RUSSIA'S FLAT TAX

In 2001, Russia enacted a flat tax rate of 13 percent; a reform so popular it has since been adopted by countries such as Serbia, Ukraine, Georgia, Romania, Slovakia and Macedonia. But is the flat tax a good thing? According to the authors of a new study published by the National Bureau of Economic Research, it is:

> Studying Russia, the authors found that the flat tax lead to a significant decrease in tax evasion.

> This is likely due to the fact that lower marginal tax rates decreases the incentive to avoid reporting income.

> Further, if there is a decrease in tax evasion, policy makers can lower the marginal tax rate further while still collecting the same amount of revenue.

Overall, it seems that the flat tax is not only attractive according to economic theory, but may also work well in reality -- at least in terms of reducing tax evasion.

[it would also make all citizens - in perfect proportion - taxpayers, and so counter the class-warfare tactic of wealth redistribution through our nonsensical tax code]

READ MORE