Sunday, September 18, 2005

Flat Tax....Yo, Boortz, lookit this!

[Sunday, December 18...
This post was put together in September and picked up today by the NY Times.
Welcome Times readers! Boortz is a talk-show I listen to daily to keep my discernment sharp. As a bed-wetting liberal I would never dream of calling in to play mouse to that cat, but I have to say he is a bright thinker.
I saw John Linder last night on S-SPAN-2 talking about the book, and I have heard more about it since this post was put together, so the idea may be catching on.
I like the idea of a consumption tax because I personally know of more and more economic activity that would be called "blackmarket" in other countries, so a consumption tax is the only way to capture some of those otherwise untaxed transactions.
Those who argue that a flat tax is not "progressive" are not taking into account that in real dollars there is no way that a low-income person is going to come close to "being taxed" as much as a rich one. And all the drug money, unreported gratuities and "sub-contractors" who now contribute nothing will be pumping the economy a lot more every time they buy something with that filthy lucre.]

COUNTRIES that have adopted a flat tax are growing twice as fast as those that haven't, research out this weekend confirms.

Since 1995, eastern European countries with a flat tax have enjoyed an average annual gross domestic product (GDP) growth rate of 5.3%, compared with only 2.6% among those without, research by the Reform think-tank shows. A weighted average of the flat-taxers confirms this finding and reveals they have grown faster in eight out of the past 10 years.
The research also reveals cutting tax rates need not mean a collapse in tax receipts, thanks to positive growth effects and a reduction in tax evasion.

The Treasury's main argument against the flat tax, made repeatedly last week, is that it would "cost a lot of money" due to lower tax rates and a likely increase in the income tax threshold to help lower earners. But the argument was rejected by Reform, which said: "This argument is disingenuous because the Treasury is in the process of spending 'a lot of money' itself in the form of very considerable public spending increases above the rate of economic growth between 1999-00 and 2007-08." It said that if the government had maintained spending increases at the rate of economic growth, it could have introduced a flat rate of income tax at 17% with a bigger personal allowance.

Eric Nielsen, economist at Goldman Sachs, said: "The move to lower and simpler taxes has begun in Old Europe and that is good news for productivity and growth."

Hat Tip: WILLisms

(Neal Boortz and John Linder have been advancing the case for the "fair tax," an unfortunate attribution for a proposal which is light years ahead of, and a lot more promising than, the "flat" tax given currency by Steve Forbes.
Check the link and note the comments.
I like the notion but I don't think it has a chance. Nobody has even blogged about it...
The sludge in Washington is thicker than that of New Orleans. I few inches of rain will get New Orleans on the way to cleaning up, but I don't have the same hope for the Washington cesspool.)

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