Politics & Policy

Putin, The Flat Taxer

First Steve Forbes, then the president of Russia.

When President Clinton meets with Russian President Vladimir Putin at their summit this weekend, he may be surprised to learn that Russia has sworn off IMF austerity policies on the economy and is instead turning to a free-market reform plan developed by an international advisory panel that has consulted with Putin in recent months.

This group includes U.S. congressional staffers Jim Carter, Richard Vedder, and James Gwartney, along with Professor Arnold Harberger (one of the original “Chicago boys” who reformed Chile in the 1980s), Social Security reformer Jose Pinera and former New Zealand deregulatory prime minister Roger Douglas (of “Rogernomics” fame).

Meeting with Putin and his top economic deputies, the panel hammered out a pro-growth reform plan that includes a flat income tax, significant payroll-tax cuts, a currency board, abolition of customs duties, additional privatization, private-property-rights protection and major openings for foreign investment.

This plan, first reported by former Wall Street Journal editorialist Amity Shlaes in her new Financial Times column, is expected to be unveiled this month. The ambitious and strong-willed Putin believes that a Russian growth strategy of 8% to 10% over the next decade will enable Mother Russia to surpass the economies of Spain and Portugal and equal the size of British GDP.

The jury is still out as to whether Mr. Putin will respect press freedoms and human rights, and whether he will negotiate in good faith on arms control and foreign relations. But economic liberalization would surely be a step in the right direction. President Clinton should bring his notepad with him to Moscow.

Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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