Managing the Nation-state Economy
The middle chapters examine those public issues that concern the nation-states the most. The mounting sovereign debt that seems unsustainable remains a major issue today. When the economy fails to perform, it affects the public finances even if the elected officials would try to make the right choice of economic policies. Moreover, squeezes in the public expenditure affect the quality and adequacy of public goods and services provided. At national level, the key issues remain employment and job creation, delivery of law and order as well as the provision of essential services such as education, health care, transportation, and housing etc. Inefficiencies of public sector management and the changing social and demographic structure further aggravate the situation. Here, the management of public expenditure versus national revenue remains the key issue. The author has suggested here to run the country almost like a quasi corporation.
The chapter highlights are therefore the concepts of Gross National Asset (GNA) and National Equity (NE) in addition to the national debt. This includes propositions to abolish the traditional personal income tax for the average income-earner and restructuring of the entire tax regime. The corporation tax is to be reduced to the idea of levying a flat turnover tax as a percentage of the revenue thereby eliminating the need for complicated tax filing and costly tax litigations. Personal income tax and the VAT are to be replaced by a Consumption Tax (CT) and a few related taxes, but a Wealth Equalization Tax (WET) has been proposed for the super-rich or those who earn over the threshold limit. All forms of Value Added Taxes and local authority taxes are to be replaced by the uniform CT noted above, except a meager Essential Services Tax. The author has also proposed to equitize and sell the economic potential and the production capacity of the nation in the market in the form of General Revenue Augmentation Share Stock (GRASS).
The author's latest book titled 'Sovereign Debt Crisis and Economic Sustainability' is based on this chapter. The book is not only diagnostic but also prescriptive and suggests strategies to generate public revenue without recourse to excessive borrowing or punishing the tax payers.