Wednesday, July 14, 2010
Hong Kong and the Flat Tax
Check out this excellent piece on Hong Kong's flat tax system on Clusterstock:
I lived in Hong Kong for three years. When I was getting ready to leave, I realized I had never paid any income taxes (the government doesn't clip your paycheck there). I figured I'd better settle up so I looked up the number for Inland Revenue (their IRS) and dialed it. A woman answered and I explained my situation. She asked me my ID and I told her. For about 20 seconds, I heard the sound of a computer keyboard. Then she told me exactly how much I owed. She didn't even have to transfer the call. I sent in the check. Bam, done!
Now contrast that to the annual compliance agony we go through here in the U.S. My wife and I use an accountant, of course, but I'd estimate that we spend 20 or 30 hours just to prepare all the necessary documentation for the accountant. Then we have to answer his questions, of course. More time, more expense, more stress.
There has got to be an easier way to give money to the government. Tax simplification should be a huge political winner for either party. The problem is, they are too fond of using the tax code to implement their social engineering fantasies, or as a way to dispense favors to politically connected donors and friends. A flat tax is not a convenient play toy for politicians, but its implementation, besides promoting economic growth, would have the salutary effect of reducing political corruption.