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Tax Reform
On Thursday I was up at the Hoover Institution to do the interview with Erin Ade of RT’s BoomBust and I always use those chances to visit some of my favorite Hoover colleagues. One of them is Alvin Rabushka, who invited me into his office and showed me the flags he has from each country or political entity that has introduced the flat tax rate on income. Alvin, with our fellow Hoover colleague, Bob Hall, wrote the book The Flat Tax, and Alvin has proselytized for a flat tax around the world. The picture below shows the results. Every flag on that desk represents a place that adopted the flat tax.
READER COMMENTS
ThomasH
Nov 15 2014 at 7:33pm
I understand the desire to avoid high rate of taxation on capital income, but that is achieved with a consumption tax. But why would one not want that consumption tax to be pretty steeply progressive? A flat INCOME tax would be fair only with a huge amount of redistribution of ownership of capital. It might be OK for Maoist China in 1949 but not a modern capitalistic economy like ours.
Andrew_FL
Nov 15 2014 at 9:03pm
There Ain’t No Such Thing As A Big Simple Tax.
Readers here may appreciate (I know I did) Roger Garrison’s critique of the Rabushka’s flat tax proposals.
Rich Berger
Nov 16 2014 at 7:56am
Professor Rabushka spoke at a meeting of our actuarial consulting firm. He noted that most actuaries derived their income from exploiting the tax code, and that a flat tax would eliminate many of those opportunities. He stated that he was confident that we were smart enough to find alternative employment. I liked his candor and optimism.
RogC
Nov 16 2014 at 8:42pm
Proposals for flat tax rate plans all erroneously presume the purpose of the income tax is to fund government. Flat plans tend to exist in nations where the citizens do not have very strong due process and privacy protections so the government gives up little by allowing the plan. Where national constitutions provide strong protection to the privacy of the citizens the tax authorities are usually exempt from the restrictions that law enforcement must follow and simplifying the tax code would weaken the ability of the government to pry into the affairs of the people. There are of course a few exceptions in smaller nations which have lucked into the temporary position of having decent leaders but not many.
Hugh
Nov 17 2014 at 3:41am
I live in Romania which implemented a flat tax (16% on personal and corporate income) in 2004.
….It’s great.
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