Forbes's masterpiece is a significant work with a lot of helpfully served information. I think everyone who's worried about the future of tax codes should simply read this book.
Flat Tax represents an idea of restoring liberty upon equality. The people who prefer progressive taxes actually prove themselves to be dedicated to the main idea pinned down in Communist Manifesto written by Marx and Engles. They entitled progressive taxation as the basic idea of communist society. There's a never-ending list of "yes" for the adoption of a single, competitive and fair flat tax. The main reasons are growth and simplicity. Economically, the argument of simplicity works perfectly since the margin of administrative costs falls down respectively. In fact, taxes are the main determinant of variability in productive behavior. Higher taxes mean less capital inflows which could be translated into high drop-out rate of new jobs. In fact, policymakers in socialist countries such as Sweden, France, Germany, Slovenia and Italy strongly underpin their uprising for "poor". Bullshit. Do you know that current economic growth in China pulls a million people from poverty a month? Do you know that Slovakia, after adopting the flat tax in 2004, almost trippled its GDP compared to its situation in 1993 when the country launched institutional restructuring towards market economy and property right protection. Do you know that Estonia after adopting a single marginal flat tax rate has been constantly considered "economically completely free" country? Estonia's remarkable achievement of transition was its shifting towards free market economy. Once the "sick edge of Baltics" is now, according to State Department, one of the most competitive countries in European Union in terms of efficiency and performance. Do you know that Hong Kong has been serially treated as No.1 place of economic freedom? The main ingredient of this success was definitely its flat tax system that boosted productive behavior and invited investors from all around the world to invest in Hong Kong. Another reason for simple and effective flat tax is the security of our financial resources. Privatizing social security and health care is just one chapter of this competitive potential. State-subsidized welfare programs of health care and social security are nothing else but a "big joke" that cheats millions of taxpayers who don't receive a credible commitment that their money contributed to the "national health care scheme" will be spent rationally and effectively. Shifting towards private accounts for social security would definitely turn out in an increase of wealth since yields of market investment funds raise impressively. This would result in a free choice of selecting where to put your money in order to be returned in higher value respectively. And finally, tax returns would be filled out on a simple postcard-sized paper. This would mean that you will no longer have to rent tax advisers and tax specialists. The only you'll have to do is to fill out a simple form in a matter of minutes. As simple as that!
If you want to hear more about flat tax than read Forbes's Masterpiece. Click here or here.
3 comments:
One of the reasons China may be so competative is that they offer near slave labour. Maybe...
In 2005, China emerged as the world's third-largest trading nation. Its 2004 current account surplus jumped 50 percent to $68.7 billion—more than 10 percent of total exports. The Chinese government reports that 2004 GDP growth continued at a robust rate of 9.5 percent. Beijing moved to cool the economy with cutbacks of construction machinery and investment-related imports and by exporting surplus domestic production of chemicals and metals. Foreign direct investment inflows rose 13.32 percent to $60.63 billion in 2004. Stepped-up complaints of China's failure to address intellectual property crimes and other grievances, as well as pressure from U.S. protectionists, generated a groundswell of sentiment in Congress to sanction China for trade transgressions. In late 2004, China's septuagenarian leader Jiang Zemin finally passed the baton to his sexagenarian successor Hu Jintao, but this "transition" did not ease the machinery of political repression, much less presage political reforms. Through 2004 and 2005, even domestic observers of China's political scene bemoaned tighter controls on speech and expression, particularly via the Internet, and complained that President Hu had sold out to party hard-liners.
General barriers to investment that plague China include a lack of transparency, inconsistently enforced laws and regulations, weak [intellectual property rights] protection, corruption and an unreliable legal system incapable of protecting the sanctity of contracts. The Economist Intelligence Unit reports that "China welcomes foreign investment and is bound under World Trade Organisation rules to open its industries further to foreign businesses, but it does not wish to see its control over important ‘strategic' sectors of its economy slip into foreign hands. Partly with this in mind, on July 25th 2004, China announced a significant structural change to its FDI regime. That allowed foreign investment only in specific, government-designated sectors." Foreign investment regulations that took effect on April 1, 2002, requiring various Chinese bureaucracies to regularly update a Foreign Investment Catalogue for the government to use as a guide in approving foreign investment projects remain in effect. In June 2004, the government opened the retail and distribution sector to 100 percent foreign-owned companies. The People's Bank of China regulates the flow of foreign exchange into and out of the country, and the government intervenes and controls foreign investment in the stock market. The International Monetary Fund reports extensive controls, government approval requirements, and quantitative limits on foreign exchange, current transfers, and capital transactions. Direct investment is subject to government approval, as are real estate transactions.
China is actually a global phenomena. Why the labor force is interpreted to be nearly enslaved is generally the question of hundreds of years of destructive role of formal and informal institutions which has surpassed different politico-economic system. The latter was resulted in a collapse of private property rights protection. This is also the essential question why capitalism works somewhere and fails elsewhere. Steve Forbes offered a brilliant speech on Hillsdale College and had frankly talked about how modern economy grows on the edge of its competitive strenght. China has luckily dropped off Maoist perceptions of economic structure which has allowed "more" liberal investors' environment and create creative certain quantity of wealth. But the major concern is still China's political system where civil rights are treated very badly and disgracefully Judicial system is weak, property rights are usually violable and very weakly protected.
Heritage Foundtion and CATO Institute frankly criticize the role of Chinese institutions and my opinion is that it's just a matter of time when the political system of China will be compelled with its "booming" system of economy accordingly.
Why Chinese market lifts million people a month out of poverty? Economist's comment: "Well markets were allowed to have created wealth." But believe me, this success is definitely not politically resulted!
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