Monday, October 10, 2005

Talking Flat (I)

For some of our readers Talk Tax already talked enough about flat tax (see old posts). But because it is hype and cool to discuss this issue, I try once more to understand why a business magazine publishes an article called “Europe Circles The Flat Tax” View

Some of the argumentation deserves my comments:

"(Flat tax) In the eyes of many fiscal conservatives, it's the Holy Grail of public policy" – what I doubt is tat the ones supporting this grail are doing it fro the right reasons!

"Most of these countries' (that enacted flat tax) economies are growing at a far"-healthier clip than those of their neighbours to the west. – So what? But are the economies of the west comparable to the economies that implemented flat tax?

"Angela Merkel, the Christian Democratic Union's candidate for Chancellor in Germany's Sept. 18 elections, chose a leading flat-tax advocate as one of her main economic advisers." – Look what happen to her! The funny thing is that because of that choice one of the requirements of the SPD for the coalition that allows Mrs Merkel to become Chancellor was that they chose the Finance Minister! I wonder why!

"In Britain, the opposition Conservatives on Sept. 7 announced they would set up a commission to study a flat-tax proposal." – I think that conservatives will do anything to regain Downing Street.

"The issue is so politically explosive that no Western European government is likely to impose a flat-tax regime anytime soon. (…) But tax simplification is clearly in the air." – This thing of marrying simplification with flat tax is poor. Tax simplification is an issue by its own.

"Even without pressure from the East, many Western European governments face growing complaints about the complexity of their tax regimes."– Right! But you will not see complaints about progressivity. Actually did you notice that this word is always missing from the articles about flat tax!

"There's no guarantee, of course, that flat taxes would work as well in Western Europe as they have in the countries to the east. In the former Soviet bloc, most of the countries that enacted flat taxes gained revenue as people who had worked in the shadow economy began reporting their income and paying taxes." – That is an argument that does not have great effect on the western economies.

Flat Tax Rates
Estonia - 24%
Georgia - 12%
Greece - 25%
Hong Kong - 16%
Latvia - 25%
Lithuania - 33%
Romania - 16%
Russia - 13%
Serbia - 14%
Slovakia -19%
Ukraine -13%

I will try again to talk falt tax soon...


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