Course, Eastern Europe could just be growing because it's a fairly advanced region coming out of the economic slumber of communism, too.

The only thing that causes economic growth is a free (or freer) market. Any time a market is made more free, you get economic growth.

The problem with the Flat Tax is that it does nothing for the most complicated aspect of tax law -- defining what qualifies as "income" in the first place. (In reality, it's defining what qualifies as "profit" by distinguishing between the forms of expenditures that can be deducted.)

The graduated rate-scale is the least complicated part of the whole tax code.

But, it's not about simplicity. There is no good reason to have a steeply graduated income (profit) tax rate-scale, not since Marx advocated for it 150 years ago. That kind of scheme takes the most long-term, productive investment dollars in the economy and converts them into dollars to be used for immediate consumption. Doing that can only make a society poorer.

The problem with the Flat Tax is that it does nothing for the most complicated aspect of tax law -- defining what qualifies as "income" in the first place. (In reality, it's defining what qualifies as "profit" by distinguishing between the forms of expenditures that can be deducted.)

Yes, I know, and this is always my beef with the "simplification" that will supposedly occur with the flat tax. I didn't get into this with Steve Forbes, as it's a bit of an in-the-weeds point, but honestly, figuring out what you owe ONCE YOU'VE ALREADY FIGURED OUT YOUR INCOME is the easiest step.

The flat tax makes it "easier" to just calculate a simple percentage. The bulk of the tax code is about what constitutes income, what's an ordinary business expense vs. a capital expenditure, etc. And the flat tax does nothing to simplify that.

As it really, you know, can't. The tax code isn't complicated just because of lobbyists arguing for special breaks, although that doesn't help. It's complicated because defining income and different sorts of gains is INHERENTLY a complex matter.

It's complicated because defining income and different sorts of gains is INHERENTLY a complex matter.

That complexity is what allows the special privileges to be enacted.

In contrast, a transactional tax is really simple. The only factors that go into it are (a) the price and (b) the tax rate.

Transactional taxes are also anonymous. You can't single out any particular tax-payer for special treatment nearly as easily (this cuts both ways -- there's special treatment for paying more, and for paying less).

Taxation based on the tax-payer will always be more complicated, because it requires you to aggregate all of your transactions for a certain period of time, and charaterize all of them according to some set of rules. Transactional taxes are asssessed immediately, on the spot, based on nothing more than the amount of the transaction.

Can't we have both? A 10% Consumption Tax and a 10% flat tax?

Can't we have both?

Sure. And we can pay them in Euros just to make the nightmare complete.

In 1986 we reformed taxes with a flat tax. It didn't stay flat for very long. The definition of insanity is doing the same thing over and over and expecting a different result.

Remember corporations don't pay taxes people pay their taxes. So if a flat tax is 17% plus FICA 7.65% the flat tax will be 24.65% for individuals and 32.3 % for self-employed. Corporations will pay 24.65% which we will ultimatly pay in the price of their goods and services. That means the actual cost to the individual/consumer will be 49.3 %.

As long as we continue to tax businesses we will have limited growth.

If the flat tax is so good why is Russia looking at doing only a sales tax only starting in 2009.