Friday, April 27, 2007

Flat Tax Roundup

Daniel J. Mitchell has a great piece rounding up the state of flat taxes around the world. Interestingly, most of the countries that have implemented a flat tax are former Soviet countries, including Russia.

In effect, there is a global contest being waged. On one side are pro-market forces that value tax competition as a powerful force for better tax policy. The global tax reform revolution is a symptom of how globalization is pushing policy in the right direction. On the other side, however, are international bureaucracies such as the OECD (the European Commission and United Nations also oppose tax competition). These bureaucracies are asserting the right to dictate what they refer to as “best practices” in a way that would control the types of tax policy a jurisdiction could adopt.

So far, thanks in part to the Center for Freedom and Prosperity, this effort to create a global tax cartel has been thwarted. Assuming political developments (especially in the United States) do not alter the balance of power in favor of Europe’s welfare states, tax competition will continue to thrive and an “OPEC for politicians” will never materialize. Iceland is the only “first world” nation to jump on the flat tax bandwagon thus far—but it may merely be a matter of time before tax competition brings good tax policy to the rest of Europe and even the United States.

Flat taxes are an issue I am personally very interested in, and have written about several times. There are some interesting arguments, however, in favor of what has become known as the Fair Tax.

HT Club for Growth


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