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Friday, May 05, 2006

The Flat Tax in Costa Rica

Mary Anastasia O'Grady (WSJ subscription):

The concept is anathema to Costa Rica's hard left, which is crying foul on grounds that a single, low rate is unjust: Under a flat tax the rich don't pay their fair share and it leads to profits -- a dirty word to Latin socialists -- for business.

Yet the flat tax has already proved an effective way to fight poverty in a host of developing countries... For individuals, tax evasion goes down and tax collection goes up because of better compliance. Low corporate rates attract capital, spurring economic growth and job creation. That means there is more money in government coffers to help the needy. Without a laundry list of tax exemptions and loopholes, corruption is thwarted.

If anyone can sell these concepts to Costa Ricans, it's Mr. Arias. He has the confidence of many Costa Ricans who tend to distrust the private sector, thanks in part to the systematic indoctrination of young minds by the left-wing national teachers' union.

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