This is the Cato Daily Podcast for Tuesday, July 24th, 2007. I'm Caleb Brown.

The U.S. tax system is becoming less competitive now that a growing number of countries are shifting to flat taxes.

So says Cato Institute Senior Fellow Dan Mitchell.

But there is good news, he says.

As more countries adopt flat taxes, lawmakers are watching.

It's making it easier to make the case on behalf of flat taxes on Capitol Hill.

We now have at least 17 nations with flat tax systems and at least three other

countries have adopted the flat tax system that should be going into effect in

the next year or two. I think the reason we're seeing this incredible growth in the number of countries

with simple and fair tax systems is twofold.

One is just real world experience.

A lot of countries have seen that for six decades Hong Kong has been the fastest growing

jurisdiction in the world and success begat success.

But also I think tax competition is playing a critical role.

When Estonia started the tax reform revolution in Eastern Europe, they obviously attracted

a lot of jobs and capital, they should are growing quickly.

Their neighbors noticed that.

And the two other Baltic nations, Latvia and Lithuania, quickly followed suit.

Then it spread to Russia from there to Serbia, Ukraine, Slovakia, then to Romania at Georgia, Montenegro, Serbia,

I mean all sorts of countries are adopting it. It's currently being debated in the

Czech Republic and what's happening is countries realize in a global economy with goods and

services and capital and labor able to cross borders much more easily it's

...