Like many other unpleasant things in life, taxes are unavoidable. In most countries, including the United States, there are hundreds of different taxes, and even more forms for filing them. Our tax code is so convoluted that some tax experts can’t even agree on how to file a sample tax return. “The rules are confusing, complex, and so complicated that even Americans with good intentions can easily find themselves running afoul of the law,” said Jeffrey Neiman, a former federal prosecutor. Consequently, there has been a mass exodus of taxpayers in recent years from America’s archaic tax system. One solution is to consolidate all taxes into a single flat tax, a successful process that has already been tested in multiple states, resulting in increased revenue and allowing for an overall reduction in tax rates.
Speaking of tax rates, here is a list of some taxes that many U.S. citizens pay. Of this list, income tax, property tax, capital gains tax, sales tax, and inheritance tax are among the costliest in terms of gross dollars as well as percentage of income. Many countries, as shown in the chart below, do not have these taxes at all.
Lastly, the filing process itself should be simplified to reduce wasted man-hours and money spent on compliance. In the United States alone, it is estimated that people spend over 6 billion hours preparing their tax forms and $400 billion in compliance every year. In contrast, Estonia, a pioneer of digital infrastructure, is using technology to implement an efficient tax-filing system among many other “e-successes”, including voting, prescriptions, and grades.
Ultimately, it’s pretty clear from a taxpayer’s perspective that some tax systems are much more modern and efficient than others. Even from a non-monetary point-of-view, people often choose to move to countries with more efficient tax systems simply to avoid the hassle of hours upon hours spent on tax forms. Don’t even get us started on the actual savings that can be realized from lower tax rates in these other countries. Oh wait, maybe we have gotten started on this?