Let's Take a Look (Again) at the Flat Tax Solution
As has been pointed out the chart by the TaxProf has different numbers than the iris chart. The difference between the two is that the TaxProfs numbers have been adjusted for inflation. (Via: Daily Bubble)
This does not change my argument. Correlation does not imply causation. The flat tax alone does not account for the rapid GDP growth in each of these developing countries. The rapid GDP growth can be attributed to the economic liberalization occurring in each of these nations. Free trade and privatization will naturally increase revenue. Flat taxes only allow governments in developing nations to collect revenue more efficiently (less loopholes, easier to enforce, etc.)
As for the "fair tax" of a 23% sales tax on all retail goods and services it ain't gonna work. Its not revenue-neutral at 23% and the minimum level set would have to be at 31%. This does not take into account the possible revenue lost due to people purchasing items under the table.
No matter how much conservatives state the benefits of the flat tax the idea will never catch on in the Western Europe and the United States where citizens are more concerned about the distribution of wealth rather than growth. Political suicide comes to mind when I think of legislators pushing the flat tax idea.
An interesting idea, but whose time has not come and probably never will. (At least for the United States and Western Europe)
Update: I understand that the flat tax did not kill Angela Merkel's political career, but it almost did.
This does not change my argument. Correlation does not imply causation. The flat tax alone does not account for the rapid GDP growth in each of these developing countries. The rapid GDP growth can be attributed to the economic liberalization occurring in each of these nations. Free trade and privatization will naturally increase revenue. Flat taxes only allow governments in developing nations to collect revenue more efficiently (less loopholes, easier to enforce, etc.)
As for the "fair tax" of a 23% sales tax on all retail goods and services it ain't gonna work. Its not revenue-neutral at 23% and the minimum level set would have to be at 31%. This does not take into account the possible revenue lost due to people purchasing items under the table.
No matter how much conservatives state the benefits of the flat tax the idea will never catch on in the Western Europe and the United States where citizens are more concerned about the distribution of wealth rather than growth. Political suicide comes to mind when I think of legislators pushing the flat tax idea.
An interesting idea, but whose time has not come and probably never will. (At least for the United States and Western Europe)
Update: I understand that the flat tax did not kill Angela Merkel's political career, but it almost did.
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