Is there anything as simultaneously boring/important as tax policy?
According to the Bank of Estonia, government revenue for 2003 was 48 billion kroons ($4.06 billion). That compares with 42 billion kroons in 2002, and 36 billion kroons in 2001. In other words, revenue has risen steadily.
Next, head south to Slovakia. At the end of last year, the country introduced a flat tax of 19 percent for individuals and companies. The system came into effect at the start of this year.
Slovak Revenue
And how's it working out? Well, this month the government of Slovakia said tax revenue will probably exceed its forecasts for the year by 700 million koruna ($23.6 million). As a result of that, it said the budget deficit would be smaller than originally forecast.
Again, the flat tax seems to be producing higher revenue.
I think we should have a mostly flat 3 tier system. It would have a "Poor Tax" of $100 per person for the poor, a flat rate of about 10% for the "Regular Tax", and a "Rich Tax" of twice that for income above $1 million. That should satisfy the undeniable populist urges of a large portion of our society without jacking anybody up too hard.
To find the perfect tax rate we start at 15% and then lower the rate by 1 point every year until revenues actually decline. Then we go back up a point to the top of the Laffer curve, which we just empirically discovered, and leave it there forever. I suspect the sweet spot will be around 10%, but I don't know anymore than you do -- let's find out.
From day 1, the definition of rich and poor would be indexed. Also from day 1, the entire code will be rewritten from scratch to be comprehensible to dummies like me.
There, I'm done. Tax reform made easy.