Nathan Lewis, Contributor I write about monetary and tax policy
for the 21st century. For a number of years now, people have
asked me whether I prefer a “flat tax” or a “fair tax.” Both are
problematic. The “flat tax” is typically conceived as a
replacement for the existing personal income tax. This is fine,
but it ignores the payroll tax, which is really just another
form of income tax. So, it is only half of an income tax reform.
In practice, quite a few countries have gone this route,
beginning especially with Russia in 2001, and the results have
been very good. These countries have generally replaced their
income tax systems, but have kept what amounts to relatively
high payroll taxes. I would like to see a top-to-bottom income
tax reform, which includes payroll taxes. Or, I should say,
which does not include payroll taxes: I would like to see the
payroll tax system eliminated entirely and integrated into a
single income tax system. Neither Hong Kong nor Singapore, which
are models of what can be achieved