U.S. Administrator Imposes Flat Tax System on Iraq

www.washingtonpost.com...

It's like the Iraqi's are getting all the good institutional decisions. I think they have universal health care too. Man. Almost makes me want to m .... nah neverm ind.

"American flat-tax advocates have made little headway at home, in part because Democrats say it would disproportionately hurt lower-income Americans and because expensive tax breaks such as the deductions for mortgage interest and charitable donations are beloved in both parties. But in places such as Russia, the Baltic states and Iraq, there was no well-established tax code defended by an army of lobbyists. "Somehow, it's easier when you start from scratch," Norquist said."

Flat tax versus flat tack.

My gut reaction was to ask, what does this replace?

From the article:

"The highest individual and corporate income tax rates for 2004 and subsequent years shall not exceed 15 percent," Bremer wrote in Coalition Provisional Authority Order Number 37, "Tax Strategy for 2003," issued last month.

Voil�! Iraq has a flat tax, and the 15 percent rate is even lower than Forbes (17 percent) and Gramm (16 percent) favored for the United States. And, unless a future Iraqi government rescinds it, the flat tax will remain long after the Americans have left.

"It's extremely good news," said Grover Norquist, head of Americans for Tax Reform and a Bush administration ally. Bremer's vaguely worded edict leaves open the possibility that Iraqis could face different levels of taxation below 15 percent, but "they told me it's a flat rate and it appears as though it's a flat rate," Norquist said. The tax fighter added: "It might be a hint to the rest of us."

Bremer's new economic policy for Iraq will slash Saddam Hussein's top tax rate for individuals and businesses from 45 to 15 percent. Of course, since Hussein's government, like others in the Middle East, almost never enforced tax collection, there is no real history of paying taxes in the country."




So there are several ramifications:

1. Top rate of 45%, which corporations would have had reason to baulk at.

BUT

2. It was never collected!!!!!

AND

3. Now it WILL be collected...


While it looks reasonable, it ain't gonna be popular. It only looks attractive becuase it's lower than what you are used to paying. But it is higher than what Iraqia are used to paying.

Five years time, fair and reasonable progressive tax sytsem, like anywhere else. But not by Bremer's initiative, it will start later.