Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It

I guess we all remember the first time we heard the term "flat tax." It looked like it might be a good idea, but we never came close to debating it, much less trying it. It comes as a surprise, then, to learn that over twenty countries around the world already HAVE a flat tax. It averages around 17%. Many countries have completely eliminated capital gains taxes and estate taxes. Personal tax rates are DECLINING. One very important reason for doing all this is to attract corporations and taxpayers. Cities which are drunk on high tax revenues (New York City springs to mind) have been facing a dwindling tax base for years. And some people think the answer to this problem is to raise taxes even further. I lived in Manhattan for a while, and I was shocked to discover that I was getting taxed at least FOUR TIMES: the Federal bite, the N.Y. state bite, the N.Y. city bite (!), and of course the sales tax. If I put the pathetic remnants into investments, the interest and dividends would get taxed AGAIN. Oppressive regulation and outrageous taxation spell the same thing: companies leaving for more welcoming places. You may find it hilarious that California do-gooders recently found a new regulation: any business with more than 50 employees must send them to sexual-harassment workshops. (Do you have any idea how much the "facilitators" there earn? And how useless their "workshops" are?) And, as I write this review, California Democrats are trying to sneak through a massive tax hike. Great. More stupid rules, and higher taxes. Bye-bye business. You may also be shocked to learn that America has the highest corporate tax rate in the world! We've recently heard a lot of complaining (from the UAW and the "Big Three") about those nasty, evil Japanese companies making excellent cars in the US without the helpful hands of the union. Well, let's all join in, and bash them some more! But how will we feel if they suddenly move their operations to Mexico. Thousands of new unemployed, billions in lost tax revenue... If you read this book in conjunction with "The End of Prosperity," you will probably wind up with a few more worry lines on your face. I mean to say that, for me, the best scenario is that Obama commits so many errors during his first term that he doesn't get invited back, and some no-nonsense Republican like Peter Fitzgerald gets in. But that Obama first-term is starting to look like Jimmy all over again! An awful lot of damage can be done in four years, especially with an economy on the ropes. First of all, bad economic decisions in Washington could cut most of the growth out of the American economy itself. But those bad decisions could make more businesses decide to move elsewhere, and leave us with a very serious situation indeed.

International tax competition is only one aspect of globalization: as mobility and capital change, individuals and businesses alike are investing in nations with lower take rate pressuring their own governments to cut taxes at home or see a loss in revenue. Such tax competition is generating intense political opposition but the authors argue against such opposition, showing that such competition is actually helping to advance prosperity and expand human rights. College-level libraries strong in both business, economics, and social issues will find this an excellent source for discussion.

This compilation and discussion of taxes around the world is a great read for all tax policy professionals. It has data from hard to find places and reality assessments of what the data means. The next President should read this before he proposes any tax changes.

"Superb, well-written, eye-opening survey of the exciting worldwide movement to cut individual and business taxes. The flat tax, in particular, is gaining momentum, especially in Central and Eastern Europe. Depressingly, the United States, once the leader in tax cutting, is now lagging. This masterpiece may not wake up myopic Washington, but it will arouse the American people to demand action!" Steve Forbes, CEO of Forbes and Editor-in-Chief of Forbes magazine "Globalization is confronting governments with an increasingly competitive fiscal environment. Investors now have many choices among competing country tax climates. Global Tax Revolution shows that countries ignore this reality at their peril." Vernon L. Smith, Nobel Laureate in Economics "This well-researched book provides a strong and clear message about the need for tax reform in an era of rising globalization. Taxpayers, business leaders, policy experts, and members of Congress need to read this book." Edward C. Prescott, Nobel Laureate in Economics "Chris Edwards and Dan Mitchell take the reader on a fascinating world tour of tax reforms since the 1980s and make a strong case that U.S. policymakers need to follow the lead of the two dozen nations that have adopted simple, pro-growth flat tax systems." Alvin Rabushka, Senior Fellow, Hoover Institution at Stanford University "Edwards and Mitchell provide a warning to Americans that their future prosperity rests on leadership in tax reform and strong support of international tax competition." Walter E. Williams, Professor of Economics, George Mason University "Global Tax Revolution reveals how dramatic tax reforms are being implemented abroad thanks to foreign leaders who recognize that pro-growth policies keep the entrepreneurial geese who lay the golden eggs of prosperity from flying away." Dick Armey, former Majority Leader of the U.S. House of Representatives