Bremer Imposes Flat Tax on Iraq
Paul Bremer continues to use Iraq as an economic guinea pig, and has now implemented the “flat tax” idea beloved of the US wealthy by fiat. Flat taxes are regressive, since they tax the rich at the same rate as they tax the poor. Someone making a million dollars a year would pay $150,000 in Federal taxes at a 15% flat tax rate, leaving him with $850,000. Someone making $20,000 a year would pay $3,000, leaving her with $17,000. This is a way for the rich to avoid contributing their fair share to national needs such as interstate highways, airports, Homeland Security, and other Federal responsibilities. Since nearly 50 percent of the privately held wealth in the US is owned by the top one percent of the population, taxing them at the same rate as everyone else ensures that much of the country’s wealth is not available for key societal needs.
As it turns out, however, a flat tax in an oil state like Iraq is probably irrelevant anyway. In petroleum states, the real question is how the state shares the oil income with the citizenry. Taxation isn’t the big issue, unless the petroleum industry is privatized (not likely–Bremer needs the income). Bremer has spoken well of the Alaska arrangement for citizen dividends from petroleum, and if that is implemented it will more than make up for the regressiveness of the new tax system.
And, as Billmon points out, it is still illegal for Bremer to change Iraq all around at will. Section 3, Art. 48 of the Hague Regulations of 1907 clearly say “If, in the territory occupied, the occupant collects the taxes, dues, and tolls imposed for the benefit of the State, he shall do so, as far as is possible, in accordance with the rules of assessment and incidence in force . . .” Since the rules of assessment in force under the Baath were not the flat tax, the Occupying Power does not have the right to introduce a flat tax.
Likewise, Section 3, Art. 43 says, “The authority of the legitimate power having in fact passed into the hands of the occupant, the latter shall take all the measures in his power to restore, and ensure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country.“
For Billmon’s comments see:
For general issues in the law of occupation with regard to Iraq:
For the Hague Regulations:
Since the CPA seems not to have a copy at hand, here are the relevant passages in case any of the surfs this site from Baghdad:
Hague Regulations of 1907:
MILITARY AUTHORITY OVER THE TERRITORY
OF THE HOSTILE STATE
Art. 42. Territory is considered occupied when it is actually placed under the authority of the hostile army.
The occupation extends only to the territory where such authority has been established and can be exercised.
Art. 43. The authority of the legitimate power having in fact passed into the hands of the occupant, the latter shall take all the measures in his power to restore, and ensure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country.
Art. 44. A belligerent is forbidden to force the inhabitants of territory occupied by it to furnish information about the army of the other belligerent, or about its means of defense.
Art. 45. It is forbidden to compel the inhabitants of occupied territory to swear allegiance to the hostile Power.
Art. 46. Family honour and rights, the lives of persons, and private property, as well as religious convictions and practice, must be respected.
Private property cannot be confiscated.
Art. 47. Pillage is formally forbidden.
Art. 48. If, in the territory occupied, the occupant collects the taxes, dues, and tolls imposed for the benefit of the State, he shall do so, as far as is possible, in accordance with the rules of assessment and incidence in force, and shall in consequence be bound to defray the expenses of the administration of the occupied territory to the same extent as the legitimate Government was so bound.
Art. 49. If, in addition to the taxes mentioned in the above article, the occupant levies other money contributions in the occupied territory, this shall only be for the needs of the army or of the administration of the territory in question.
Art. 50. No general penalty, pecuniary or otherwise, shall be inflicted upon the population on account of the acts of individuals for which they cannot be regarded as jointly and severally responsible.
Art. 51. No contribution shall be collected except under a written order, and on the responsibility of a commander-in-chief.
The collection of the said contribution shall only be effected as far as possible in accordance with the rules of assessment and incidence of the taxes in force.
For every contribution a receipt shall be given to the contributors.
Art. 52. Requisitions in kind and services shall not be demanded from municipalities or inhabitants except for the needs of the army of occupation. They shall be in proportion to the resources of the country, and of such a nature as not to involve the inhabitants in the obligation of taking part in military operations against their own country.
Such requisitions and services shall only be demanded on the authority of the commander in the locality occupied.
Contributions in kind shall as far as possible be paid for in cash; if not, a receipt shall be given and the payment of the amount due shall be made as soon as possible.
Art. 53. An army of occupation can only take possession of cash, funds, and realizable securities which are strictly the property of the State, depots of arms, means of transport, stores and supplies, and, generally, all movable property belonging to the State which may be used for military operations . . .
Art. 55. The occupying State shall be regarded only as administrator and usufructuary of public buildings, real estate, forests, and agricultural estates belonging to the hostile State, and situated in the occupied country. It must safeguard the capital of these properties, and administer them in accordance with the rules of usufruct.
Art. 56. The property of municipalities, that of institutions dedicated to religion, charity and education, the arts and sciences, even when State property, shall be treated as private property.
All seizure of, destruction or wilful damage done to institutions of this character, historic monuments, works of art and science, is forbidden, and should be made the subject of legal proceedings.