Tax Reform for the New Century (First in a Series)

Despite reforms across the world, our tax system remains a national disgrace. It's time to change that.

by Rod D. Martin
January 9, 2004

In the Washington Post, a recent headline blared, "Flat Tax Imposed On Iraq."

New taxes heartlessly heaped on the backs of hapless Iraqis? Well, not exactly.

You wouldn't guess from the headline, but on September 15, what U.S. administrator L. Paul Bremer did was cut Iraq's top tax rate from 45% to 15% for individuals and businesses.

So Iraq is now the latest member of the flat tax club. Hong Kong’s amazing success story is largely attributable to its flat tax, Ukraine has just followed suit, and in 2001, Russia replaced its maniacally Keynesian code with a 13% flat tax on individual income, easily the lowest rate in Europe.

Russia's experience has been astonishing, not to mention instructive. For years after the fall of Communism, Russia was a basket case, in large measure stifled by an impossibly complex tax system which punished investment and encouraged corruption. Today, Russia’s economy is growing faster than any in Europe, and its tax revenues have be…