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Tax System in the Faroe Islands

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Re: Tax System in the Faroe Islands

#71

Post by Taniwha »

twawaaay wrote: post #27

If I was a government body responsible for setting tax rules after reading the article I still haven't learned anything. First of all, tax systems are typically result of huge forces within the country and represent history of negotiating between parties or other groups of people that each tries to get something for themselves while the government needs to deal with finite budget and groups of people dissatisfied tha…

Here in New Zealand this all looks very familiar - we too have NO deductions for most tax payers - I run a small company, do the payroll and tax stuff in a spreadsheet - one simple line per employee.

Most people who have just one job end up paying exactly the right amount of tax (that 1 line in my spreadsheet) and don't need to file - if you have multiple jobs you may get money back (depending on how you registered your second job) if you don't file the IRD will send you a cheque (we don't do cheques any more, they'll drop it in your bank account).

It doesn't have anything to do with GDP, we used to have that complex tax system, about 30 years ago we chose to change it - what it takes is politicians with the political will to change things

Re: Tax System in the Faroe Islands

#72

Post by jopsen »

dxs wrote: post #44

For several years now I've been wondering about a couple of things. One would be to come up with a simple taxation formula for individual income. (1) No deductions. (2) Peg the tax rate to a formula, something like tax = 1% per $10,000 of income. (These specific numbers would not work very well.) This would be simple, absolutely predictable, and would set a maximum income at whatever the culture decided was right. An…

Is equality a goal in its own?

Think of the incentives you setup. People won't be build large long lasting corporate institutions.

Also "disbursing funds", sounds an awful lot like liquidate investments. Is that a good idea?

Worst of all, whatever commissions you create will be corrupted, because so much money is involved. The commissions will make bad decisions, etc.

Centralized decision making faces many of the same problems as plan economics / communism. You simply can't know what is good/bad idea at scale.

Sure, privately owned corporations make bad decisions too -- but it's more distributed. And the government isn't incentivized to cover it up.

Note. I'm not saying we shouldn't have a decent estate tax. Or that the wealthiest shouldn't pay more in taxes... Just that there things worse than private ownership :)

Re: Tax System in the Faroe Islands

#73

Post by jopsen »

imtringued wrote: post #69
dogma1138 wrote: post #51

Earlier quoted context omitted.

That sounds like a dystopian nightmare that is incompatible with private ownership of anything.

Why is that a more dystopian nightmare than rich people owning all the private property and leaving nothing for you?

> leaving nothing for you?

You assume the world is a zero sum game.

You have what you make. Why would you need anyone to "leave" something for you?

To be fair: I didn't mind my free healthcare, education, and the educational support that allowed me to study without loans, saving or a job.

But you don't have to do a full communist to fund a wealth fare state.

Re: Tax System in the Faroe Islands

#74

Post by ElfinTrousers »

nsteel wrote: post #6

They could send that journalist to almost any country and experience a better tax system than the US. Although it sounds like a nice trip and he got some hikes in. > Filing taxes takes up an estimated 6.5 billion hours each year—as the right-leaning Tax Foundation points out, the equivalent of 3.1 million people working full-time for the whole year. It's just a staggering level of waste. But hey, keep shuffling stuff…

> Although it sounds like a nice trip and he got some hikes in.

Getting the boss to pay for your vacation is a time-honored tradition in all fields.

Re: Tax System in the Faroe Islands

#75

Post by geysersam »

notahacker wrote: post #66
expazl wrote: post #60

> THE FAROES ARE ONE OF THE RICHEST COUNTRIES in the world by per capita GDP—even slightly richer than Denmark itself. The Faroe Islands are a strange place. There aren't many people, yet you'll see huge infrastructure projects to literally drill tunnels through mountains to connect at 2-3 families with the main roads. A gigantic amount of public money gets pumped into every part of their industry and infrastructure,…

I think the Faroes being a country with high levels of evenly-distributed wealth and a profitable but not-very-diverse business sector is why they get the luxury of having a simple tax system with limited pressure to add deductions (that and taxes not actually needing to be high enough to cover government spending). Certainly the wealth is more a cause of the tax simplicity than the other way round. Back of the math…

About the budgets. Certainly the cost of this kind of systems scales sub-linearly with population size?

Re: Tax System in the Faroe Islands

#76

Post by zx8080 »

imtringued wrote: post #69
dogma1138 wrote: post #51

Earlier quoted context omitted.

That sounds like a dystopian nightmare that is incompatible with private ownership of anything.

Why is that a more dystopian nightmare than rich people owning all the private property and leaving nothing for you?

Maybe because a hope to become rich from the poor supports the "rich owns everything" nightmare?

Re: Tax System in the Faroe Islands

#78

Post by geysersam »

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 think you misunderstood how their system for business taxation works. They don't have a revenue tax. And they do have deductions, only fewer than in most other countries.

Re: Tax System in the Faroe Islands

#79

Post by yieldcrv »

In a diverse economy with many sectors, having a tax system that incentivizes participation and capital movement towards some sectors is beneficial.

velocity within an economy is more important than public coffers, especially when the attempts at management are distributed to the private sector, compared to a single flawed attempt centralized at the public sector. In systems like the US, the distributed risk takers compete with the centralized attempt or simultaneously collaborate with it.

The "loopholes", some of which are indeed loop holes, function to incentivize certain behaviors. In almost all cases, someone that wants to simply accumulate cash will be taxed the heaviest, the entire system is saying move it around in specific ways, keep the velocity high. create, invest, hire.

Re: Tax System in the Faroe Islands

#80

Post by int_19h »

jopsen wrote: post #73
imtringued wrote: post #69

Earlier quoted context omitted.

Why is that a more dystopian nightmare than rich people owning all the private property and leaving nothing for you?

> leaving nothing for you? You assume the world is a zero sum game. You have what you make. Why would you need anyone to "leave" something for you? To be fair: I didn't mind my free healthcare, education, and the educational support that allowed me to study without loans, saving or a job. But you don't have to do a full communist to fund a wealth fare state.

I don't think the scheme proposed by OP is a good idea, but it's not communist in any meaningful sense. It's not even anti-private-property. It's very specifically against inheritance.
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