Accession Number:

ADA555401

Title:

Mexican Tax Reform: Look to the Russian Example

Descriptive Note:

Research paper

Corporate Author:

NAVAL WAR COLL NEWPORT RI JOINT MILITARY OPERATIONS DEPT

Personal Author(s):

Report Date:

2011-10-31

Pagination or Media Count:

29.0

Abstract:

Mexico suffers from a high underemployment rate of 25, an extremely high poverty rate of 48, a growing debt, low tax revenues, and low GDP growth. Without bettering this situation, the Government of Mexico will not be able to foster prosperity or afford any public expenditures to improve the security of the most unfortunate of its citizens. The Government of Mexico should follow sound economic theory and historical precedent and adopt a simplified, low-rate, flat tax system to improve the quality of life of the Mexican people. Raising tax rates, as economic theory and recent history demonstrate, does not equate with raised tax revenues. Lowering and simplifying taxes, as economic theory and the Russian 2000 Tax Reform demonstrates, will result in increased GDP, employment, real wages, and tax revenues. The Russian example shows that from 1998 until 2005, tax revenues increased approximately 881 and GDP approximately 787 in nominal terms. Also, real wages doubled. Hours worked by primary breadwinners increased 5 to 7 and unemployment dropped from 11.9 to 7.6. By adopting such tax reforms, the Government of Mexico will be better able to handle the many pressing issues facing it today.

Subject Categories:

  • Economics and Cost Analysis
  • Government and Political Science

Distribution Statement:

APPROVED FOR PUBLIC RELEASE