What is ``TAKS'', the best tax system on earth that supports the economy of the Faroe Islands?
A very simple and efficient tax management system called 'TAKS' is built in the '
The Best Tax System on Earth - The American Prospect
https://prospect.org/world/best-tax-system-on-earth-faroe-islands/
While part of the Kingdom of Denmark, the Faroe Islands are a semi-independent country with their own self-governing government. It has individual treaties on fisheries and trade with neighboring countries, and in addition to catching and exporting pelagic fish such as mackerel and herring, the aquaculture industry is also developing, mainly raising fish such as salmon. It is said that they are exporting to overseas. Fishing is one of the main industries accounting for one-fifth of the Faroe Islands economy and is also the highest paying job in the Faroe Islands.
The Faroe Islands are also known to be one of the richest countries in the world, and their GDP per capita is higher than that of Denmark. The unemployment rate is also low, with record lows of 4% or less in 2015, 2% or less in 2019, and 0.5% in 2022. increase.
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This economy is supported by a system called 'TAKS'. TAKS centrally manages tax calculations and deductions, etc. All wages and tax payments paid by the company are processed by the central government under TAKS, and the payment amount is automatically calculated and deducted before it is transferred to the bank account. It has been.
In addition, payments of almost all government benefits such as family benefits, unemployment benefits and pensions have been integrated and partially automated. Thanks to a simple system, the government can provide benefits simply by telling TAKS who is eligible for which system without requiring or confirming documents for each benefit.
In this way, the advantage of TAKS is that the government can monitor all income streams of each individual, automatically adjusting the withholding tax on the spot, and almost always producing the correct figures. Cooper said, ``Imagine you are running a medium-sized company with dozens of employees.You are required by law to pay your employees' salaries and income taxes to the government, so you are an accountant. It would cost about $50 (about 6500 yen) per employee per month, and you would have to go through a cumbersome process every time you hired someone.However, under TAKS Everything is unnecessary,” he explained.
“Alternatively, imagine that you are one of the employees. You will be asked to fill it in. You will have to sort it out when you file your tax return and you may have to pay penalties for under-reporting, which is a huge burden.”
In the United States, for example, an estimated 6.5 billion hours are spent filing tax returns each year, which is the equivalent of 3.1 million people working full-time for a year. If calculated with average wages, the economy will be burdened with a burden of 313 billion dollars (about 40 trillion yen). Considering that there are 83,190 tax officers in the United States and an average income of $ 51,080 (about 6.6 million yen), the efficiency of TAKS is immeasurable.
In addition, the fact that the Faroe Islands Statistics Bureau can access the data processed by TAKS is also very useful for economic activities. Economic indicators that are calculated based on interviews in other countries can be calculated in the Faroe Islands by analyzing data with accuracy and timeliness.
Mr. Cooper said, ``TAKS would not have been built without the broad context of Nordic social democracy. Because it is fundamentally at odds with the American way of thinking: our insistence on personal control of our taxes is because such policies make beneficiaries appear as if they are strict individuals who do not rely on government assistance. It is because they can be regarded as being ideologists,' he said.
“Such a system would be difficult to fully implement in the United States, but we may be able to learn from the example of the Faroe Islands. You may not be able to handle it with , but you can build an opt-in system for people who don't like paperwork,' he concluded.
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