Another Flat Tax Nation?

Moldova, a former Soviet Republic, is a poor and backwards nation with too much government. Seeking a brighter future, a part of Moldova has declared independence and is calling itself Pridnestrovie. Though this new country has not yet been recognized by the world, Pridnestrovie has wisely decided to implement free market reforms — including a flat tax that has been reduced from 15 percent to 10 percent according to a story from last year in the Tiraspol Times:

Parliament in Pridnestrovskaia Moldavskaia Respublica approved new lower tax rates for the emerging but unrecognized country. Previously, the nation taxed incomes for physical persons at 15%, but starting next month the rate will be just 10% flat.

…Since its declaration of independence on 2 September 1990, Pridnestrovie has gradually transformed itself from a post-Soviet system to a free, Western-style market based economy. In the process, it has found that a flat tax provides the best incentives for citizens and investors alike.

Hoover Institution political scientist Alvin Rabushka points to a number of different countries in the former Soviet bloc that have adopted some form of flat tax in recent years. In addition to Russia, Pridnestrovie and Slovakia, they are Romania, Georgia, Estonia, Latvia, Serbia and Ukraine.

Not surprisingly, the flat tax is having a positive impact. The Tiraspol Times now reports that tax revenues have more than tripled and lawmakers understand that lower tax rates can lead to more revenue — just as the Laffer Curve illustrates:

Thanks to reform in the tax code, and a lowering of rates, income from taxes has gone up three and a half times in Pridnestrovie, says the parliamentary press service. …Tax revenues went from 63.4 million dollars in 2001 to a whopping 221.6 million dollars in 2006, the last full year for which the numbers are available.

…Key to the reform package were measures which makes filing simpler, as well as a comprehensive program of tax relief. Five taxes which existed before 2001 have now been abolished and instead replaced with a single, simple tax.

…With both personal and corporate tax rates well below those of Ireland, the growth in Pridnestrovie’s tax income is even more impressive. As taxes have been simplified and rates have been lowered, revenues have gone up three and a half times.

Addendum: The good news about Pridnestrovie may not be so good after all. My Cato colleague Justin Logan rained on my flat tax parade by telling me that Pridnestrovie, AKA Tansnistria (I guess even the name of the place is in dispute), is not exactly the Hong Kong of Eastern Europe. The breakaway province has a very poor reputation for corruption. It also is not exactly a role model of democracy, since the boss of the country recently won 103 percent of the vote in one region (eat your heart out, Castro). Alas.

Hillary’s Chutzpah

Sen. Hillary Rodham Clinton denounces the Libby commutation as “disregard for the rule of law” and a “clear signal that in this administration, cronyism and ideology trump competence and justice.”

She has a point. But hello?! Wasn’t she part of the Clinton administration? Speaking of disregarding the rule of law.

And abusing the pardon power? The Clinton administration was notoriously stingy in pardoning real victims of unjust sentences. When it did use the pardon power, it seemed to have an unerring instinct for scandalous and undeserving beneficiaries. In 1999, as Hillary Clinton began her Senate campaign, President Clinton pardoned 16 members of the Puerto Rican terrorist organization FALN, raising questions about whether the pardons were intended to curry favor with New York’s Puerto Rican electorate. And then there was the infamous last day in office, when Clinton managed to pardon or commute the sentences of

  • Marc Rich, a fugitive tax evader whose ex-wife was a major contributor to the Clintons;
  • Susan McDougal, who loyally refused to testify in the Whitewater scandal;
  • Child-molesting Democratic congressman Mel Reynolds;
  • Post Office-molesting Democratic congressman Dan Rostenkowski;
  • Cocaine kingpin Carlos Vignali, whose father was a major Democratic contributor;
  • Four Hasidic shysters alleged to have promised and delivered Hasidic votes to Hillary Clinton’s first campaign;
  • Clinton’s half-brother Roger;
  • and various crooks who paid fees to Hillary Clinton’s brothers Hugh and Tony Rodham to lobby the First Family.

With so many people in jail who deserve a pardon, as Gene Healy and I have discussed in earlier Cato@Liberty posts, it’s appalling that both President Clinton and President Bush have used their pardon powers in such ways. And if anyone lacks credibility to criticize the Libby pardon, it would be President Clinton and Senator Clinton.

Why People Hate the IRS

My wife and I received a notice from the IRS yesterday regarding our 2006 income tax return. At first glance, I thought it said we underpaid by $107, which would be no big deal and I’d go ahead and pay.

Then I looked closer at the calculations the notice showed:

Total Tax On Return: $xx,242.00

Total Payments and Credits: $xx,241.63

Underpaid Tax: $0.37

Penalty: $106.65

Interest: $0.01

Total Amount You Owe: $107.03

You’ve got to be kidding–we underpaid our taxes by 37 cents and the IRS is dinging us with a $107 penalty?!

Page 22 of the 1040 instruction book clearly says that rounding to the nearest whole dollar is OK.  I think this needs more investigation. 

Cato@Liberty’s Health Care Content Ranked #24?

Last week, I entered the Cato@Liberty blog you’re reading in the healthcare100.com rankings of health care blogs.  Which might have been unfair.  Most or all of the blogs in that ranking are exclusively focused on health care.  Cato@Liberty covers many other issues and could get credit for visits and incoming links that have nothing to do with health care.  So I made sure to enter only the health-care-specific URL and RSS feed.

