ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Tuesday, July 22, 2008

Back in the USSR

Bulgaria faces reality. If only Barry & the socialists Democrats in Congress would join the reality-based community.

Ms. Kostidinova, who speaks English with a thick Eastern European accent, tells me: "The situation was getting desperate in Bulgaria. We were losing our population and our best workers. They were leaving for Western Europe to find jobs and the No.1 form of foreign capital came from remittances." All that began to change when the corporate tax was cut to 10% in 2007 and the personal income tax to 10% in January of this year. "We told the politicians that it was symbolically important for Bulgaria to have the lowest flat tax. We were surrounded by flat tax countries, we wanted to be the nation most friendly to capital and business."

Result: A country that ten years ago had a 12% unemployment rate now has a 6% jobless rate. Instead of people leaving Bulgaria to find jobs, "now it is the reverse. Western Europeans now come to Bulgaria for jobs. We're gaining population now," she says.

Bulgaria is one of 24 nations, most of them in Eastern Europe, that have adopted the flat tax. A unique feature of the Bulgarian system is an absence of exemptions -- everyone pays the 10% tax regardless of income. Because the rate is so low, Ms. Kostidinova says, the plan's promoters figured that everyone could afford to pay. But don't lefties insist that the rich should pay more? "Of course, many do, and they want to raise the rates, but most understand that the flat tax gives us more jobs and more revenues."

If avowed socialist politicians in East Europe are open to new ideas about how to make their tax systems more growth-oriented, why aren't Republicans or Democrats in Washington? Says Richard Rahn, former chief economist for the U.S. Chamber of Commerce and now an economic consultant in Eastern Europe: "These countries understand that the flat tax is the key to their prosperity -- even the former communists." Only stultified political tactics -- certainly not clear thinking -- explains why somebody like Barack Obama could be running on a platform of making America's tax rates among the highest in the world when other nations are proving the competitive advantages of flatter tax systems.

If unreconstructed Communists can understand that people and businesses actually respond to incentives, why won't the Dems? Why does Barry insist that a punitive increase in the capital gains tax cut won't effect the flow of capital for the US?

This isn't rocket science, people...

Your Co-Conspirator,
ARC: St Wendeler