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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (3533)	11/15/2001 1:18:08 PM
From: GraceZ	Read Replies (1) \| Respond to of 24758

When they instituted it compliance shot way up.

To: ahhaha who wrote (3533)	11/15/2001 4:42:27 PM
From: frankw1900	Read Replies (1) \| Respond to of 24758

The flat tax is a start. Right now, if you invest in Russia there is a very good chance your capital will be stolen. I'm not talking about fraud but straight up robbery. They get that problem fixed and sky's the limit.

To: ahhaha who wrote (3533)	11/26/2002 7:49:39 PM
From: Elsewhere	Read Replies (1) \| Respond to of 24758

The Putin Curve President Bush just mentioned that Russia has a flat tax. If Russia can keep that in place, the world's capital will move towards Russia. Wall Street Journal November 26, 2002 The Putin Curve We don't usually tout Russia as a model of economic enlightenment. But with the tax-cutting debate in full cry here in Amerika, it's a good time to review Russia's recent tax revolution. We hope President Putin's "very frank" discussions with President Bush last Friday included talk of tax reform. The Russian reforms began in earnest at the start of 2001, when Mr. Putin introduced a 13% flat tax on individual income, replacing a convoluted system that had a marginal rate of 30%. Then came a cut in the tax on corporate profits by nearly one-third to 24%, the closing of a large number of tax loopholes for companies, and the simplification and reduction in social security levies. What happened next is illustrated in the nearby chart. Tax revenues immediately began heading north, as citizens decided it was easier to pay taxes than go to the trouble of avoiding them. This was a classic Laffer Curve result -- an enlarged tax base and a surge in tax revenues. Before Mr. Putin's reforms, the post-Soviet tax system had been marked by fluctuating tax rates -- all high -- and a Byzantine tax code, the interpretation of which was left to poorly paid bureaucrats who relied on "gifts" for favorable rulings to supplement their incomes. The International Monetary Fund didn't help matters by opposing lower tax rates and counseling tougher enforcement. Enforcement being something Russian officials do instinctively, armed tax troops set out raiding corporate offices and tearing through files. Most individuals who earned above-average wages (roughly more than $200 a month) asked for and received the bulk of their income under the table. Shorn of revenues, the government cut "offset" deals with Russia's corporations, writing off taxes in exchange for fuel, electricity and other commodities. The system and its enforcement led to spiraling evasion and gray market activity. After the 1998 crash, the IMF hightailed it out of Moscow and thereafter remained mercifully on the sidelines. With the loss of outside help, sheer economic necessity forced Moscow to take a revolutionary approach to taxation. At the stroke of a pen, Mr. Putin decriminalized practically an entire society of tax cheats. He made complying with the law an affordable alternative to cheating. Russia's corporate tax cuts have not had as dramatic an effect on revenue as the flat tax, in part because the closing of numerous tax allowances has meant a steep increase in the effective tax rate for many companies. While the changes make corporate taxation fairer, there is a clear need to reduce rates further, something the government has been talking about. Rising tax revenues also reflect the recent growth of the Russian economy, which is attributable in part to a run-up in world oil prices. But that isn't the whole story. The tax reforms have provided a solid basis for economic growth and investment. As important, they have signaled to Russian individuals and businesses that the government is serious about creating incentives to productive work and risk-taking. As flat-tax advocate Steve Forbes likes to say, taxes are a fee charged on productive endeavor, particularly successful endeavor. Tax cuts lower the cost of labor and risk-taking. In the nature of things, corporations pass on taxes to consumers or, failing that, reduce investment or the rewards to shareholders and employees. Whether or not tax cuts boost revenues, they always free up the productive resources of the economy. So far, Mr. Putin has demonstrated a better understanding of this relationship than many in Washington. Another tax going on the Russian scrap heap is the "road user" tax. At about 1% of corporate revenues (not profits), the tax was highly regressive, a disincentive to investment that pushed a lot of business into the black market. Economic Development and Trade Minister German Gref sounded like a supply-sider when he said that the elimination of the road user tax is "the first step to stimulating economic growth." Russia's tax reform remains a work in progress. A new transportation tax and increases in the gasoline excise tax and the land tax next year are a return to the IMF playbook. Russia's overall tax burden remains far too high, especially for a poor country. It is one piece of a need for further broad economic reforms. Still, Russia's government is on much sounder footing now than it has been at any time since the fall of the Soviet Union. The economy grew 9% in 2000 and 5% in 2001 and is expected to expand by more than 4% this year. The Moscow stock exchange has been galloping while other exchanges have groaned. The Russian example shows that this is precisely the right time for tax reforms to spur economic growth in the U.S. Opponents complain, as always, that tax rate cuts will shatter governmental budgets. What's the Russian word for baloney? URL for this article: online.wsj.com

