The Flat Tax Society

The National Post predictably decides to argue in favour of a flat tax. But before jumping to the conclusion that there might be some data to back the Post's ideology, take a look at the examples the NP puts forward in favour of its claim.

From the article:

In most jurisdictions that have adopted flat taxes, economic activity has increased and government revenues have risen. The lower rates spur greater investment, and also encourage greater compliance with tax laws, which means government's tax take increases from both a rise in national production and a fall in cheating.

Since 1994, Estonia, Georgia, Latvia, Lithuania, Romania, Russia, Serbia, Slovakia and Ukraine have all adopted flat taxes on personal income ranging from 12% to 19%.

Keep a very close eye on the alleged reasons for increased investment, then consider that all but three of the examples of current flat-tax countries are former Soviet-bloc states, while the other three were also completely state-owned until at least 1989. The cause and effect for those states is "legalizing investment increases investment", not "flat tax increases investment". The flat tax may have made for easier collection in a state with very little means to set up a revenue agency, but that doesn't make it a good fit for the first world.

Every other jurisdiction discussed in the article (aside from Alberta) is one which has yet to implement a flat tax - and in at least one case, even the proposal was only made by a firmly-entrenched opposition party. Judging from the standards set by the Post, the mere publication of the article makes Canada a country "considering" a flat tax, and thus evidence in favour of implementing one.

In the end, the only jurisdiction that apparently provides any meaningful support for the flat tax is one which has done well largely due to resource revenues, and which was booming long before the flat tax was implemented.

The tax system probably could stand to be a lot more simple. But as I've pointed out before, there's no need whatsoever to link tax code reform with a flat tax - regardless of the connections that the Post chooses to invent.