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Tax System in the Faroe Islands

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Re: Tax System in the Faroe Islands

#81

Post by sokoloff »

analog31 wrote: post #67
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 wonder if the article perpetuates the confusion about "deductions." I run a small business and use Schedule C on my tax return. Basically, Schedule C has you write down your revenues, and subtract your costs. The difference is what ends up in the income section of your main form. "Deductions" come later in the form.

Those subtractions of your costs are deductions.

Costs of Goods Sold are deductible: https://www.irs.gov/publications/p535#en_US_2021_publink1000...

Re: Tax System in the Faroe Islands

#82

Post by notahacker »

geysersam wrote: post #75
notahacker wrote: post #66

Earlier quoted context omitted.

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?

Not sure there are massive economies of scale in tax collection (and probably some diseconomies of scale too from scaling up from the Faroe Islands to a region/nation too big for a single official to know every accountant personally!). Auditing and providing specific advice on compliance is pretty hands on stuff, and as the population size grows, so does the size, variety and geographical dispersal of the entities being taxed, the range of possible avoidance measures, the complexity of legal actions etc. And inevitably, the complexity of the tax code...

Re: Tax System in the Faroe Islands

#83

Post by dogma1138 »

int_19h wrote: post #80
jopsen wrote: post #73

Earlier quoted context omitted.

> 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.

Which is very much against private ownership of property or at least individual ownership which is even worse.

It’s just blatantly stupid as it favors ownership under entities other than individuals such as corporations and trusts over individual ownership.

This move from an ownership model to a beneficiary one is already how the wealthiest amongst us avoid paying inheritance tax since if a family trust owns everything and you just get to benefit from those assets there is nothing to tax when a trustee dies.

And ofc corporations don’t die so no inheritance there which means the farmer’s kids are fucked whilst some mega agrocorp is laughing all the way to the bank waiting for Old McDonald to die…

All of these schemes that attempt to make inheritance costlier just make it worse for everyone other the richest of the rich.

People might take an issue with Bezos leaving billions to his survivors but what about farmland that has been in a family for generations? or an ancestral home? Or heck you don’t need to even to get to Amazon levels can someone leave to their kids a chain of 4 dry cleaners in some small city without it being taken away by the taxman?

And if that isn’t enough then it puts the residents of a country that has such a tax policy or any substantial inheritance taxation at a massive disadvantage against foreign investors and owners.

Re: Tax System in the Faroe Islands

#84

Post by dogma1138 »

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?

The suggestion above guarantees exactly the opposite of what you want to achieve.

Corporations and other legal entities that are not individuals don’t die so there is no inheritance to steal sorry to tax so they’ll end up owning everything.

Oh and foreign investors since when a Japanese billionaire dies his ownership in US assets is governed by Japanese inheritance law not by US one.

It would be also interesting how you’ll deal with various indigenous people and ancestral lands too ;)

Re: Tax System in the Faroe Islands

#85

Post by throwawaylinux »

tokai wrote: post #61
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 I read that they are planning to start lowering the financial support from Denmark this year. But only by a small bit. With no concrete plan of weaning fully of it. So the end of the union still is far off it seems. As long as Greenland wants support they should get it, as they really need it, but the Faroe Islands should have been on-track for independence a long time ago imo.

> As long as Greenland wants support they should get it, as they really need it

What is the reasoning there?

Re: Tax System in the Faroe Islands

#86

Post by rgmerk »

gpderetta wrote: post #55
LatteLazy wrote: post #24

Earlier quoted context omitted.

In the UK, less than 10% of the population even file a tax return. For 90% of people tax is just taken at source. Unless you have a small business, rent out properties or work abroad, HMRC already knows what you needed to pay and get's it right 99% of the time and your employer/pension provider just withholds as required. It's always baffled me that so many rich countries don't operate like this...

I do my own taxes on the UK, it is not complicated, but it would be everything a billion time easier if all brokerage accounts [1]and banks had a simple way to get all transactions in a tax year in a single csv file instead if having to do a billion clicks and having to parse dozens of pdf files! Also can I have everything in a single unified gui? [1] especially those barebone accounts used for employee stock grants.

Heh.

The thing I find astonishing about the UK is the sheer number of tax-advantaged savings schemes. Half a dozen different types of pensions. Several different types of ISAs (tax-advantaged savings accounts). And we haven’t even mentioned the wonderful world of offshore bonds…

Re: Tax System in the Faroe Islands

#88

Post by charlieyu1 »

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…

VAT artificially inflate prices and is often a hard hit to the economy because of reduced demand. Also the cost is generally transferred to the end user, which screws up the lower and middle class. I believe profit tax is the best model, the riches are paying more out of their profits while still not hurting operations.

Re: Tax System in the Faroe Islands

#89

Post by someguydave »

dr_petes wrote: post #23
cs702 wrote: post #19

Without a doubt, the US tax system is broken in mumerous ways. To a close approximation, everyone agrees on that. But the OP's notion makes about as much sense as asking if Amazon can somehow draw lessons for improving the efficiency and simplicity of its global software and hardware infrastructure by studying the super-simple software and hardware infrastructure of some tiny company. It strikes me as... highly unlik…

I don’t think bigger always needs to be more complex. For simplicity sake, a 10% tax on income would scale infinitely, no matter how big an economy grows (I’m not arguing in favor of this tax). But the point of the article, in my opinion, is that US has a large problem, costing tax payers an estimated 40 billion in labor figuring out their taxes, where other countries have almost automated the entire process. I think…

Maybe the US could stop taxing labor and investment and simply tax consumption (sales tax). That would simplify everything.

Re: Tax System in the Faroe Islands

#90

Post by sidewndr46 »

dan-robertson wrote: post #65
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)

I read theory a lot and I can see it as an argument that the filing process for Americans with reasonably simple situations are painful and difficult (ie that there’s no government website[1] to file for free, or that the IRS can’t fill in details for you). But I would think tax companies are not hugely important in the grand scheme of things and that the actual reason that tax is so complicated is more broad, eg: -…

Taxation in the US in general does not become more complex as you move to smaller governments.

For example, my local appraisal district just sends me a notice (which I am free to dispute if I wish) for my property tax each year. If they don't manage to send it, I don't owe anything.

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