Forbes magazine publisher Steve Forbes says the Obama administration should abandon its fiscal stimulus package and cut taxes instead.
“We should know by now that stimulus packages don’t work,” he tells CNBC. “It didn’t work in 2001. It doesn’t change tax rates, so it doesn’t change incentives.”
Reducing taxes, however, does have an impact, Forbes says.
“Lower the payroll tax and capital gains levy,” he urges
“Those things work. We know that from experience. Simply spending more money, that’s one shot and then you’re back to where you were before.”
As he has stated previously, Forbes prefers a flat-rate tax.
“I propose 17 percent,” he says. “There should be generous exemptions for adults and kids — for a family of four, no federal tax on the first $46,000.”
In addition, he favors abolishing taxes on savings and death. “Hello, President Obama, you should be allowed to leave this world unmolested by the IRS.”
Forbes says “there certainly seems to be a bottoming out” in the economy.
“But the key thing is getting the credit markets truly working again,” he adds. "The Federal Reserve should be pumping out a lot more liquidity, most especially in the mortgage market.”
Forbes certainly isn’t alone in proposing that tax rates be reduced in the highest brackets.
Former Reagan advisor Arthur Laffer says such cuts are needed to unshackle the most productive workers in the economy.
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