What about the Czech Republic?

PerrytaxIn response to my post “These are the 10 Best Countries for Business”, and the USA not making the list, Scott asks this excellent question

Surprisingly the Czech Republic isn’t on that list either. I’ve been czhecking in on them over the past decade since you commented “watch them flourish!!” after they enacted a flat tax. I’m underwhelmed.

That’s an excellent point and one that I’ve wondered about as well.

Here’s what I think is going on (not that Scott will necessarily agree with me).

Back in 1993 (!), the Czech Republic introduced a 15% flat tax on personal income. Then in 2004, they joined the EU, which imposed all of the EU required taxes upon them to join. So they added the Value Added Tax (VAT) of 21%, social and health insurance of 45% (11% employee + 34% employer), etc.

Bottom line: the Czech Republic is anything but a flat tax haven.

I would love to see what a system of a flat maximum tax of 15% would produce. Productivity and prosperity would break out everywhere. 

One thought on “What about the Czech Republic?

  1. The only thing I disagree with that a flat tax would somehow magically be a panacea for economic problems. It matters little whether taxes are flat, graduated, formulaic, etc. The main sticking point to all of it is answering the many complexities surrounding “what is taxable income”. If ALL income is subject to a flat tax irrespective of costs incurred in producing that income, then a flat tax in incredibly unfair to workers and business with thin profit margins. On the other hand, if it’s only profits that are being flat taxed, then the flat tax does little to nothing in reducing the bloated tax code which is supposedly one of the big selling points of flat taxers (“The IRS code will be reduced to the size of an envelope”).

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