![]() ![]() Russia has a flat tax, but it also has serious problems of expropriation of property. Similarly, with a flat tax Turkmenistan's GDP has grown at an annual rate of 11.2 percent over the past decade. The IMF reports that per capita income has quadrupled in the past decade. Mongolia's GDP has grown at an annual rate of 9.4 percent since its flat tax initiative in 2007. Additionally, this rate is double that of the westerly oriented Scandinavia region. Since implementing flat taxes in the mid-1990s, the collective growth rate for the Baltic States - 4.74 percent - is larger than that of the progressively taxed Poland. The Baltic States (Estonia, Latvia, and Lithuania), Mongolia, and Turkmenistan, all have flat taxes and VATs. However, comparing former Soviet republics with flat tax systems to those with progressive tax systems shows otherwise. Furthermore, due to their subtle nature, VATs tend to grow over time, as 20 of the 29 OECD nations with VATs have raised their rates.Īdditionally, some argue that the relationship between flat tax policy and economic prosperity is one of correlation, not causation. Ironically, the "business activity" component of Paul's proposal will be primarily borne by consumers, as corporations charge higher prices to customers in order to shoulder increased costs. Unlike a conventional sales tax that is only charged at final sale, VATs are charged in small amounts along the entire supply chain. Despite its widespread popularity among OECD nations, VATs serve as a pernicious form of taxation, harming American consumers through increased prices and broader tax bases. In addition, Paul proposes a 14.5 percent "business activity tax" that would operate much like a European Value Added Tax or VAT. He includes a tax exemption for the first $50,000 of family income and the maintenance of mortgage and charity write-offs. Paul's tax plan, as with many flat tax proposals, is not a pure flat tax. But the key to fiscal growth is not as easy as implementing a flat tax. ![]() He concludes with an assurance that the plan's execution will see the American economy roar. Account icon An icon in the shape of a person's head and shoulders. ![]()
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