Flat Tax Progress in Hungary and Poland

While most other East European nations have adopted pro-growth flat tax systems, Hungary and Poland are still burdened by class-warfare systems that penalize people for contributing more to economic performance. The Budapest Times, however, reports that Hungary’s small parties may combine to push through an 18 percent flat tax:

MDF leader Ibolya Dávid called for opposition parties to attend talks on 15 April to work out details of a bill to submit to parliament by May. The party wants to emulate regional peers such as Slovakia and Romania by introducing a flat 18% personal income tax to reduce a tax burden it called “unfairly high”. The Free Democrats (SZDSZ) and main opposition party Fidesz - along with its ally the Christian Democrats (KDNP) - have said in the past that they would favour a flat tax. …The MSZP has only 190 seats in the 386-seat parliament, meaning that the opposition parties could force through a flat tax bill by banding together. Hungary is ranked as having the second-highest tax burden for single people, behind Belgium, amongst the members of the Organisation for Economic Cooperation and Development (OECD). Many feel the high burden - made worse in 2006 when the government hiked taxes as part of its economic reforms - damages Hungary’s regional competitiveness.

Meanwhile, the Polish government already has promised to implement a flat tax, but a key official has suggested that the new system may be implemented in 2009 rather than in 2010 or 2011 as originally planned. Because of its size and geography, Poland’s shift to a flat tax would be a momentous development and could sharply increase the pressure for pro-growth reforms in Old Europe:

According to Zbigniew Chlebowski, head of ruling Civic Platform’s (PO) parliamentary club, there is a possibility of introducing a flat tax rate as early as 2009. Chelbowski said that Prime Minister Tusk supports this option and is ready to fight President Kaczynski should he veto it. Chelbowski, however, did not give a concrete rate of the possible flat tax, but stressed that it shall surely be lower than 18 percent, because such a rate would be higher than the present tax rates. The final decision is to be made in July or August. The ruling Civic Platform had originally planned to introduce the new tax in 2010 or 2011.

Discouraging Moments in American Political Debate

There’s a spirited debate going on at National Review. Mark Krikorian, NRO’s resident immigrant-basher, supposed yesterday morning that maybe one more reason we should keep immigrants out is because the grandchildren of Hispanic-American Catholics might turn out to less supportive of Israel than their Anglo coreligionists (a condition he calls “anti-Semitism”).

Charging to challenge this thesis is John J. Miller, coauthor of a book calling, umm, France, “America’s oldest enemy.” (Strangely enough, the book was published around the beginning of the Iraq war.) Bernard-Henri Levy “characterized the book this way:

the whole book is a mad charge (whose only equivalent I know is the fascist French literature of the 30’s) against a diabolical nation, the incarnation of evil, bearing in the body and soul of its citizens the stigmata of an ill will the only aim of which throughout the centuries has been the humiliation of America the great.

Good Lord, what’s happened to American conservatism? The debate between these two reminds me a bit of Henry Kissinger’s remark on the Iran-Iraq War.

The Helping Hand of Government …

… strips away privacy before it goes to work.

Here’s a nice, discrete example: S. 2485, introduced in the U.S. Senate last week, would require asset verification of participants in State Medicaid programs, exposing the personal information held by financial institutions to government access.

This privacy loss is a natural outgrowth of entitlement programs. It’s nearly mandated by the simple and warranted effort to reduce waste, fraud, and abuse.

My 2004 Policy Analysis, “Understanding Privacy - and the Real Threats To It,” explored how entitlement programs almost always carry with them a significant privacy-cost:

To provide benefits and entitlements—and, of course, to tax—governments take personal information from citizens by the bushel. Nearly every new policy or program justifies new or expanded databases of information—and a shrunken sphere of personal privacy.

It’s Hard to Compete with ‘Free’

The Fordham Foundation has just released a new report documenting the closure of 1,300 Catholic schools since 1990 — shifting some 300,000 kids into the public sector at a cost to taxpayers of about $20 billion. 

It’s hard to compete when the other guy (read: state-run schools)  spends about twice as much per pupil but gives his service away for “free.”

A proper education tax credit program would level the financial playing field between government and independent schools, dramatically increasing parental choice and saving taxpayers a bundle in the process.

And wouldn’t it be nice if we gave parents the means to escape schools like this?

Florida Teachers vs. Poor Parents

As I blogged a couple of weeks ago, Florida’s largest public school employee union, the Florida Education Association, is threatening a lawsuit to kill that state’s scholarship program for poor kids. Why would they choose to go down this road, mined as it obviously is with the potential for bad publicity? 

I explain that today in an Orlando Sentinel op-ed, giving the FEA a little of the bad publicity it so richly deserves in the process.

Monetary Mercantilism

Chile’s Central Bank has finally decided to intervene in the local currency market in order to avoid a further appreciation of the peso against the U.S. dollar. In doing this, Chile joins a monetary policy trend that includes most Latin American countries, particularly Argentina, Bolivia, Peru, Colombia, Costa Rica and Guatemala.

Until recently, Chilean monetary policy was regarded as an example for all Latin America. Chile was mentioned frequently — especially by defenders of “monetary sovereignty” — as a model of how a Latin American country can have both a national currency and monetary stability.

However, alarm bells started ringing last year when inflation tripled to almost 8 percent, mainly because of an excessive increase in public spending by the government of Michelle Bachelet. Now, by deciding to abandon the historic policy of free floatation of the peso, Chile’s Central Bank further compromises this year inflation’s target.

Aiming for a cheaper peso will prove very expensive for Chileans.