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Tax System in the Faroe Islands

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Re: Tax System in the Faroe Islands

#31

Post by pigsty »

soneil wrote: post #26
WeylandYutani wrote: post #9

Faroe Islands is a tiny speck. Countries are a cross between oil tankers and nuclear power plants. There's nothing to learn politicians have debated every single tax system known to human civilization. But even small changes are Herculean tasks.

I always find "but they're small" to be a lazy argument for things like this - I heard it recently in regards to Estonia's digital services also. "It's easy for them to do, but we're a huge country with near-infinite resources, we couldn't possibly". I mean sure, it means you have to scale the operation to match, which is why the IRS has more staff than the Faroes have population. But "we can't take on these projects…

I think there’s a difference though when a country has a population less than a typical large corporation and no major industry whatsoever. It’s at a scale where everyone knows somebody who can help you get things done.

Re: Tax System in the Faroe Islands

#32

Post by LikesPwsh »

sokoloff wrote: post #28
AlexTWithBeard wrote: post #20

Earlier quoted context omitted.

Well, the easy part of tax filing is easy: yes, it's a bit tedious in a sense that you have to copy some stuff from your W2 to 1040, but that's it. Calculating part time rental property depreciation is complicated, but that's because it IS complicated.

Exactly. The ordinary earned income portion of our income is 80% or more of our income and 1-2% of the tax filing burden/complexity.

The imbalance is that it's more like 2% of tax complexity but 80% (made up numbers) of time spent.

Assuming no submission is equivalent to a submission with earned income only (standard in Europe) would save an incredible amount of time.

Re: Tax System in the Faroe Islands

#33

Post by [deleted] »

sokoloff wrote: post #11

Taxing businesses on gross revenues (what “no deductions” means) is a huge bias in favor of vertical integration and large conglomerates. If I’m a small company and participate in a chain of 8 companies providing a good or service, there is a large multiple of tax paid on that good as compared to a competitor who manages to do all 8 things in a single company. (This is why VAT taxation works better and is more common…

[deleted]

Re: Tax System in the Faroe Islands

#34

Post by Symbiote »

sokoloff wrote: post #11

Taxing businesses on gross revenues (what “no deductions” means) is a huge bias in favor of vertical integration and large conglomerates. If I’m a small company and participate in a chain of 8 companies providing a good or service, there is a large multiple of tax paid on that good as compared to a competitor who manages to do all 8 things in a single company. (This is why VAT taxation works better and is more common…

Here's the English part of the Faroese government's website on tax: https://www.taks.fo/en/individuals/tax/

And for businesses: https://www.taks.fo/en/business/starting-a-business/starting...

I think "no deductions" means there aren't hundreds of complicated rules like the USA has. The page says "Operational costs should be deducted from the taxable income. Operational costs are the expenses that are necessary for the business to operate, such as rent, electricity, maintenance, furniture, equipment, transportation, insurance, bookkeeping, telephone expenses etc."

VAT is 25%.

Re: Tax System in the Faroe Islands

#35

Post by sokoloff »

LikesPwsh wrote: post #32
sokoloff wrote: post #28

Earlier quoted context omitted.

Exactly. The ordinary earned income portion of our income is 80% or more of our income and 1-2% of the tax filing burden/complexity.

The imbalance is that it's more like 2% of tax complexity but 80% (made up numbers) of time spent. Assuming no submission is equivalent to a submission with earned income only (standard in Europe) would save an incredible amount of time.

I think ordinary income is People with only earned income already have a very easy time of it here as well.

Re: Tax System in the Faroe Islands

#36

Post by soneil »

pigsty wrote: post #31
soneil wrote: post #26

Earlier quoted context omitted.

