Every since the current government won a landslide election, there’s been a widespread assumption that Hungary would be the next nation in Europe to hop on the flat tax bandwagon. Well, the assumption has become reality. Here’s a report from Tax-news.com.
The Hungarian parliament has approved the government’s 2011 tax bill, which introduces a flat rate personal income tax of 16%, and grants a 10% corporate tax rate to certain companies from next year. The bill also contains a highly controversial amendment to the country’s original bank tax legislation. Hungary’s 2011 tax bill, which was adopted by 259 votes to 104, provides for a 16% flat rate of personal income tax in a bid to boost domestic demand. It also reduces the corporate tax rate from 19% to 10% for all companies from January 1, 2013.
It’s a bit disturbing to see that Keynesian theory (“boost domestic demand”) was part of the rationale for this tax reform, but I’m not going to quibble. Any port in a storm, as the saying goes.
So it’s time to cue up the flat tax theme song and celebrate the growing list of flat tax nations. More than 30 nations now have the morally and economically superior tax regime, a remarkable increase since I narrated a video two years ago and there were only 25 countries on the list.
[…] write about Hungary’s economic policy, presumably focusing on the country’s sometimes good and sometimes bad tax […]
[…] to Hungary. The country is ranked #57 from Economic Freedom of the World, so it’s great that there’s a successful flat tax, but a lot more reform is needed for Hungary to become a role model for overall market-friendly […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] La questione è molto semplice. Quando la forza lavoro ed i capitali hanno la possibilità di fuggire da scelte politiche sbagliate trasferendosi in un altro paese (come ha fatto qualcuno di cui ora mi sfugge il nome… ah, già, il sottoscritto ndApo), i politci sono più propensi a realizzare che è stupido imporre tasse troppo elevate. A questo punto, spesso, iniziano a competere per attirare posti di lavoro ed investimenti abbassando le aliquote fiscali. Questa forma di rivalità creativa aiuta a spiegare perché così tanti paesi, negli ultimi anni, abbiano abbassato le tasse ed adottato sistemi fiscali semplici ed equi basati su un’aliquota unica. […]
[…] The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems. […]
[…] a few days ago, Hungary joined the flat tax club. Could Greece implement a flat tax before […]
[…] une situation assez comparable : envoyant promener le FMI, le nouveau gouvernement conservateur vient d’adopter une flat tax intégrale (16% pour les particuliers, 10% pour les entreprises), remède dont j’avais également […]
The “boost domestic demand” rationale may have been put there to help the bill gain support from the public/members of parliament. I know if I was trying to win people over, I’d throw in as many nice-sounding benefits as I could muster.