Here’s a perfect example of what the US authorities in Iraq should not be doing. The Washington Post reports that Paul Bremer, the US administrator in Baghdad, signed an order establishing a single tax rate of 15 percent for all Iraqis, regardless of income. US conservatives are ecstatic.
Apparently Iraqi participation in the decision to impose the flat tax was minimal:
Iraq’s new finance minister, Kamil Mubdir Gailani, is considered a follower of Ahmed Chalabi, the Western-oriented banker who has closely adhered to the Bush administration’s economic policies, according to one expert on the Iraqi economy. Gailani presented the new Iraq finance program, including the flat tax, at a recent international meeting.
“A piece of social engineering is being done on Iraq, but it has almost no support from other members of the U.S.-appointed Iraqi Governing Council,” said a Middle East expert who heard Gailani’s presentation.
At least when the Iraqis achieve self-government they’ll be able to repeal the flat tax and establish a progressive tax. But shouldn’t this have been a decision for the entire Governing Council?