October 24, 2003

Russian leaders on tax

David A. Keene is optimistic about Russia's flat tax policy:

The new Russia is turning into quite a place. Russian President Vladimir Putin may be a former KGB apparatchik and he may sometimes act more like a czar than the head of an emerging democratic state, but he and those around him are an interesting bunch.

Thus, while policymakers in this country have been struggling for years over the question of how we might reform and simplify the tax code, Putin's government looked the question in the eye and opted for a 13 percent flat tax. The results since its implementation have been dramatic. The Russian economy, in spite of all the problems it faces, is growing faster than any in Europe. What's more, tax revenues are up so markedly that the Kremlin seems to be seriously considering lowering what already is Europe's lowest marginal rate even further.

This is good news for Russia and, ultimately, for the rest of us because a successful, stable and sensible Russia can offset the goofy thinking that dominates the leadership of old Europe. Indeed, it is entirely possible that Putin and his successors will ultimately prove Alexis de Tocqueville's observation that America's natural continental ally across the Atlantic is Moscow rather than Paris or Berlin. Lenin and his buddies made that observation seem a bit silly to many of us for a long time, but they are gone and it doesn't seem quite as silly anymore.