Out of Control Policy Blog

Romania goes flat

While our tax code is as wacky and complex as ever, Romania has adopted a flat 16 percent tax on personal and business income.

The old personal income tax had five rates, the bottom one kicked in at 18 percent of income and the top at 40 percent. In pre-flat days, the business profits tax was 25 percent.

It's another example of another nation getting its act together while we twiddle our thumbs. Reasserting ourselves as the land of dynamism and innovation would help a lot more than grumbling about outsourcing.

Even formerly communist nations are learning how to compete:

    Romania's decision to adopt a low flat tax reflects fiscal competition from other Central and Eastern European countries that have adopted the flat tax: Estonia, Latvia, Russia, Serbia, Ukraine, Slovakia, and Georgia. [Lithuania has a 33% flat rate on wage and salary income, but its tax system imposes a wide variety of rates depending on source of income.]

    Other countries are waiting in the wings. The likelihood of a flat tax in these countries depends on the elections that will be held in the coming years. The shadow finance minister of the Czech Republic, Vlastimil Tlusty of the Civic Democratic Party, is urging his country to follow suit.

In related news, North Korea has also caught flat fever, but in more of a totalitarian kind of way.

It announced that the "flat-top crew cut" is one of four acceptable haircuts for men. The others are: "middle hairstyle," "low hairstyle," and "high hairstyle".

Turns out that long hair on men is a sign of a corrupt capitalist lifestyle.

Ted Balaker is Producer


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