A radical tax overhaul represents the best solution for the country’s stubborn unemployment problem, says billionaire investor Wilbur Ross, head of W.L. Ross.

The government should implement a value-added tax (VAT), which is a consumption tax levied at each stage of production. And it should discard personal and corporate income taxes, he tells CNBC.

President Barack Obama’s job plan has some strengths, but it’s too expensive, Ross says. With the unemployment rate at 9.1 percent "we need something that is very far-reaching, very dramatic," he says.

Wilbur Ross (Getty Images photo)

"An idea I've been in favor of is to scrap all of the corporate income taxes, all of the individual income taxes, and substitute a value-added tax on all goods imported into the country and manufactured and consumed here, and then rebate it on exports."

Ross says a VAT would produce a net revenue increase of $80 billion for the government. As it stands now, the government will end up spending $400,000 for each $50,000-a-year job, so "it would be cheaper just to give everybody a $50,000 job," Ross says.

Harvard economist Greg Mankiw, while not calling for as radical change as Ross, also says corporate income taxes should be cut.

“According to a 2008 study by the Organization for Economic Cooperation and Development, ‘Corporate taxes are found to be most harmful for growth,’” he writes in The New York Times.