Fin – impact of a flat tax on the cost of capital
A number of European countries have adopted a flat tax. These countries (as of 2007) include Estonia with a rate of 24%, Latvia 25%, Russia 13%, Ukraine 13%, Slovakia 19%, and Romania 16%, Georgia 12%, and Serbia 14%. As an aside, Slovakia collected 10% more income tax than expected and the number of new firms registering in Slovakia jumped 12%.
What impact do you think a flat tax has on the cost of capital for firms raising money in the flat-tax countries? Will it have further-reaching ramifications?
Has Turkey considered a flat tax? Explain.