Estonia's Flat Tax Leads to Economic Boom, crows Cato's Daniel Mitchell, before quoting John Stossel who observes "The former Soviet republic used to be poor . . . Microsoft, Colgate, 3M, Bristol-Meyers Squibb, and Johnson & Johnson opened businesses in Estonia after the flat tax was adopted. Twelve years ago, foreign investment in Estonia made up only 5 percent of GDP, but today, it’s up to 20 percent." Do libertarians seriously expect me to believe that the fact that Estonia has reaped significant benefits from abandonning Communism demonstrates that the United States ought to abolish progressive income taxation? Isn't it possible that the moral of the story here has something to do with command economies rather than tax rates?
Stossel also gives us the flat tax's heartiest bit of mumbo-jumbo: "Estonians need an average 10 to 15 minutes to file their income taxes. Most do it without leaving their desk: 84 percent file online." And good for them! I wish America were the same way. But this has nothing to do with your flat tax. I just did my taxes a week ago. It was pretty complicated and annoying. But the complicated and annoying part is calculating your taxable income not applying the formula that relates income to taxes owed.