The Faroe Islands’s tax authority, TAKS, is known to be the cleanest and most efficient in the world. The Faroes haven’t just set up a centralized system that automatically collects tax revenue and disburses welfare payments: they also continuously monitor all of your labor income and adjust your withholding as necessary if you lose a job or get a new one. Ordinary businesses and employees never have to even think about TAKS: no tax return is required. What’s more, the system almost automatically produces the best possible economic statistics (virtually an identical and contemporaneous picture of the whole economy, down to the last krone): that automation, in turn, has allowed TAKS to cut its budget and staffing while increasing audits on large, rich companies. Almost as remarkable as TAKS itself is the fact that the Faroese tax code has no income-tax deductions of any kind: this greatly enables the automation of the system, because all of the calculations are much simpler. A common reaction that pops up whenever comparisons are made between the Nordic countries and a ‘big’ country is that ‘those countries are small and supposedly homogeneous, so they can’t really be compared with a huge country’: that size argument, however, actually runs in the opposite direction, as it is easier, not harder, for a big, wealthy country to set up a streamlined bureaucracy, because of efficiencies of scale. A bigger tax database requires less money per person than a smaller one, and a country like America or the UK have a great ‘supply’ of computer scientists. There’s no technical reason the Faroese tax system cannot be borrowed. Read more on Theatlantic.com
