Bad News for Karl Marx

If there is a heaven (or, more appropriately, if there is a hell), Karl Marx must be in a sour mood. The Berlin Wall has disappeared. Communism is dead every place other than Cuba, North Korea, and certain faculty lounges. And now, former Soviet colonies are abandoning his concept of discriminatory taxation and instead adopting simple and fair flat tax regimes. A Czech article discusses the flat tax revolution, which is proceeding in spite of complaints from Western Europe’s uncompetitive welfare states:

Karl Marx might be shocked to see who’s doing what with tax systems in Central and Eastern Europe these days. After all, it’s the capitalist West that won’t abandon progressive tax systems, which Marx championed in The Communist Manifesto, while the former Soviet bloc countries are lining up to buck their old ideological fountainhead by moving to a … single tax rate for nearly all earners, regardless of income. Nowhere has this flat tax caught on more swiftly than in Central and Eastern Europe, where nine of world’s 13 countries to have adopted the system are located. It’s a reform movement that started in 1994 with Estonia, gained momentum when Russia saw a 25-percent increase in state revenue from personal income tax after implementing a 13-percent flat tax in 2001, and culminated with Slovakia’s much-lauded adoption of a single 19-percent rate on income, corporate, and valued added tax three years later. …

Few, if any, of the reforms in Central and Eastern Europe meet the definition of a true flat tax because they include deductions, exemptions, and other exceptions. … Several Western European leaders complain that the lower tax rates … give the newer European Union states an unfair advantage in attracting business.