Flat tax, The Laffer curve and other esoterica
 

Tax Trends in Other Countries: The Flat-Tax Fever
For many years, I have lobbied for implementing a flat tax, not only in California, but also for the entire U.S. Hong Kong adopted a flat tax ages ago and has performed like gangbusters ever since. Seeing a flat-tax fever seemingly infect Europe in recent years is truly exciting. In 1994, Estonia became the first European country to adopt a flat tax, and its 26 percent flat tax dramatically energized what had been a faltering economy. Before adopting the flat tax, Estonia had an impoverished economy that was literally shrinking--making the gains following the flat tax implementation even more impressive. In the eight years after 1994, Estonia sustained real economic growth averaging 5.2 percent per year.

Latvia followed Estonia's lead one year later with a 25 percent flat tax. In the five years before adopting the flat tax, Latvia's real GDP had shrunk by more than 50 percent. In the five years after adopting the flat tax, Latvia's real GDP has grown at an average annual rate of 3.8 percent (See Figure 8). Lithuania has followed with a 33 percent flat tax and has experienced similar positive results.



Russia has become one of the latest Eastern Bloc countries to institute a flat tax. Since the advent of the 13 percent flat personal tax (on January 1, 2001) and the 24 percent corporate tax (on January 1, 2002), the Russian economy has had amazing results. Tax revenue in Russia has increased dramatically (See Figure 9). The new Russian system is simple, fair, and much more rational and effective than what they previously used. An individual whose income is from wages only does not have to file an annual return. The employer deducts the tax from the employee's paycheck and transfers it to the Tax Authority every month.



Due largely to Russia's and other Eastern European countries' successes with flat tax reform, Ukraine and the Slovak Republic implemented their own 13 percent and 19 percent flat taxes, respectively, on January 1, 2004.

Arthur B. Laffer is the founder and chairman of Laffer Associates, an economic research and consulting firm. This paper was written and originally published by Laffer Associates. The author thanks Bruce Bartlett, whose paper "The Impact of Federal Tax Cuts on Growth" provided inspiration.

For the full article: http://www.heritage.org/Research/Taxes/bg1765.cfm

I would love to see that implemented over here, but doubt it will ever happen.

Breaking their rice bowl
 

A flat-tax would slash receipts and force painful cuts -- not in the U.S. Budget, but in Congressional re-election budgets. Most incumbents have no other marketable skills, so if they don't win, they don't eat. :(

Much better than the flat tax, is the Fair Tax. Not only would we see a massive influx of jobs to our country, we would have greater purchasing power. The basic necessaties wouldn't be taxed nor would our savings.
For those that don't understand what the Fair Tax is, I recommend you go to FairTax.org and do a little research. A good book to read about the Fair Tax is "Fair Tax: The Truth" by Neal Boortz and Congressman John Linder. Mike Huckabee is also a strong supporter of the Fair Tax

I was just about to mention this. What a radical idea - keep the income that you've earned and tax what you BUY. We could get rid of 90% of IRS employees as it would simplify the system greatly. And maybe get some consumer spending under control. Also, sales tax too high - buy a cheaper tv, stereo or just do without.

No Pain No Gain
 

It would also right this sinking ship .
Hey, if they don,t win they can always get work asking -Do you want fries with that?:D

....yeah....it would make too much sense

Politics and common sense do not seem to be in the same hemisphere.

Esoteric

Most all of the people on this forum have a good working knowledge of economics, to each point they argue rightly or wrongly. Even though we all suffer disagreements about certain points of capitalism, most understand that each and any item or service has a certain value attached to it.

It is amazing how uneducated about even simple economic principles a great majority of Americans are (including college grads and other self-proclaimed intellectuals). Not only do most not understand, they are unwilling to understand. Everything must be put in simple, stupid terms to those people and thus we have Politicians.... where, like you said, common sense (which is an oxymoron) is not in the agenda.


Unfortunately the consequences to those economic principles and laws are now coming to pass. Clever rhetoric and idealism will not be enough to rectify that which has been sowed.

Educating your friends and neighbors
 

This website has some excellent and accessible videos on taxes--Laffer curve, flat tax, etc:

Center for Freedom and Prosperity

Look on the right side of the page.

WW