To: ahhaha who wrote (3533)	7/11/2003 8:33:38 PM
From: Elsewhere	Respond to of 24758

Flat Tax Fever Wall Street Journal July 11, 2003 When Donald Rumsfeld made his famous crack about "New Europe" versus Old, he was speaking about foreign policy. But it turns out the spirit of the new is also sweeping economic policy: Flat tax fever is spreading across Eastern Europe. Russia instituted a 13% flat rate on income in 2001, and its success is now breeding imitators. In May, Ukraine reformed its tax code along Russian lines with a 13% top marginal rate. The Slovak Republic's ruling coalition has just agreed to implement a 19% flat tax beginning next year. Poland's Prime Minister Leszek Miller has expressed a strong interest, and the opposition Civil Democratic Party in the Czech Republic is also supporting it. The impetus here seems to be the power of the positive flat tax example, in the Baltic states and especially in Russia. Estonia (26% rate) and Latvia (25%) enacted their own flat taxes during the 1990s, albeit not as boldly as Russia. In 2002, those economies grew an average of 6.1%, among the highest rates in Europe, old or new. Their budget deficits are also well under control, which certainly can't be said about old "progressive" tax-rate Europe. The theory of the flat tax is that a low rate across a broad tax base will improve both tax compliance and efficiency. And that's exactly what's happening in Russia, where tax avoidance used to be a national pastime but where Lenin must now be turning over in his Red Square display case. Alvin Rabushka, the flat tax promoter at the Hoover Institution, has been scrubbing the Russian growth and revenue numbers (available at www.russianeconomy.org/comments.html1), which would make even Steve Forbes blush with pride. Russian income tax revenue has far outstripped the rates of economic growth and inflation in both 2001 and 2002. Revenue from personal income taxes climbed nearly 40% last year, while inflation was under 16% and economic growth just 4.3%. The flat rate has also boosted the personal income tax's share of all Russian revenue -- to 15.3% last year from 12.7% the year before. Many of these countries are set to join the European Union, so they have a strong incentive to make their tax regimes both fairer and more conducive to economic growth. The Slovakian government has candidly said one of its goals is to attract more foreign investors. Unlike Old Europe, these recently liberated countries haven't had decades to build up interest groups that have a stake in high tax rates and can defeat any attempt at reform. This contrasts with Old Europe, where in Germany, for example, the average tax rate is 35%. Chancellor Gerhard Schroeder has recently had to fight like the furies to reduce the top marginal rate to 42% from 48.5% -- still more than three times as high as Russia's. The typical, if often disingenuous, objection to a lower tax rate is that it will increase the budget deficit. But at some point higher tax rates offer diminishing revenue returns, not least because they increase the incentive to cheat or create loopholes. A low rate can actually produce more revenue, as the Russians are proving. We'd add that all of this tax progress in Russia and the rest is taking place only after they booted out the International Monetary Fund and started thinking for themselves. IMF fiscal orthodoxy cares little about tax rates or incentives, focusing instead on "deficits." The developing countries that still inhale this stuff -- Turkey, most of Latin America -- would be far better off looking to Eastern Europe for advice. For that matter, so would the developing country known as America. President Bush has managed to cut income tax rates (the top federal rate is now 35%, or 37% including the phase-outs of exemptions and deductions). But those rates are levied across an ever-narrower band of income, as ever more income is sheltered because of tax credits and other deductions. We never thought we'd live to say this, but a Russian-style flat tax reform would be in America's interest too. URL for this article: online.wsj.com Hyperlinks in this Article: (1) russianeconomy.org Updated July 11, 2003