Wednesday, July 24, 2013

Fictitious Capital

Wall Street Journal editorial page on threats to its beloved flat tax, 11 January 2013 --

The rapid economic development of Central and Eastern Europe counts as one of the Continent's success stories of the last 20 years, and no small part of the revival had to do with the flat tax. Beginning in the mid-1990s, several governments east of the river Oder tried flat taxes to lure investment and promote growth. Early success in the Baltics caused the idea to spread. This time last year, more than a dozen European capitals from Prague to Tbilisi taxed income at a single, flat rate.

Wall Street Journal editorial page on Germany's solidarity levy financing of reconstruction in east Germany, 24 July 2013 --

The solidarity surcharge is arguably a failed project: Much of the East still lags behind the West economically. The better solution in 1990 would have been to turn the ex-communist states into a development zone that could attract private enterprise with low taxes and lighter regulations and social protections. (A similar strategy today could lift the Southern euro-zone countries.)

In fairness, there's nothing worse about their proposed Transition II programme for Greece, Spain, Portugal, Cyprus, and Italy than what Eurocrats actually have on the table.