1st: Russia Has a Flat Tax and Almost no Debt

Mitt Romney’s  bizarre stand-off with an Occupy Wall Street heckler has now gone viral. To the surprise of no-one conservatives seem to love Romney’s performance (“you tell that smelly hippy where he can go, Mitt!”) while liberals seem to loathe the arrogance and class privilege that leak out of Williard’s every pore.

I don’t particularly care about the political fall-out of this minor kerfuffle, Romney is absolutely going to be the GOP nominee so whether this “boosts” him in the South Carolina primary is completely irrelevant. I do, however, find it exceedingly entertaining that Romney immediately defaulted to a caricatured view of Russia as a socialist dystopia when the reality is that it actually embraces many of the economic policies, particularly balanced budgets, low government debt, and low marginal tax rates on the wealthy, for which he has aggressively been campaigning.

As he is preparing for the next debate maybe Romney can spend some time reading about “ Russia’s flat tax miracle” or perhaps he could learn that Russia was part of the “ global flat tax revolution “  or perhaps even how Russia “ more than doubled revenues from income taxes *” after implementing a flat-tax. Romney could also stand to take a look at the Economist’s Global Debt Clock which shows that Russia is one of the most fiscally responsible countries in the entire world.

Let’s just take a few numbers from the Economist which show that Romney, if he is half the budget hawk he repeatedly claims to be, should be signing up for a tutorial in fiscal policy from Vladimir Putin.

Public debt per person - Russia $ 891 ( 8.5 % of per capita income according to 2010 World Bank Figures)

United States $ 29,053 ( 61.5 % of per capita income according to 2010 World Bank Figures)

If anything those 2010 figures substantially understate the differences between Russia and the US since the United States has continued to run (and will continue to run for the foreseeable future) massive budget deficits while Russia has already brought its budget roughly back into balance, but those are the last years for which I could swiftly and easily get comparable per-capita income figures. If things aren’t changed, within the next couple of years we could easily see a situation in which US public debt surpasses 100% of GDP while Russia remains right in the range of 10% – a truly startling divergence.

Now there are, of course, other areas of policy about which Romney could (rightly!) criticize the Russian government. But when it comes to issues of tax policy, budget management, economic inequality, and the relationship between the 99% and the 1%, Russia is precisely the sort of model he wants to adapt. Russia is not in any way a socialist nightmare but is instead low-tax, low-debt, and a firm believer in the necessity of budget discipline.

* It’s worth noting John Fund’s farcical, and totally unsupported, contention that the introduction of the Russian flat tax caused Russia’s economic expansion from 2000-08. While the introduction of the flat-tax didn’t hurt matters, Russia’s economic recovery from the 1998 debt default was well underway by the time it was introduced