The 10-percent solution

If you’re looking for some big news, here it is: The Commonwealth’s H.B. 14-203 proposes to enact a 10 percent flat tax in the CNMI, and the bill is starting to get attention.

Wow! Just when the Commonwealth’s situation looks hopeless, along comes this huge piece of news, an economic messiah if ever there was one. Not even a Clint Eastwood thriller could have a better hero to save the day at the last moment.

In fact, this is the best piece of news to hit the CNMI in the past 10 years. This is exciting stuff, and I don’t know where to begin…

OK…this being the CNMI and all, I do know where to begin: Politics. If democracy is all about choice, well, talk about a choice. The Commonwealth now has a chance to steer itself into world-class prosperity, and H.B. 14-203 is clearly the course to economic success.

So it will be very interesting to see if the community and its elected representatives choose the path toward prosperity. Yes, the CNMI can have a Hong Kong level of wealth while maintaining the beauty of tropical paradise…I’ve been saying that for a solid decade now. It’s doable, folks. Economically, environmentally, socially, it is very, very doable.

We all know about the natural beauty of the islands, but sometimes we forget to give thanks that the CNMI is also a friendly place, with nice people, a great lifestyle, a (generally) friendly business environment, and the blessings of the U.S. flag. Meanwhile, don’t forget that the world’s new economic powerhouse is Asia, and the CNMI is already sitting on that doorstep.

So when you add all these factors together, it’s obvious that the Commonwealth is more economically blessed than if it had diamonds in the dirt, gold in the ground, or oil in the soil.

But blessings, at least in the harsh world of economic reality, don’t do you much good if you don’t use them intelligently. And…ahem…the CNMI has gotten a bit spoiled sometimes, and has taken the easy way out, simply because our kind and generous Uncle Sam has handed out freebies here in a turbo-charged Santa Claus mode.

But at least we have a clearly defined fork in the road now. One path: A low-tax environment that would unlock the CNMI’s other economic advantages and set the stage for an economic boom.

The other path: More of the current dysfunction, more of the welfare-state mentality, more excuses, and more corruption.

Talk about a clear choice, eh?

I’m still digging into the details of the flat tax bill, and I am also reviewing some federal legislation that is probably related to all of this. Which means, of course, that I’ll have more to say on this, so stay tuned.

And I know, of course, that the Commonwealth’s legions of gadflies and amateur economists will oppose any proposal that offers genuine economic opportunity to CNMI residents. These gadflies want longer food stamp lines, not shorter ones. And that’s where they got you, isn’t it? Yes, it is. If you had listened to me, things would have been better, right? Right. So you can make amends now and listen to me on this: H.B. 14-203 is the best bet the Commonwealth ever had…well, second best to having me as Mr. July in the Men of the Saipan Tribune calendar, but we’ll talk about that later.

And we’ll talk about some serious economic matters pertaining the flat tax later.

But for now, the big picture is the important one to see. Will the CNMI take this rare opportunity to use tax policy to create an economic boom? Or will the CNMI prefer to keep sinking into a welfare state? Which path do you want for your children?

We’ll soon find out. This isn’t just a bill. No, this is an economic mirror, the ultimate self-portrait.

(Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. Ed4Saipan@yahoo.com)