Friday, April 15, 2005

Just in time for tax day

From the Economist – “The Case for Flat Taxes” – “Pioneered in eastern Europe, flat tax systems seem to work because they are simple

The Americans are talking about [tax reform]. Meanwhile in Europe, east of Vienna and as far afield as Russia and Georgia, they are actually doing it. In 1994, Estonia became the first country in Europe to introduce a so-called “flat tax”, replacing three tax rates on personal income, and another on corporate profits, with one uniform rate of 26%. Simplicity itself. At the stroke of a pen, this tiny Baltic nation transformed itself from backwater to bellwether, emulated by its neighbours and envied by conservatives in America who long to flatten their own country's taxes.
The companion article, called “The flat tax revolution” further notes that Estonia’s economy has flourished and that by exempting a certain base income, the flat tax still maintains a level of progressivity. Very interesting stuff.

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