Work at Home

[Terry Allison]

Work at Home

Work at home is just as real as any traditional brick-and-mortar business. Because the work at home is a real business, the business owner also needs to be informed about all the various tax proposals, and its effect on a work at home business and our economy. One of those proposals is the flat tax. The following article shows various examples on how the flat tax has worked in other countries, and its effects on the gross domestic product. The purpose for posting the article is only to inform the Google reader in his or her work at home business.

The Rise Of The Flat Tax Gives Us Morning In Albania
Original article at Forbes
By Nathan Lewis

When Robert Ernest Hall and Alvin Rabushka published the book The Flat Tax in 1985, they did not have much historical evidence to go on. Only Jersey, Hong Kong and Guernsey had identifiable flat tax systems, plus a few other places like Singapore with similar tax regimes. They were riding on the political wave of Reagans tax cuts. It was Morning in America, to borrow a phrase from the 1984 presidential election.

Today, the flat tax idea is perhaps even more politically remote, in the United States, than it was in 1985. However, the rest of the world caught on to the idea. Today there are at least forty governments with flat tax type systems, most of which made the switch in just the last decade.

These include, Estonia in 1994 with 21 percent, Lithuania in 1994 with 15 percent, Latvia in 1995 with 23 percent, Russia in 2001 with 13 percent, Serbia in 2003 with 12 percent, Bosnia and Herzegovina in 2004 with 10 percent, Slovakia in 2004 with 19 percent, Ukraine in 2004 with 15 percent, Georgia in 2005 with 20 percent, Romania in 2005 with 16 percent, Turkmenistan in 2005 with 10 percent, Kyrgyztan in 2006 with 10 percent, Albania in 2007 with 10 percent, Mongolia in 2007 with 10 percent, Kazakhstan in 2007 with 10 percent, Mauritius in 2007 with 15 percent, Tajikistan in 2007 with 13 percent, Bulgaria in 2008 with 10 percent, Czech Republic in 2008 with 15 percent, Belarus in 2009 with 12 percent, Seychelles in 2010 with 15 percent and Hungary in 2011 with 16 percent.

A number of these countries have been having problems recently, mostly due to unstable money and the generalized effects of the recent global economic difficulties. We could take 2007 as a representative pre-crisis year. How did the flat tax countries do then? For thirteen countries for which information was available from the IMF, the average GDP growth rate was 10.0 percent, ranging from 6.2 percent, Slovakia, to 23.1 percent, Ukraine.

However, even this impressive number hides more dramatic gains. In my opinion, in high-growth areas, the true rate of growth tends to be hidden by inflationary adjustments. Prices rise, but it is not because of the debauchment of the currency, it is because people are getting richer. Rents, restaurants, hotels, medical services, education and so forth all become more expensive. Thus, the nominal GDP figures give perhaps a better impression of the true rate of growth. The average nominal GDP growth among these thirteen flat-tax countries was 21.8 percent in 2007.

We are not talking about adding a percentage point to growth. We might be adding ten percentage points. The cumulative effects are astounding. Are you getting the idea of why this policy has been so widely imitated?

Another surprising theme has been the amazing stability of tax revenue as a percentage of GDP. Among ten flat-tax countries for which data is available from the IMF, I took the revenue-GDP ratio of the last year of the former tax system and the first year of the flat-tax system. How much did the revenue-GDP ratio change? The average change was minus 0.10 percent. Yes, a tenth of a percentage point. Hardly any change at all. Six countries, out of ten, had an increase in the ratio. They actually got more tax revenue, as a percentage of GDP, than with their old tax system. The largest decline was Slovakia, whose revenue-GDP ratio fell to 40.57 percent from 45.60 percent. Maybe that was a little high anyway.

