It's about time the concept of taxing all income at a single rate, which presidential candidate Steve Forbes and then-House Majority Leader Dick Armey broached a decade ago, once again takes center stage. It's increasingly popular overseas, with Romania and the republic of Georgia adopting it last January. Greece is likely to introduce a 25% single rate for both corporate and personal income next month. If Poland's opposition parties win next month's elections they are likely to introduce a flat tax. In Italy, the Bruno Leoni Institute has just published an interview with former finance minister and current defense minister Antonio Martino detailing his support of the flat tax.
Here at home the flat tax is still routinely ridiculed. When Mr. Forbes floated the idea in 1995, President Clinton joked that Republicans were becoming "the party of flat-earthers and flat-taxers." But he has also told friends privately that he got a real scare during the 1992 primaries when Jerry Brown championed a flat tax. Mr. Brown won applause from audiences by pointing out that under our current system the rich will always be able to hire experts to lobby for tax loopholes and avoid the higher rate traps set for them.
If the U.S. doesn't adopt the flat tax it may find itself losing jobs, capital and ambitious entrepreneurs to nations with a more ambitious growth agenda.
Alvin Rabushka, a senior fellow at Stanford's Hoover Institution, believes it's only a matter of time before an emerging economic superpower like China or India goes the flat-tax route. His book on the subject has just been published in Chinese, with a preface by Lou Jiwei, the vice minister of finance. If China adopted a flat tax, more than a quarter of the world's population would be filling out tax returns on the back of a postcard. That would leave them a lot of time and money to eat our economic lunch.
Monday, August 29, 2005
"The World Is Flat"?
Here is an article worth reading: "The World Is Flat: But America is a laggard in the tax-reform revolution." Here are snippets, but the whole article is worth reading.
Posted by W. at 9:42 AM