Flat Taxes
Posted on February 24th, 2005 in General, Economics by tavaresforby ||
Within 48 hours of taking office, Romania’s new prime minister issued an emergency edict and now companies and private citizens pay a single tax rate of 16 percent. Before, paying a flat tax rate was uncommon. But now, countries like Latvia, Lithuania, Ukraine, Russia and Serbia are not paying a flat tax rate. Here are some excerpts taking from this article:
Fair question. A flat-tax system is easy to set up and simple to administer—powerful attractions for any country with a weak tradition of tax collection. It also encourages the tax-paying habit. Why risk the penalties of working in the black economy when, as in Russia, the taxman wants just 13 percent of your earnings? “Set the rate low enough and it just isn’t worth going criminal,” says Madsen Pirie, of the Adam Smith Institute in London. The Belgian entrepreneur paying 50 percent on the top slice of his income might be tempted to hide his cash offshore; not so his Slovakian equivalent.
I am pretty sure there are some pros and cons to this flat taxation, which is unknown to me at this time. But evidently, it is working for some countries. If all goes well with paying a flat tax rate, I am pretty sure the U.S. will consider and maybe even implement one day. Like flat taxes, privatizing social security was once a concept that is now being supported by the U.S.
(Link found from the Adam Smith Institue)
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Lithuania, Latvia, Serbia, Ukraine, Russia? Oh, isn’t it a wee bit early to declare that these economies are so stable that we should start emulating them?
You confuse tax progressivity with tax complexity.
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You could very easily construct a SIMPLE AND PROGRESSIVE tax code.
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