However, when you combine the typically high growth in nominal GDP with these stable revenue-GDP ratios, nine out of ten countries experienced an increase in tax revenue in the first year of flat-tax implementation. The average increase in revenue was 17.7 percent, when excluding outlier Estonia, which had an 81 percent increase. Even Slovakia, with the biggest decline in revenue-GDP, had a revenue increase of 6.1 percent. Mongolia, with their 10 percent flat tax replacing a system with rates up to 40 percent, experienced a 33 percent increase in revenue! The only decliner was the Czech Republic, which had a 0.50 percent reduction in revenue. However, even that could be explained by the fact that the Czech Republic implemented its flat tax in 2008, a year of economic crisis worldwide.

So you see, most of the seemingly-impossible promises of the flat-taxers, higher growth, stable revenue-GDP ratio, rising government revenue, are in fact common and repeatable.

Russia, which implemented its flat tax in 2001, provides one of the best longer-term examples. Between 2000 and 2008, Russias GDP, in U.S. dollar terms, grew at an average compounded rate of 26 percent per annum. The end result was that GDP in 2008 was 546 percent higher than in 2000.

Russias tax revenue-GDP ratio was 31.4 percent in 2000, and 31.6 percent in 2008. With this ratio stable, you can see that the Russian governments tax revenue also grew right alongside the growth in the economy as a whole, increasing to more than six times its 2000 amount in less than a decade.

The funny thing is, between 2000 and 2008, Russias population actually declined from 146.7 million to 141.4 million. Blaming economic stagnation on population, as is common regarding Japan today, is a waste of time.

And what about Albania? On January 1, 2008, Albania implemented a 10 percent flat tax on personal and corporate income, replacing a system with rates from 10-30 percent on personal income and 20 percent on corporate income. The result? Tax revenues went up 18.4 percent, even though 2008 was a crisis year worldwide.

Whether the reader agrees with the flat tax proposal or not, the work at home business will always be a better choice for anyone wanting to take control of his or her life and financial concerns.

Work at home is the solution for an individuals financial issues. Working at home is being able to look at the advantages of your alternatives and is a great choice for your financial stability. Work at home is the best option. Be proactive on your financial future, especially in times of economic uncertainity. There is a community where an entrepreneur can gain valuable information on a work at home business.

Work at home can happen for you, if you are motivated. Now, there is a work at home community that you can work with and gather as much information that you need to succeed. The community name is Tomorrows Home Business social community and is located at this address http://tomorrowshomebusiness.ning.com.

In this work at home community, the business entrepreneur will be able to read blogs and watch videos for business, or just for pleasure. With a couple of RSS feeds coming to the main page, the entrepreneur can even stay informed of what is happening in the world. There is something here in this community for everyone.

Groups like the Maniac Marketers come in and post their blogs in the community, giving valuable information for their Health and Wellness businesses. If you would rather watch videos of the TriVita videos, you can do that, too. Or if you just want to hang out and relax, you can do that, too! There are many music videos like Johnny Cash, Waylon Jennings, Pink Floyd, Eric Clapton, and Seasick Steve! Or if you want to learn about handcrafts or see the equally oldest Ford antique car, a 1903 Model A Ford, you can do that, too! Or maybe you need an inspirational video clip! There are many choices of inspirational clips, such as Al Pacinos locker room speech in Any Given Sunday, or Mel Gibson as William Wallace motivating the Scottish men men before battle in Braveheart; or Sylvester Stalone as Rocky and how he motivates himself in the boxing ring, or even his inspirational conversation with his son, and who can forget those chants for Rudy in the movie Rudy!

When you become a member of Tomorrows Home Business Social Community, there is a profile created just for you. You can use the standard set-up on your page. Or you can be as creative as you want to be. For an example check out my profile page at Terry Allisons Profile Page. I use my profile page as a dream-building tool. I have always wanted a Harley-Davidson motorcycle. I have learned to keep this dream in front of me.

A work at home community for people wanting to find out more information on starting their own work at home business. You can also subscribe to this RSS feed to receive up-to-date information from the community blogs Tomorrows Home Business Social Community RSS Feed

Terry L. Allison, Sr.
Creator of Tomorrows Home Business Social Community
http://terryallison.com
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