Taxes in Nordic Countries Are so Simple, People File Them by Text Message
This story originally appeared on BusinessInsider.com.
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.