I always find "but they're small" to be a lazy argument for things like this - I heard it recently in regards to Estonia's digital services also. "It's easy for them to do, but we're a huge country with near-infinite resources, we couldn't possibly". I mean sure, it means you have to scale the operation to match, which is why the IRS has more staff than the Faroes have population. But "we can't take on these projects…

I think there’s a difference though when a country has a population less than a typical large corporation and no major industry whatsoever. It’s at a scale where everyone knows somebody who can help you get things done.

What I'm not convinced of is that complexity is actually a necessity.

For example, what's the real difference between operating a fire department in a town on the Faroes, vs a town in the Mid-west? It seems like a fairly cookie-cutter operation where requiring more of them in total does not add complexity to each operation.

Possibly even the opposite, where the scale of the US turns into a net benefit, so you can support your own industries building and providing tenders/appliances - where the Faroes are (I assume) more likely to ship one from Germany.

So I'm not clear why taxation within a single state has to be more complex than taxation within a small nation. I'm not going to deny that it probably is, and probably will be, but I'm less comfortable with the assumption that it must be.

Re: Tax System in the Faroe Islands

#37

Post by NoboruWataya »

soneil wrote: post #26
WeylandYutani wrote: post #9

Faroe Islands is a tiny speck. Countries are a cross between oil tankers and nuclear power plants. There's nothing to learn politicians have debated every single tax system known to human civilization. But even small changes are Herculean tasks.

I always find "but they're small" to be a lazy argument for things like this - I heard it recently in regards to Estonia's digital services also. "It's easy for them to do, but we're a huge country with near-infinite resources, we couldn't possibly". I mean sure, it means you have to scale the operation to match, which is why the IRS has more staff than the Faroes have population. But "we can't take on these projects…

Landing a man on the moon is not a problem that increases in complexity with population size, taxation is. "Things like this" are exactly where "but they're small" is a perfectly legitimate response. To say "oh just scale the operation" ignores the fact that scaling is just about one of the hardest problems we face in human organisations.

Re: Tax System in the Faroe Islands

#38

Post by lokar »

chadash wrote: post #15
sokoloff wrote: post #11

Taxing businesses on gross revenues (what “no deductions” means) is a huge bias in favor of vertical integration and large conglomerates. If I’m a small company and participate in a chain of 8 companies providing a good or service, there is a large multiple of tax paid on that good as compared to a competitor who manages to do all 8 things in a single company. (This is why VAT taxation works better and is more common…

i guess that in a very strict sense “no deductions” might mean you can’t deduct business expenses, but I doubt that the tax code ACTUALLY works that way. I think the article is talking about individual, not business deductions. If you taxed revenues, some businesses would just be impossible to run. I have to imagine that there are grocery stores and pharmacies in the Faroe Islands.

I think the article was talking about tax incentives and social spending when they say deductions

Re: Tax System in the Faroe Islands

#39

Post by lokar »

paulryanrogers wrote: post #22
pavlov wrote: post #21

Earlier quoted context omitted.

This is the case in almost all European countries nowadays. The US tax and banking systems are so bad that it’s genuinely hard to understand from the Euro perspective.

US system is difficult by design. Automation would make filing less painful, and one party dislikes taxes so prefers people feel the pain.

The IRS could do a simple automatic return for the vast majority of Americans. Lobbying from intuit prevents it.

Re: Tax System in the Faroe Islands

#40

Post by ausbah »

beej71 wrote: post #18
BariumBlue wrote: post #8

Earlier quoted context omitted.

Turbo tax and H&R Block, companies that produce software for filling taxes, lobby to keep taxes complex and non-easy (unless you pay for their software)

This is why I still do taxes myself, including itemization and SE. Free fillable forms gets me e-file. If there's ever anything in unsure of, I hire an independent tax person to do it. Then if I have to do it again, I use that as a template. Another option is a lot of these places allow you to compute the results without paying, and you can use that to check your work. Overall, a royal pain in the ass, but at least t…

in most cases it's pointless for people to file their own taxes. governments already n ke their income streams and can tax appropriately at the source. just the idea of people having to do their own taxes represents those "fuckers" taking your time away
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