Hong Kong has a flat tax, and going flat is all the rage in Eastern Europe.
Stephen Moore thinks that now is the time for the US to join the club:
- Former Senators Connie Mack of Florida and John Breaux of Louisiana, the chairmen of President Bush's new tax reform panel, have been granted a historic opportunity to dramatically overhaul our economically debilitating federal tax system. The surest way for the tax panel to crack through the political gridlock that has paralyzed this issue for decades would be to endorse the Freedom to Choose Flat Tax ...
The central idea behind the Freedom to Choose Flat Tax is to create an optional post card flat tax, which would be offered to tax filers as an alternative to -- rather than a replacement of -- the current tax code. There would be no deductions whatsoever, except for a generous personal deduction and child deduction.
Picture a 20 percent tax rate for all income:
- The plan would be a boon to American competitiveness and job creation because wage and business income would be taxed at a maximum rate of 20%. The corporate tax rate, which is now 35% and well above the world average, would fall to 20%, but all tax credits would be ended.
Going flat would also help slow outforcing, and that, not outsourcing, is the real boogeyman.