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The Revolution of Flat Tax. Whose Victory?


I have tried, in various studies and articles, to show why the choice of a particular taxation system is not and cannot be a scientific one, but a political issue, in essence. Further on, we also need to understand another essential idea, namely that the flat tax system is not, by definition, the foundation of a liberal fiscal policy. In fact, “the revolution” of the flat tax that occurred in Central and Eastern Europe was associated with right-wing economic policies because, on a common ground of liberalization and tax competition, adopting a flat tax meant – in almost all cases – reducing the level of taxation.

The true problem does not concern the way in which people are taxed, progressively or proportionally, but it is about that kind of fiscal arrangement that violates the private property as little as possible. The true and realistic option – in the near future – is between having higher taxes, i.e. a paternalistic state, widened by socialist reflexes, and having lower taxes, i.e. a state limited to the rule of law and (property) rights, which unleashes economic freedom and prosperity.

The reason for which I get myself involved again in the debate “flat tax vs. progressive tax” is that I want to clarify two simple ideas: 1) a liberal fiscal policy cannot be anything else but a policy supporting low taxes; 2) the virtues of flat tax are, in fact, the virtues of a consistent reduction in the fiscal burden.

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Cosmin Marinescu