Welcome to the Cato Daily Podcast

for Monday, February 12th.

I'm your host Anastasia Yuglova.

Iceland has joined a growing list of nations that have sharply cut their corporate tax rates

and adopted flat rate individual income taxes, writes Cato Senior Fellow Dixie. tax rates Kato senior fellow Dan Mitchell in his tax and budget

bulletin for February 2007. In today's podcast Dan discusses the economic

benefits of flat tax systems and explains why American politicians also need to get with the program.

What are the benefits of a flat tax system in general?

There are two benefits. The economic benefit is that you're

not penalizing productive behavior as much. You have a low flat tax and you're not

double taxing income that's saved and invested. The combination of those two things will result

in more work, more saving, more investment, more risk-taking, more entrepreneurship.

In other words, the things that make an economy grow faster, that make all of us richer, those are the

things that you're more likely to get if you replace the punitive high-rate

discriminatory tax systems that exist in most places in the world today.

Now why has Iceland decided to join that exist in most places in the world today.

Now why has Iceland decided to join the Flat Tax Club?

I think Iceland recognized it as a small open economy in the middle of the Atlantic Ocean

with not a whole lot of natural resources other

than things like geothermal, they needed to go above and beyond to come up with policies

that would make sure they could compete in a global economy.

And I think what you saw with Iceland is they decided that they already have too big of a government.

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