Why the case for a flat-tax system is irresistible
PFlat tax is spreading because it works. Regardless of any theoretical objection, it achieves the desired results. With the addition this year of Romania and Georgia, there are now 11countries using the system, withmany more studying the idea very closely.
So what is it? In place of the various tax bands, exemptions and allowances which feature in a progressive tax regime, flat tax replaces them with a single rate. Typically, it excludes low earners from paying any income tax at all and sweeps away the tax allowances that made the graduated system so complex.
It works on two levels. The single rate is set sufficiently low thatcompliance shoots up. It is lessworthwhile to avoid tax by complicated tax shelters and less worthwhile to evade it by criminal failure to declare income. The second effect is that the low rate increases the reward of extra effort and risk-taking. Since people can now keep a higher proportion of what they earn, extra earning becomes more attractive.
Both the higher compliance and the expansion of economic activity contribute to broadening the tax base. This explains one of the most paradoxical features of flat tax: the fact that it rapidly brings in more revenue at the lower rate. It does so because the lower rate is charged on more income.
There is another paradoxical feature. A low rate of flat tax (with low earners exempted altogether) can rapidly lead to the rich paying not only more tax, but a higher proportion of the total. Something of this effect was seen following the UK's tax cuts of the 1980s. The top 10 per cent of earners, who had contributed 32 per cent of income tax before the cuts, were contributing 45 per cent afterwards. US tax cuts have produced similar results.
Those who talk of raising Britain's top rate from 40 per cent to 50 per cent say they want the rich to pay more. The reality is that tax revenues from the top earners might well decrease if they did so, whereas a cut in the top rate to 30 per cent would probably increase total revenue and raise the share of it paid by the rich.
Of course, there are theoretical objections to flat tax and John Kay raised some of them on these pages last Wednesday. Critics say it is difficult to define what income is and that is why we need thousands of pages of tax regulations. But the overwhelming majority of people in Britain are paid wages or salary, perhaps with a few easily quantified benefits such as subsidised meals. For all but a tiny minority, their taxable income would be obvious. Indeed, the same difficulties apply to the present system. Income is no more difficult to define under flat tax than it is now. It is easier.
It is the high tax rates that motivate people to seek out those exemptions and to shelter some of their income behind them. This is one reason why the current system has become so cumbersome and complex over the years. The change to a flat tax represents the chance to sweep away the accumulated debris that has built up within the tax system over generations, just as privatisation enabled distortions and bad practices to be discarded from our state industries.
Some critics suggest that flat tax works only in smaller, less developed or transitional economies. It is true that its practitioners include several of the former communist states of eastern Europe. But Hong Kong is by no means a less developed economy, nor isRussia a small one, and Hong Kong has had flat tax since 1948; Russia since 2001. China, no economic midget either, is now considering the idea and it is attracting increased interest in the US.
There will be huge competitive advantages to the first of the advanced European economies to follow this route. The low tax rate will prove a magnet for high flyers and for those setting up new businesses. It will certainly cost much less to administer, too. There is more to flat tax than its financial and commercial attractions, however. Simplicity itself is a virtue in taxation. It is better that people should understand their obligations than that they should not.
Flat tax promises to cut the Gordian knot of tax complexity. Those who feel comfortable in that complexity might blanch at the prospect of a tax system at once simple and transparent. If this tax system also unleashes enterprise and boosts economic growth, the case for it grows irresistible.
Flat tax is not flat earth, as John Kay suggests. Rather it is feet on the ground.
The writer is president of the Adam Smith Institute
实行单一税率的理由
单一税制正日渐普及，因为它可行。无论有多少理论上的反对观点，它还是实现了预期的成果。今年罗马尼亚和格鲁吉亚开始采用单一税制，使实行这种税制的国家达到11个，还有许多国家正仔细研究这一思路。
那么何为单一税呢？累进税制下有各种税阶、豁免和减免，而单一税制以单一的税率取而代之。典型情况下，它完全免除低收入者的所得税，并消除了使累进税制如此复杂的种种税收减免。
它在两个层面上起作用。设定的单一税率足够低，使纳税意愿骤升。不论是通过复杂的避税工具来避税，还是利用触犯法律的瞒报收入来逃税，都变得意义不大。第二个作用在于，低税率提高了努力工作和承担风险的回报。由于人们现在可留下较高比例的收入，额外收入变得更有吸引力。
纳税意愿的提高和经济活动的增多，都有助于扩大税基。这就解释了单一税最令人不解的特点之一，即较低的税率迅速带来更多的税收。之所以这样，是因为税率虽低，但应课税的收入却增多了。
此外还有一个令人不解的特点。单一税的低税率(低收入者完全免税)，能迅速导致富人不仅纳税增多，而且其税额占总量的比例也更高。80年代英国减税后即表现出类似效果。10%的最高收入者在减税前缴纳的个人所得税占税收总量的32%，减税后则占45%。美国在减税后也产生了相似结果。
那些提出将英国的最高税率从40%升到50%的人说，他们希望富人增加纳税。事实上，如果真那样做的话，高收入者的纳税很可能会大量减少，相反，若能将最高税率降至30%，却可能会既增加总税收，又提高富人纳税所占的比例。
当然，仍有反对单一税的理论观点，约翰?凯(John Kay)上周三在本报表达了其中一些反对意见。批评者说，界定何为收入有困难，这也正是我们需要成千上万页税务法规的原因。但是，英国绝大多数人都领取周薪或月薪，可能还有一些易于量化的补贴用餐等福利。除了极少数人之外，应课税收入都是显而易见的。的确，目前的制度也面临同样的困难。就收入的界定而言，单一税并不比现在更困难，而是更容易。
正是高税率促使人们寻求免税，并隐瞒部分收入。这就是现行税制多年来变得繁琐复杂的原因之一。向单一税制转变，提供了一个摒弃一代又一代税务体制积累起来的弊端的机会，正如私有化使我们国有的企业得以消除扭曲和不良经营行为一样。
一些批评者提出，单一税制仅在较小的、不太发达或转型期经济体才可行。诚然，采用单一税制的国家确实包括东欧的几个前共产党国家。但是，香港绝非欠发达经济体，俄罗斯也非小国，而香港自1948年开始便实行单一税制，俄罗斯从2001年开始。中国也不是经济小国，现在却正考虑这一思路，而美国对其兴趣也在增加。
第一个实行单一税制的发达欧洲经济体将会具有巨大的竞争优势。低税率将被证明是吸引高级人才和创业者的磁石。它也必将大幅降低政府管理成本。然而，单一税制带来的好处不止财政和商业方面的吸引力。简单本身就是税制的优点。人们更应了解自己的义务，而非什么不该做。
单一税制有望消除税制复杂化的难题。那些已适应复杂税制的人，可能会对瞬间就变得简单明了的税制的前景感到愕然。如果这种税制还能使企业摆脱束缚，并刺激经济增长，那么采用它的理由将更加不可抗拒。
单一税制不是约翰?凯所说的“地球是平的”狂想，而是脚踏实地的。
作者为亚当斯密研究所(Adam Smith Institute)所长。
