Implement VAT, Cut All Income Taxes to Create Jobs: Ross
CNBC.com Senior Writer
A value-added tax (VAT) that would come with the elimination of corporate and individual income taxes is the best way to get jobs rolling in the U.S., investor Wilbur Ross said.
While the plan that President Obama will present to Congress Monday has some merits, it also contains weaknesses that could make it too costly to implement, Ross said in a CNBC interview.
"We need something that is very far-reaching, very dramatic," said Ross, the head of W.L. Ross & Co. "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."
According to his calculations, Ross said the VAT would generate $80 billion net revenue to the government, while avoiding the pitfalls of Obama's $447 billion plan.
He favors the idea of cutting the cost of hiring though incentives, but doubts the $6,000 credit would stimulate very much. And he contended it would cost up to $400,000 in federal spending for each $50,000 a year job, so "it would be cheaper just to give everybody a $50,000 job."
"The amount being put in relative to that plan, compared to the jobs they say it will produce, is way out of whack," Ross said.
The Obama plan is expected to reach Congress Monday night. It calls for an infrastructure bank, $80 billion in spending on new building projects, education improvements, and an extension of emergency unemployment benefits.
Congressional Republicans have said parts of the plan could be implemented quickly, but others will face opposition.
"The Republicans should be in a conciliatory mode in the sense that we all want jobs to be created," Ross said. "The question is how and at what expense."