His favourite talking point

George Bush to Romanian Prime Minister Popescu-Tariceanu right before his departure for Zagreb –

I also congratulate the Prime Minister on having a 16 percent flat tax. I’m a little envious. I would like to have been able to achieve the same objective for our tax code, and it was a smart thing to get done, because I think those kinds of policies will enable the Romanian folks to have a bright future.

Bush had the same obsession on a visit to Estonia a while ago and it appears to be part of his bond with eastern European countries.  The trouble is, as a supposed ingredient of his own policy objectives for the USA, it’s delusional.  He never made any concrete proposal for a flat tax, and his own tax cuts have made the tax code less flat: dividends and capital gains are taxed at a far lower rate than wage income (added: and there are no payroll taxes on capital income).   The 16% is also fantasy.  The federal government spends about 21% of GDP — and that’s before housing finance got socialised! 

This entry was posted on Friday, April 4th, 2008 at 2:19 pm and is filed under A Fistful Of Euros, Transition and accession. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Tobias Schwarz Says:
   April 4th, 2008 at 3:29 pm

   Well, he did a lot of things that never happened, didn’t he? Including declaring a “mission” as “accomplished”… - still, fits in nicely with this - American political economics in one picture.

2. Tim Worstall Says:
   April 4th, 2008 at 5:47 pm

   “dividends and capital gains are taxed at a far lower rate than wage income. ”

   Tsk. In the US system dividens are paid out of profits after corporation tax. Then they are taxed again at 15%.

   Everyone else either taxes them at the corporate level or at the individual. Dividends in the US are taxed at about higher rate income tax, after the change.

3. P O Neill Says:
   April 4th, 2008 at 6:37 pm

   Point taken Tim (and reflected above). But I suspect that there are strategies that can deliver a large amount of corporate income to shareholders at lower than the total wage income tax rate. Due to the non flat tax.

4. Tim Worstall Says:
   April 4th, 2008 at 10:40 pm

   “But I suspect that there are strategies that can deliver a large amount of corporate income to shareholders at lower than the total wage income tax rate. Due to the non flat tax.”

   Oh aye.