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Worldwide Trend toward "Flat Taxes" Should Guide Congress, Nation's Largest Taxpayer Group Says
For Immediate Release January 7, 2008
Pete Sepp, (703) 683-5700
(Alexandria, VA) -- As House Ways and Means Committee Chairman Charles Rangel (D-NY) plans another push this year for an overhaul of the Tax Code, lawmakers should abandon Rangel's multi-rate proposal and follow the worldwide movement toward a simple flat tax system, according to the 362,000-member National Taxpayers Union (NTU). In the mid-20th century, Hong Kong was the only country with a flat -- and proportional -- national personal income tax rate. Since then, 17 other countries have followed suit and introduced flat taxes, according to the World Taxpayers Associations (WTA), a coalition of 60 taxpayer-advocacy groups -- including NTU -- from 44 countries.
"A single-rate tax would create a more simplified and transparent Tax Code," NTU Vice President for Policy and Communications Pete Sepp said. "Instead of 'wrangling' more money from families, Chairman Rangel and other legislators should catch on to what the rest of the world is discovering -- lower, flatter taxes benefit their citizens and their economies."
One recent trend many countries have followed is to introduce very low flat income tax rates -- usually from 10 percent to 13 percent. Bulgaria, Kazakhstan, Kyrgyzstan, and Macedonia have introduced flat tax rates of 10 percent over the past two years. Russia enacted a 13 percent income tax rate in 2001, and Ukraine did the same in 2004, according to WTA.
Estonia, the first European country to introduce a flat tax rate (in 1994), plans to reduce its rate by 1 percent each year, with a goal of an 18 percent rate by 2011. Estonia's current rate is 20 percent. Both Lithuania and Hong Kong reduced their income tax rates for 2008, from 27 percent to 24 percent and from 16 percent to 15 percent, respectively. Jersey, Georgia, Guernsey, Iraq, Ireland, Latvia, Macau, Romania, and Slovakia also have flat income tax rates ranging from 12 percent to 25 percent.
"Whether it's a flat income tax or even better, a retail-level national sales tax, American policymakers should look abroad to see what's working," Sepp concluded. "Single-rate taxes represent the wave of the future for countries that want to be competitive and governments that want to respect the rights of their taxpayers."
NTU is a nonpartisan, nonprofit citizen organization founded in 1969 to work for lower taxes, smaller government, and economic freedom at all levels. Note: For further tax policy information, visit www.ntu.org.