It’s not enough to get me to move to Iraq — or Russia — but it sounds like a good idea. From U.S. Administrator Imposes Flat Tax System on Iraq:
The flat tax, long a dream of economic conservatives, is finally getting its day — not in the United States, but in Iraq.It took L. Paul Bremer, the U.S. administrator in Baghdad, no more than a stroke of the pen Sept. 15 to accomplish what eluded the likes of publisher Steve Forbes, Reps. Jack Kemp (R-N.Y.) and Richard K. Armey (R-Tex.), and Sen. Phil Gramm (R-Tex.) over the course of a decade and two presidential campaigns.
“The highest individual and corporate income tax rates for 2004 and subsequent years shall not exceed 15 percent,” Bremer wrote in Coalition Provisional Authority Order Number 37, “Tax Strategy for 2003,” issued last month.
Voilà! Iraq has a flat tax, and the 15 percent rate is even lower than Forbes (17 percent) and Gramm (16 percent) favored for the United States. And, unless a future Iraqi government rescinds it, the flat tax will remain long after the Americans have left.
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Bremer’s new economic policy for Iraq will slash Saddam Hussein’s top tax rate for individuals and businesses from 45 to 15 percent. Of course, since Hussein’s government, like others in the Middle East, almost never enforced tax collection, there is no real history of paying taxes in the country.During the more than three decades of Baath Party rule, Hussein ran a centrally controlled economy with most large businesses owned or operated by the state. The government also managed the import of most goods.
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Bartlett, once an aide to Kemp and now with the National Center for Policy Analysis, said the model for Iraq should be Russia, which in 2001 set a 13 percent flat tax on individual income. The Bush administration, still disturbed by much higher tax rates here, has said it admires Russia’s flat tax. Russia “understands the importance of getting the tax structure right in your economy,” Commerce Secretary Donald L. Evans told the conservative Heritage Foundation last year.President Bush, in Russia last year to see President Vladimir Putin, said: “The good news is that the flat tax in Russia is a good, fair tax — much more fair, by the way, than many Western countries, I might add.”
One economist familiar with the area said: “At the previous 40 percent to 50 percent, Russian people were evading. Now at a lower rate, they are paying because the penalties are so heavy.”
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American flat-tax advocates have made little headway at home, in part because Democrats say it would disproportionately hurt lower-income Americans and because expensive tax breaks such as the deductions for mortgage interest and charitable donations are beloved in both parties. But in places such as Russia, the Baltic states and Iraq, there was no well-established tax code defended by an army of lobbyists. “Somehow, it’s easier when you start from scratch,” Norquist said.