GROWTH, JOBS, SIMPLICITY, FAIRNESS AND PROSPERITY: PANEL ON TAX REFORM - THE CASE OF THE U.S. and SLOVENIA

Traditionally, there's a basic aspect that the U.S. and Slovenia have benefited from their process of "tax competition". But there's certain evidence that America and Slovenia are falling behind with their progressively imposed system of taxes. Nations around the world are skipping forward with lower tax rates and reformed tax systems. Indeed, several nations from Eastern Europe impose genuinely adopted versions of flat tax. Estonia was the first to make such an encourages step ahead in 1994. Her incredible metamorphosis from a Soviet-type of economy to a free-market economy was namely a result of seriously principled reforms, launched by Estonian Prime Minister Mart Laar in the early 1990s. Slovakia is the most recent country that followed liberally traced principles, by adopting 19% flat tax on corporate and personal income. Slovakian reforms (Martin Bruncko, Ivan Miklos...) put an emphasis on replacing the old system that included 90 exceptions, 19 sources of untaxed income, 66 tax-exempt items and 27 items with specific tax rates.Unlike the present system, the flat tax is far more efficient and simple, good for growth and suitable for creating new jobs. Instead of ("cane-filling-crap") the 893 forms of tax cards, the flat tax is proposed on two postcard-sized forms, one for labor income and another one for business and capital income. Instead of discriminating treating, the flat tax treats all tax-payers equally, thus certainly fulfilling "Justitia omnibus" or "Equal Justice for all", most prominently etched echo of the legal code. Unlike the present system that punishes productive citizens who contribute much to nation's growth, the system of flat tax lowers marginal tax rates and most importantly eliminates tax bias against productive behavior, such as saving and investment, thus ensuring better and more explosive economic performance in competitive global economy. Admirably, there have been "blueprint" path-breaking attempts to launch the idea of flat, proposed by Hoover Institution economists, namely Alvin Rabushka and Robert E. Hall. While differently proposed, all common flat tax features sustain fixed elements that put equal treating of all taxpayers, simplicity and fairness ahead of unequal and discriminative treatment of tax-payers - a system that indicates that some of the individuals are worth more and some are worth less. Under flat tax, such a violent tax-discrimination would be endlessly abolished. So let me turn to the point of basic features that are proposed with the idea of single flat tax rate.1. SINGLE AND LOW FLAT RATE. German professor of Economics & Finance at Heidelberg University argues that no flat tax should be higher than 25%. Putting the reality on the table, all flat tax rates propose less than 20% flat rates. The low flat rates solve the problem of high marginal income rates that penalize courage and productive behavior, namely work, risk-taking and entrepreneurship.2. FAST ELIMINATION OF SPECIALLY TREATED PREFERENCES. All of the flat tax prosposal eliminate provisions of the code that bestow preferential tax treatment on certain behavior and activities. By getting rid of tax deductions, credits, exemptions and other "loopholes", the elimination of special preferences solves the problem of rigid complexity, allowing individual tax-payers to file their tax return on two postcard-sized forms.3. NO MORE DOUBLE TAXATIONS OF SAVINGS AND INVESTMENTS. Simply imposed flat tax proposals eliminate the tax code's bias against the formation of capital, by complete ending of double-taxation of income that is both, saved and invested. This of course means that there would be no capital gains tax, no double taxes on saving and no double taxes on dividends. By taxing income only once, it will be easier under flat tax to enforce and more conducive to both, job and capital formation.4. THE PRINCIPLE OF TERRITORIAL TAXATION. Certain flat tax proposals are based on the notion of "territorial taxation", simply meaning that governments should only tax income that has been gained inside (within) national borders. By getting rid of "worldwide taxation", a flat will enable U.S. and Slovenian taxpayers and companies to perform competitively on a level playing field around the world, since many other nations already rely on these principles.5. FAMILY-FRIENDLY NATURE OF FLAT TAX. There's another prosperous aspect that firmly underpins, why the flat tax is better than progressive tax rates. Households receive a generous exemption based on family size. In the case of U.S., a family of four would not start to pay tax until their annual income would overreach the annual income of $30 000.GROWTHFULLY SUSTAINABLE ADVANTAGES OF A FLAT TAXMost recently told, there are two most principal arguments for a flat tax rates. The first one is growth and the second one is simplicity. Many "supply-side" economists are literally attracted to the idea of a flat tax, because the current system is relied on high rates and discriminatory taxation of savings and investment, reduced growth, destroyed (non-value added) jobs and lower incomes. Lower incomes are stolen to certain individuals and are transmitted to preferred groups (lobbies), that a regular citizen can never hope to be in such a firm position, where he would receive incomes that were stolen from other individuals that kept on hard working in order to earn as much money as possible to save it for his or her family. A flat tax wouldn't eliminated the damaging impact of all taxes together; but by dramatically lowering rates and ending the tax code's bias against saving and investment, it would boost the economy's performance when compared with the present tax code.For many Slovenians and Americans, the most prospective feature of a flat tax is its simplicity. The complicated documents and manual instructions taxpayers struggle to decipher from every March to October would be replaced by a brief set of instructions and the numerous forms by two simple postcards. This radical and prosperous reform appeals to citizens who not only resent the time and expense consumed by their own tax forms, but also suspect that the existing maze of credits, deductions, and exemptions gives a special and discriminatory advantage to those wield political power and can afford expert tax advisers.If I come to end and enact certain advantages for Slovenia and the U.S. by imposing a single flat tax rate on labor and capital. A FLAT TAX WOULD YIELD MAJOR BENEFITS TO THE NATION, INCLUDING:- FASTER, RAPID AND EXPLOSIVE ECONOMIC GROWTH. A flat tax would spur increased work, saving and investment. By increasing incentives to be engaged in productive-type of economic behavior, it would also (most centrally) boost the economy's engine for long-term growth rate. Even if a flat tax boosted long-term economic growth, by as little as 0,5%, the income of the average family of four after the period of 10 years would still be as much as $5 000 higher that it would be under present system of "tax misery", in case if current tax laws remained in effect.- INSTANT WEALTH CREATION. Harvard economist, Dale Jorgensen says that "tax reform would boost American national wealth by nearly a $5 trillion. The reason for that argument is that all income producing assets would raise in value since the flat tax increase the after-tax system if income they actually generate.To boost growth rate, to create more jobs, to attain tax simplicity, to pursue more liberty, economic prosperity in order to preserve equal treatment for all taxpayers, to reduce political abuses and to cut the influence of lobbies on tax, there's an emerging enquiry to boost nation's economic performance in global economy. If we hold inalienable truths, that all men are created equal, as self-evident as there's a fair deal that must adopt flat tax rate and end progressive rates, that pursue misery, unhappiness and economic devolution. Such a negative aspects would most certainly devastate the nation's growth and bright future that is enacted in the proposal of a flat tax.