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Taxes in Nordic countries are so simple, people file them by text message



young women smartphones texting
Sean Gallup/Getty Images

April 18 — Tax Day in the
US— is quickly approaching. Tax day. The
procrastinator’s worst nightmare.

But while Americans may scramble to organize their paperwork,
northern Europeans are playing it cool.

That’s because in Nordic countries, doing your taxes can be as
simple as sending a text message.

“In Sweden, the vast majority of taxpayers don’t do battle with
tax documents and fine-print questions about itemized
deductions,” Derek Thompson
wrote
last year in The Atlantic. “They just get a document
from the government with all the relevant information already
filled out. Some even get a text message with their prepared tax
information, and if they respond ‘yes,’ their taxes are done.”

The way taxes work in Nordic nations — a group that includes
Sweden, Finland, Denmark, Norway, and, randomly,
Estonia
— is different from how it works here.

In the US, taxes are prepared privately by the people who pay
them (or by those people’s accountants). In Nordic countries,
they’re prepared by the government.

As a result, people in Nordic countries don’t have to do much of
anything to file their taxes. They just need to agree the
government has prepared the forms correctly. For the people who
don’t have specialized income to declare, this is painless enough
that they can confirm via text.

Researchers have lobbied for
a similarly simple set of tax codes
in the US, but as
Thompson explains, the incentive to keep things how they are is
simply too great. A number of companies, including those that
make tax software (Turbo Tax, H&R Block), profit on people’s
inability to do their taxes by hand.

But even without the backlash from tax-software companies,
bringing the Nordic model stateside wouldn’t be an easy
transition.

Sweden, for example,
celebrates its high levels of public trust
. People trust one
another, and they trust their government. This makes filing an
important document like a tax return via an unsecure mode of
communication a relatively easy proposition. Meanwhile, the IRS
is
just about the least-trusted
institution in all of the United
States.

Another reason is that wealth is much rarer (and simpler, really)
among the Nordic countries; most people’s taxes don’t come with a
laundry list of obscure tax breaks and loopholes that
enable huge companies to pay nothing
in taxes.

As a result, the people in the US who have the most to lose from
a Nordic set of tax codes are the ones in the highest tax
brackets. Those are the ones able to game the system. Even
further up are the ones who’re actually capable of making any
real changes to the tax codes, but who have no current incentive
to change it against their favor.

In the choice between dismantling a highly lucrative industry
that needs people to be confused for it to work and making
millions of people a little less stressed each spring, the
winning option is clear.

The Nordic model will continue to stand alone.

__

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This article and images was originally posted on Business Insider

by Chris Weller

 

 

 

 

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