I enjoyed this comment on the NYtimes website by A Man from Poland in response to Paul Krugman’s criticism of Mitt Romney lavishing praise on the Polish economy. Especially because Krugman concludes: “Doesn’t anyone tell Romney to do his homework?”
Mr Krugman,
I see that you don’t know too much about situation in Poland.
Of course I agree that currency depreciation was one of main reasons of Poland’s relative resilience in the crisis.
But there were second very important reason – income tax cuts in 2008.
In 2008, the first time from 10 years we had income tax cut in Poland.
Till 2007 we had 19%, 30% and 40% progressive income tax rates. In 2008 19% tax rate was decreased to 18%, 30% was decreased to 18% and 40% tax rate (for the richest taxpayers) was reduced to 32%. So, we changed 19%-30%-40% progressive system into less progressive, lower income tax system 18%-32%.
In 2008 there was also social security tax reduction which additionally decreased labour cost in Poland.
So, thanks to income tax cuts and social security tax cuts we have maintained (roughly) employment rate and consumption level in Poland and it was second important reason of quite good situation in Poland.