Where's Our Flat Tax?

If George W. Bush is our first MBA U.S. President, and Republicans control both Houses of Congress, then why have we not moved towards a scrapping of the tax code?

Could it be because once in power, Republicans spend money as easy as Democrats? Or, perhaps a major shift in the tax code would invite a (temporary) explosion of red ink that Democrats would exploit? Or, could it be we can't afford a national debate on the virtues of dumping our current system of taxation because the country is split on the Iraq War and cannot digest more big issues? Or, is K Street, the biggest contributors to U.S. House races, too invested in the current tax code to accept major changes?

Global Competition for $500, Alex.

From John Fund

The White House tax reform commission...but look for it to have warm words for how well the flat tax is promoting economic growth in the more than dozen places--ranging from Ukraine to Hong Kong--that have adopted variations of it.

It's increasingly popular overseas, with Romania and the republic of Georgia adopting it last January. Greece is likely to introduce a 25% single rate for both corporate and personal income next month. If Poland's opposition parties win next month's elections they are likely to introduce a flat tax. In Italy, the former finance minister and current defense minister Antonio Martino detailing his support of the flat tax.

Indeed, the Brussels-based Center for a New Europe notes that none of the countries that have adopted the flat tax are seriously contemplating any retreat from it. Flat-tax pioneer Estonia is even reducing its rate by two percentage points a year until it drops to 20% in 2007.

...when Jerry Brown championed a flat tax, won applause from audiences by pointing out that under our current system the rich will always be able to hire experts to lobby for tax loopholes and avoid the higher rate traps set for them.

It may be a matter of long-term economic survival. America's taxes on profits are around 40%, when you combine federal, state and local levies. With the possible exception of Japan, that rate is about the highest of any developed nation in the world today

In 2001 Russia implemented a flat tax of 13% for individuals, along with a 15% rate for most business income. The economy grew 7.3% last year, thanks in part to underground activity going legitimate...

...it's only a matter of time before an emerging economic superpower like China or India goes the flat-tax route