Wednesday, June 01, 2005

Dick Armey: Instituting a flat tax benefits you

Dick Armey: Instituting a flat tax benefits you

The rhetoric is rising in regard to a flat tax. It must be true that the republicans feel they have at least a decent chance of passage.

I have been a sceptic because the idea to reform social security is necessary but still can't get a fair hearing. One never knows; even liberals have stated that the flat tax would be acceptable if it includes a high "deductible" that will be tax free.

According to Mr. Armey, a flat tax would save Americans an average of 26 hours each year. Tax forms could be completed in 10 minutes or less. All income over the "deductible" would be taxed one time and at the same rate. There would be not estate tax, capital gain tax or loop holes. The tricky part would be the elimination of the interest deduction. One idea is to phase-in the the tax over a five year term.

The flat tax is sweeping through Eastern Europe--giving these countries a business recruitment weapon. Old Europe, including France, Germany and Italy are at a competitive disadvantage. I believe it is Sweden that has the highest taxes but this relatively isolated nation does not face the same challenges as Germany or the USA.

Who knows what omnibus bill is going to come out of the house. The market is anticipating good times ahead. The market can only discount the probabilities and chances are good that republicans are going to continue to reform old and inefficient laws that have crept onto the "books". To the extent that waste can be eliminated, prosperity can be created for share holders and for consumers.