John Stossel shares some tax facts in Springtime for Taxes:
Americans spent 6.4 billion hours complying with the tax code in 2005 — a chunk of time worth $265 billion, according to the Tax Foundation. That’s more than the 2006 federal budget deficit.Those of you who do your taxes yourselves spend an average of eight to 27 hours toiling for the U.S. government.
What a waste.
Other countries have made their citizens’ lives better by simplifying and lowering taxes. Estonians need an average 10 to 15 minutes to file their income taxes. Most do it without leaving their desk: 84 percent file online.
Twelve years ago, Estonia became the first country to tax everyone — companies and individuals — at the same flat rate. It started at 26 percent, dropped to 22, and will go to 20 in 2009. There are a few deductions for things like mortgage interest, educational expenses, and charitable donations. Very low incomes are exempt.
Unsurprisingly, Estonia is booming. The former Soviet republic used to be poor, with an average income 65 percent below its European neighbors. Today, Estonians are almost as rich as their neighbors, and their economy is growing more than 11 percent a year.
Corporations like a tax system that is low and simple, too, and that leads them to do more business in flat-tax countries. American companies such as Microsoft, Colgate, 3M, Bristol-Meyers Squibb, and Johnson & Johnson opened businesses in Estonia after the flat tax was adopted. Twelve years ago, foreign investment in Estonia made up only 5 percent of GDP, but today, it’s up to 20 percent. That means there’s more money in the Estonian economy to tax. So while the tax rate dropped, government revenues actually increased.
So why can’t we do that here?