Book Citations: Flat Tax vs. Progressive Tax

Google's ngram viewer allows a comparison of the frequency among two or words or phrases between selected years.

The following graph plots the frequency of "flat tax" vs. "progressive tax" during 1960-2008. (Click on link) It shows that "flat tax" took off around 1980 with the publication of the Hall-Rabushka plan that was the basis for many of the flat-tax bills proposed in Congress during 1982-86.  It faded somewhat after passage of the Tax Reform Act of 1986, which resulted in two rates of 15% and 28%.

The frequency of the words "flat tax" accelerated again in the early 1990s with proposals from House Majority Leader Dick Armey and Republican presidential candidate Steve Forbes.  The early 1990s also witnessed first wave of flat-tax legislation in the Baltic states of Estonia, Latvia, and Lithuania.

Its frequency in books declined again after 1998, but remains comfortably ahead of "progressive tax" through 2008, the latest year for which Google books data has been compiled.

Flat Tax Roundup 2011

No major flat tax developments transpired in 2011, either in new countries getting on the bandwagon or existing flat-tax countries falling off.

Vietnam has joined the list of countries-- Malta (15%), Andorra (10%), Malaysia (15%)--that tax non-residents at a flat rate, set at 20%, while residents pay graduated rates up to 35%.

The big news is the revival of the flat tax in the campaign for the Republican presidential nomination.  Herman Cain (since withdrawn), Rick Perry, and Newt Gingrich have explicitly proposed a flat tax.  If either Perry or Gingrich win the nomination, the flat tax will be a major issue throughout the campaign.  Although Jon Huntsman signed a flat tax into law in Utah, he proposes three federal income tax rates.  Mitt Romney plans to lower rates in the future, but is not proposing an immediate major reform.  Michele Bachmann, Rick Santorum, and Ron Paul support reform and lower rates, but none of these seem likely to secure the nomination.

Malta Extends its Preferential 15% Flat Tax

To enhance Malta’s attractiveness for skilled persons engaged in certain high-tech economic fields, the government, in its 2012 budget, has extended its preferential 15% flat tax to international professionals developing digital games.  Maltese companies that commission digital games will qualify for a tax credit of about $20,000.

The government will also exempt royalties from copyright-protected books, film scripts, music, and art.

Return With Us to Those Exciting Days of Yesteryear

The Flat Tax Rides Again--Perry, Huntsman, Gingrich (optional), Cain, and Bachman.

Et tu Romney?

Three Cheers for Herman Cain

9-9-9

Madagascar Enhances its Flat Tax

To improve the investment climate in the African island nation of Madagascar, located off the southeast coast of the African continent, the government’s 2010 budget reduced the flat-rate personal income tax from 24% to 23%, with a personal allowance of MGA 250,000 (US$1 = Malagasy Ariary 1,942), about $125 per month, or $1,500 a year.  Corporation tax was incorporated into the income tax code at the same 23% rate.

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