The results (as of July 2, 2007) are in: Cato@Liberty (Health Care) tied with three other blogs for 24th.  That put it ahead of such popular blogs as:

We have yet to eclipse The Health Care Blog (tied for 7th), but Matthew Holt is on notice.

I am not convinced that Cato@Liberty’s health care content deserves that ranking, however.  The “Cato@Liberty (Health Care)” entry on the healthcare100.com list links to Cato@Liberty’s main page, rather than the health-care content page.  In contrast, the WSJ.com: Health Blog entry links to that blog’s health-care content. 

I’m guessing that using the health-care-specific URL and RSS feed actually would tend to understate the popularity of Cato@Liberty’s health care content, since many readers presumably access our health-care content along with the rest.  The health-specific RSS is certainly Cato@Liberty’s weakest suit in the healthcare100.com rankings.  But when we edge out The Health Care Blog, I don’t want to hear any talk about asterisks.

A bigger concern is that Cato@Liberty’s strongest showing is in the “Technorati Authority Ranking” portion of the healthcare100.com algorithm: ”Technorati’s authority ranking shows the number of unique blogs that have linked to a particular blog over the past six months.”  This must be capturing non-health-care-related links to Cato@Liberty.  I hope the good folks at healthcare100.com will let us know if that’s the case and whether it can be remedied.

My favorite blog name on the list: Fingers and Tubes in Every Orifice (tied for 71st).

Happy Birthday, America—and Thanks for Having Me

This will be my first July 4th holiday in Washington, DC. Last year I was in New York City with my family, celebrating my 30th birthday (yes, I’m a bicentennial baby). So I am looking forward to seeing how the nation’s capital celebrates Independence Day.

As a recent arrival, I know that my experience of Independence Day is necessarily limited. But the ideals upon which America was based and which we celebrate tomorrow are common to many around the world, no matter where they call home. The American dream–to make a better life for yourself and to pursue whatever brand of happiness to which you aspire–is the human dream. As David Boaz notes in his podcast (mp3) today, the line of people at the immigration centers of American embassies is larger than the line of picketers outside, no matter how harsh the criticisms of the rest of the world can seem.

The government and the country are not the same thing. So for all those who have taken offense at a foreigner criticising U.S. farm and trade policy over the last year, please know that I will be celebrating a wonderful country tomorrow, along with all of you.

Unpardonable

You could make a case either way on the Scooter Libby commutation.  On the one hand, the jury found that Libby had perjured himself and obstructed justice–the sorts of offenses that Republicans thought were serious as recently as, oh, 1999.   On the other hand, special prosecutor Patrick Fitzgerald wasn’t able to charge anyone with the underlying crime (leaking CIA agent Valerie Plame’s name), so the prosecution had a bogus Martha-Stewart-case aspect to it. 

What you cannot do–at least with a straight face–is argue that of the over 160,000 federal prisoners and thousands more awaiting sentencing, Scooter Libby was the most deserving of clemency.   

As the Sentencing Project reports [.pdf], “Nearly three-fourths (72.1%) of the [federal prison] population are non-violent offenders with no history of violence.” Some of them, like Weldon Angelos and others on the FAMM list David Boaz links to below, fell victim to the federal jihad against drugs (55 percent of federal prisoners are serving time for drug offenses). Others, like David Henson McNab (who has filed a clemency petition with the president, to no avail)  fell victim to the prosecutorial zeal combined with the increasingly bewildering array of federal crimes that make a mockery of the rule of law. 

The pardon power is one that unquestionably makes the president the sole “decider.”  It does so in part, as Hamilton explains in Federalist 74, because without room for mercy, “justice would wear a countenance too sanguinary and cruel.”  Yet President Bush has shown little interest in wielding this power.  His 113 clemency actions thus far place him below all two-term presidents save George Washington, who, in fairness, didn’t have a lot federal crimes to work with. 

The Libby commutation isn’t anywhere near the worst abuse of the pardon power in American history.  James Hoffa, Richard Nixon, the FALN terrorists–all stink worse than the president’s action yesterday.  But that doesn’t mean the Libby commutation smells good.  ”Compassionate conservatism” is a notably mushy and amorphous concept.  Yet we now have a better idea of what it means in the criminal justice context: something like, ”Prison?   That’s not for our people!” 

Good Whippin’, Lost Teaching Opportunity

Richard Cohen of the Washington Post has a great piece today on the moral and intellectual bankruptcy of the Democratic Party-line on education. Here’s a taste:

The litany of more and more when it comes to money often has little to do with what, in the military, are called facts on the ground: kids and parents. It does have a lot to do with teachers unions, which are strong supporters of the Democratic Party. Not a single candidate offered anything remotely close to a call for real reform. Instead, a member of the audience could reasonably conclude that if only more money was allocated to these woe-is-me school systems, things would right themselves overnight.

He rightly lambastes them for offering more money as their only solution … if $16,000 in DC is not enough, what is? 

And he is correct to focus on the important role that parents play in a child’s education. 

But it’s disappointing that Cohen neglects to mention the one and only solution that actually allows parents to take charge of their child’s education: school choice. 

The education-industrial complex, Big Ed, controls the system and places a brick wall of government-school bureaucracy in the way of parents who want to be involved. Cohen’s and Obama’s call for more parental involvement ring just a wee bit hollow when the government education system is specifically designed to exclude the voices of parents and taxpayers and to dance only to Big Ed’s tune. 

School choice empowers parents, encouraging their involvement in education and making certain that their voices will be heard.   

Cohen would do well to follow his great criticism of the absence of real solutions among the Democratic presidential nominees with an explanation of the only real solution left.