A scarily good idea

My opinion towards tax: make there be less of it, make it be less confusing, and make it quick.

The less of it bit is fairly self explanatory. The quick bit, also – it’s something of a pain for people to have to set aside cash during the year to pay a poorly calculated amount at the end of the next year.

The simple bit is the real problem though. Nobody I know, and I know a few, can say that they really understand what tax they need to be paying. I know tax specialist accountants who are constantly arguing amongst themselves about what a particularly badly written law means, and I know people with next to no income who are terrified that what little they do earn is going to be taxed into oblivion because they don’t know what they’re liable for.

In a sensible world, tax would be a set percentage of income over a certain level, and that would be it. Say 20% of everything over 20 grand. Nice round numbers, and it has the added advantage of being understood by all.

However, that’s not likely to happen. No tax ever gets simpler; more and more loopholes are opened and closed with every budget, and the accountants start going all gooey eyed at the though of the fees they’ll get to charge.

But wait, apparently that’s not true. For the first time – ever – a major government is just going to get rid of a stupidly complicated tax.

The US revenue service has made clear it is binning a controversial tax on personal use of employer supplied devices such as cell phones and BlackBerries.

The law was introduced in 1989 and meant that personal use of mobiles provided by employers would be taxed as a benefit. Last week, the Internal Revenue Service asked for ways to better enforce the law, which has tied people up trying to work out which calls were for work and which were private.

Now if only other countries would follow suit…

2 thoughts on “A scarily good idea

  1. You are, of course, using Estonia as your baseline system here, I presume?

    Fixed percentage of all income over the exempt level and almost no deductions beyond that (other than a fixed amount for pension payments, mortgage interest, ongoing education, or having more than two dependent children). Plus no tax on company profits — any dividend payments are purely taxed as income for the recipient.

    90% of people file their tax returns online, and most take less than 15 minutes. Almost no-one uses an accountant.

  2. I wasn’t, actually. I thought I was describing a concept so simple in its execution that no country could ever consider this.

    I’m beginning to see why you like Estonia so much…

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