Tuesday, March 16, 2010
Thursday, March 11, 2010
To prevent this disaster and possible destruction of Egypt, Pharaoh appointed Joseph to supervise the collection of a fifth of the grain output in the seven plentiful years and store it for subsequent distribution and sale in the seven lean years. Sure enough, Pharaoh’s dream came true, but the storehouses of grain saved Egyptians and their neighbors from starvation.
From this episode, Joseph established as law the principle that a fifth of the produce grown in the land of Egypt belongs to Pharaoh. This principle was reestablished in July 2005 when a new code slashed the top personal rate from 32 to 20 percent (with two lower rates of 10 and 15 percent) and set the corporate rate at 20 percent.
Wednesday, March 10, 2010
A chronology of countries that have adopted a flat tax, indicating the year of adoption, the personal income tax rate, and the corporate income tax rate appears below.
|Flat Tax Jurisdictions|
|Jurisdiction||Year of Implementation||Personal Tax Rate Percent||Corporate Tax Rate Percent|
|Trinidad & Tobago||2006||25||25|
A few comments on the table are in order. All but the first four entries were implemented after the collapse of the Soviet empire, most being former states within the Soviet Union. The spread of the flat tax was contagious, as one country after another enacted flat taxes to maintain competitiveness with neighboring countries to attract both foreign and domestic investment.
The more recent entries in the table have tended to enact very low flat rates, with the modal rate at 10 percent. Thirteen have unified their personal and corporate income rates, with the others maintaining different rates between personal and corporate tax rates.
Sunday, March 7, 2010
The weekend edition (March 6-7, 2010) of the Financial Times carried a story on the Eastern Europe property market in the wake of the global financial crisis. The author noted that some Eastern European countries were faring better than many in Western Europe.
Prospects in Moscow were sufficiently attractive for British real estate firm Chesterton Humberts to open an office earlier this year. One of its agents, Greg Thain, who has lived in Moscow for 17 years, explained why:
"Working Russians have large disposable incomes because they pay just 13 percent [the flat rate] in tax and utilities are very low in real terms." Moscow’s population has grown rapidly because everyone in Russia who wants a good job moves to Moscow and the low flat-rate income tax enables many to afford a housing unit.
Tuesday, March 2, 2010
Seif wants to reform Libya’s economy, opening it to Western investment and transform it into the Dubai of North Africa. His ideas include massive investment in infrastructure, a free-trade zone for foreign investment, a new business and commercial legal code, and a 15 percent flat tax.
Seif’s views on the flat tax are attributable to two factors. In 1996, while attending a meeting of the Mont Pelerin Society in Vienna, I taught a one-credit, day-long course on tax policy at IMADEC (International Management Development Consulting) University. I concluded with an exposition of the flat tax, which had then been adopted in the three Baltic countries of Estonia, Latvia, and Lithuania. Among the students was Seif al-Islam el-Qaddafi, who asked several interesting questions about the flat tax.
A second factor is its spread to another two dozen countries with positive results for fiscal policy and economic development.
The flat tax is only one, but very important, ingredient in the matrix of economic policies that fosters investment and growth. If and when Libya adopts a 15 percent flat tax, it will be a sign that the country has chosen, as Deng Xiaoping put it for China in 1982, to open up to the West.