The power of the flat tax, Bulgarian style

Stephen Moore has a great piece on WSJ.com illustrating the success that Bulgaria has had since implementing the flat tax. More specifically, he discussed the benefits it has reaped by implementing an “across the board” 10% flat rate earlier this year.

Here is an overview of some of the successes Bulgaria has seen since implementing a flat tax:

• Bulgaria went from having an unemployment rate of 12% to 6%
• In the first six months of 2008, Bulgaria experienced record GDP growth (7%)
• Inflation is projected to drop from 14% to 9% by the end of 2008
• In May, Bulgaria was accepted into the “Reformers Club of the World Bank,” a group which honors countries that have made considerable changes to promote business growth.

This positive impact of the flat tax in Bulgaria isn’t something that is only being seen on paper, but is being felt in the homes of many Bulgarians. An example of this can be seen in things like automobile sales, where year after year, Bulgaria ranked second in the European Union for most growth (20.5%). The country with the highest growth was Lithuania (36.2%), and third was Slovakia (19.3%).

What is one correlation between the three countries? They each have some form of a flat tax.

Of course, the question that I’m sure many have is whether or not the flat tax is something that the United States should consider implementing. There are some who will argue that examples like Bulgaria, Estonia, etc, shouldn’t be used simply because they are post-war countries with smaller economies, thus making it a weak argument for implementation here in the United States. To no surprise, it is often that those very naysayers are the ones who are promoting other policies like the fair tax.

While the HR 25/S 105 (Fair Tax) crowd has definitely built a strong base of supporters, there is one thing that a flat tax has that the Fair Tax simply cannot match, a track record of success. There are over twenty countries that have implemented a flat tax and seen success, and that number will only continue to rise.