Tax specialist Davis offers ideas on U.S. economy
CHAMPAIGN — As a specialist in tax policy, Jon Davis has a few notions about what the federal government should — and shouldn't — do when it comes to taxes.
Davis, who was recently appointed head of the University of Illinois Accountancy Department subject to trustee approval, said he's not encouraged by what's going on in Washington.
"I don't see a lot of good stuff out there. I'm pretty cynical about Washington at this point," he said.
"I think we need to recognize as a country, we're spending our children's money at this point. If you look at the budget, it's not possible to go forward without having some kind of increase in taxes," Davis said.
Plus, spending cuts are needed, he added.
The big question is, how best to increase the tax base. Davis said he likes the philosophy of Louis XIV's finance minister, Jean-Baptiste Colbert, who once observed: "The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing."
That quote, Davis said, should be a guide to how Congress increases revenue.
He believes the United States should consider adopting a value-added tax, a national sales tax assessed at every level of production.
He said the U.S. and some nations in sub-Saharan Africa are among the only countries without such a tax.
"It's a good tax if it's done right," he said.
Davis said he believes the U.S. should keep the estate tax and lower the corporate tax rate, which is higher than those of countries with which the U.S. competes.
The nation should also look at cutting nondiscretionary spending, including Social Security, Medicare and Medicaid — and in the case of Social Security, consider raising the retirement age to 70 to cut costs, he said.
This story appeared in print on Feb. 26.