . . 100% on the rich.
Frank's notion is that the very high rates would discourage the rich from building "mansions" [a term he used multiple times during his appearance]. And the taxes thus collected could go for things he thinks we need. For example, Frank incredibly claimed that in the US, "we don't invest in education," ignoring that we spend more per pupil than any country in the world other than Switzerland. Video after the jump.
Watch Frank espouse a form of 9-9-9 on class-warfare steroids. You'll note that when Joe Scarborough first aks him to state the tax rate he has in mind, Frank speaks in generalities. Eventually, Steve Rattner pins him down, and Frank confesses that he favors a 100% rate for consumption over $4 million.
JOE SCARBOROUGH: What kind of tax rate are you talking about? Let's say Steve Rattner decides to build another ring onto his mansion.
ROBERT FRANK: You worry about high marginal tax rates when we're taxing income because that does discourage savings. Savings is a part of your income. So we don't want to discourage that. If we're taxing consumption, it's a whole different story. So if I were a savvy rich guy, and I'd read the relevant studies, I'd want to move to a place that had a very steep progressive rate on consumption because I'd say to myself: that's a place, if I go there, I can build my fortune. If something bad happens I'll have more stashed away to take care of it. And in the meantime I won't be blowing all my money on coming-of-age parties for my kids.
STEVE RATTNER: Just so I know what to prepare for, what rate? What's the rate?
FRANK: It could be 100% on the next dollar, if you're already consuming $4 million a year. That would mean if you spent an extra dollar, you've got to come up with an extra dollar for the tax authority.
Full Disclosure: Bob Frank was a tennis buddy back in my Ithaca days. Hopefully I won't be on the other side of the net anytime soon when he gets a short, sitting lob ;-)