Friday, May 4, 2007

Excellent article about taxation magazine has posted an excellent article about the flat tax revolution. While not quite the solution to all ills, flat tax does stimulate growth by not penalizing people who want to earn more (0 marginal tax rate). The article lists several accomplishments:

* Stronger incentives for productive behavior. Flat tax rates almost always mean a lower tax rate on work, saving, investment, risk-taking, and entrepreneurship.
* Encouraging capital accumulation. As noted in the previous section, few if any flat tax systems live up to the Hall/Rabushka goal of eliminating all discriminatory taxes on income that is saved and invested. Yet most of the world’s flat tax systems have reduced the tax penalty on capital.
* Evening out the tax burden. Some nations (like Slovakia, Estonia, and Hong Kong) have done a better job than others, but most every flat tax system includes a reduction in the special preferences that distort market decisions and cause economic inefficiency.

1 comment:

Anonymous said...

Another good article on flat taxes can be found here: