Flat tax?

A flat tax might not meet the lofty goals associated with progressive taxation, but in the real world it's seldom the rich who pay the bills. If the rich want to avoid taxes, they lobby legislators and pay tax attorneys and move assets out of reach. (I'm amazed by how many people think that becasue they give a job to government it will somehow escape selfishness and/or corruption. If anything, the history of taxation argues the opposite.) At least with a flat tax, the burden is more clear, and avoidance is more transparent.

Yet the U.S. government, among others, resists the idea. No wonder--what would all the tax attorneys and lobbyists do if they were no longer supported by an indirect government subsidy? What would the bureaucrats do if they had to administer a code so clear? There would no room for "prosecutorial discression" (read, arbitrary decisions) and that would reduce their power.

The competition between countries for investment, however, is pushing governments in directions they would rather avoid. Flax taxes are becoming the norm in eastern Europe and Russia--and they are succeeding. Western Europe, dependent on VATs and the politics of income redistribution, is left behind. Where will the United States fall?

For all the talk of Social Security reform, the single greatest thing the Bush adminnistration could do is a radical restructuring of the tax system to remove the debris from the experiments of the past century.