Arnold Kling

Russian Flat Tax

Arnold Kling, Great Questions of Economics
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I was not aware that Russian had adopted a flat income tax of 13 percent, until I read this article by Daniel Mitchell.

According to preliminary figures, inflation-adjusted tax revenues climbed by 28% last year. This proves the class-warfare artists in Washington completely wrong when they argue that tax revenues would fall and the rich would get a big tax cut if America adopted such a system.

As usual, the supply-side rhetoric gets a bit out of hand. I can understand in Russia that a cut in tax rates easily could be offset by an increase in tax compliance. In the United States, where the rate of voluntary compliance is high to begin with, it is considerably less likely that we would see an increase in revenues resulting from a decrease in tax rates.

Discussion Question. The complexity of the tax code in the United States often is blamed on special interests. Campaign finance reform is supposed to reduce the influence of special interests. Is it reasonable to expect to see a simpler tax code?

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