Worldwide Trend toward Flat Taxes Should Guide Congress, Nation's Largest Taxpayer Group Says

NTU ^ | 01/07/2008 | Peter J. Sepp, Natasha Altamirano

[xcamel]

(Alexandria, VA) -- As House Ways and Means Committee Chairman Charles Rangel (D-NY) plans another push this year for an overhaul of the Tax Code, lawmakers should abandon Rangel's multi-rate proposal and follow the worldwide movement toward a simple flat tax system, according to the 362,000-member National Taxpayers Union (NTU). In the mid-20th century, Hong Kong was the only country with a flat -- and proportional -- national personal income tax rate. Since then, 17 other countries have followed suit and introduced flat taxes, according to the World Taxpayers Associations (WTA), a coalition of 60 taxpayer-advocacy groups -- including NTU -- from 44 countries.

"A single-rate tax would create a more simplified and transparent Tax Code," NTU Vice President for Policy and Communications Pete Sepp said. "Instead of 'wrangling' more money from families, Chairman Rangel and other legislators should catch on to what the rest of the world is discovering -- lower, flatter taxes benefit their citizens and their economies."

One recent trend many countries have followed is to introduce very low flat income tax rates -- usually from 10 percent to 13 percent. Bulgaria, Kazakhstan, Kyrgyzstan, and Macedonia have introduced flat tax rates of 10 percent over the past two years. Russia enacted a 13 percent income tax rate in 2001, and Ukraine did the same in 2004, according to WTA.

Estonia, the first European country to introduce a flat tax rate (in 1994), plans to reduce its rate by 1 percent each year, with a goal of an 18 percent rate by 2011. Estonia's current rate is 20 percent. Both Lithuania and Hong Kong reduced their income tax rates for 2008, from 27 percent to 24 percent and from 16 percent to 15 percent, respectively. Jersey, Georgia, Guernsey, Iraq, Ireland, Latvia, Macau, Romania, and Slovakia also have flat income tax rates ranging from 12 percent to 25 percent.

"Whether it's a flat income tax or even better, a retail-level national sales tax, American policymakers should look abroad to see what's working," Sepp concluded. "Single-rate taxes represent the wave of the future for countries that want to be competitive and governments that want to respect the rights of their taxpayers."

[xcamel]

The 800-pound gorilla that other tax plans (dreams?) ignore..

Fact is, Flat taxation works as evidenced by the 36 countries (280 million people) that have adopted similar (and wildly popular) plans in the last 30 years

[Extremely Extreme Extremist]

Countdown to the FairTax kooks spamming the thread 3...2...1

[xcamel]

A Brief Guide to the Flat Tax
[mash above]

[econjack]

What amazes me is that Rangle, who has no formal training in economics, is in charge of overhauling the tax code. Well, Charlie, it doesn’t need to be overhauled. It needs to be thrown out. We realize that you would have to give up a little power for a flat (or Fair) tax, but that’s what the American people want...even if it isn’t what you want.

[econjack]

Countdown to the FairTax kooks spamming the thread 3...2...1

I think it’s unfair to call people who support the Fair Tax "kooks." There’s some good reasons why the Fair Tax should be considered, especially if they drop the prebate idea. The Flat Tax, however, should have the least bureaucracy associated with it.

[mike-zed]

Unfortunately, the Congress seems to have chosen Vladimir Ilyich Lenin as a guide.

[yankeedame]

Worldwide Trend toward Flat Taxes Should Guide Congress, Nation's Largest Taxpayer Group Says,

Hah!! The worldwide trend has been for countries to earnestly explore/tap into off-shore oil. Something no one can ever blame the U.S. for doing. Unfortunately.

[LoneRangerMassachusetts]

"A single-rate tax would create a more simplified and transparent Tax Code," NTU

So if we go from several progressive tax rates to a single rate, all of a sudden loopholes, deductions, incentives, the bureacracy, armies of accountants, and tax attorneys just disappear? Believers must be potheads.

[xcamel]

That is an entirely different topic...

[Glenn]

Fact is, Flat taxation works as evidenced by the 36 countries (280 million people) that have adopted similar (and wildly popular) plans in the last 30 years

Are any of them capitalist countries?

[xcamel]

They all are now..

[xcamel]

The Heritage Foundation has weighed in heavily on this:

http://www.heritage.org/Research/features/issues/issuearea/Taxes.cfm

But according to some, they are just another group of Marxists.

[xcamel]

This will let you make more sense of it..

http://www.cato.org/pubs/policy_report/v29n4/cpr29n4-1.html

[Roccus]

President Reagan was hinting around about a flat tax during his first term. I was hoping that he would push one after the 84 election but........

[xcamel]

He and his economic advisers did manage to convince a fair number of eastern European countries to do it, and for their size, they’re rocking now...

[Alberta's Child]

I don't doubt the effectiveness of a flat income tax rate, but some of these anecdotal stories from other countries are a bit misleading.

Russia, for example, adopted a "flat income tax" rate some time ago. But from what I've read, the Russian government actually gets more revenue from a payroll tax system that is far more dysfunctional than ours. The result is that the flat income tax rate doesn't have quite the same impact as one might have expected in that case.

[Eska]

Ain't that the truth. As I sit here doing my dang taxes, knowing once again I will pay more than is withheld with zero claimed; I also realize this country would come apart at the seams if a flat tax was instituted overnight.

If only the repubs & dems could start towards that flat tax direction; dreaming I guess.

[who_would_fardels_bear]

Exactly!

No matter how many income levels and tax rates the IRS comes up with it is a relatively simple thing to read your taxes owed off a table once you know your taxable income.

The complicated part about filling out a tax form is adding up all the different things that constitute income and subtracting all of the different things that are counted as deductions.

Bush, and even Thompson, who claim to be for tax simplification are/were contantly supporting tax "incentives", etc. which amount to additional pages of tax code leading to further complication.

Personally I would be willing to accept a little bit of progressivity in the tax schedule in exchange for the elimination of all or most deductions and "incentives".

We should do this for corporations first. No more "incentives" to invest in solar, or whatever other harebrained ideas they have. Just total up the profits and slap on a tax.

If so, then the job of "tax attorney" might be eliminated in our time.

[xcamel]

As an aside.. about 1300 pages of tax code (not legal rulings) to figure your income tax - and another 15,000 pages of "social engineering"

"Taxes should be uncomfortable. Not especially painful, mind you -- just a bit irritating. Enough to make you pay attention. Modest discomfort is an element of citizenship, reminding voters of the price they pay for civilized society."

(thank you, Justice Holmes)

[econjack]

That was Friedman talking and he played an extremely important behind-the-scenes role in Reagan’s economic policies. He advocated a 17% flat tax rate. I was lucky enough to meet him twice and was (and still am) absolutely in awe of his intellect.