A taxpayer's comparison of tax systems

As the tax season approaches, I offer an employee-oriented comparison of the three tax systems I have personally experienced: France, the UK, and the US.

1. The winner: The UK

I simply loved filing taxes in the UK. A pay slip has two lines only: one for the NHS contribution (health) and one for the income tax.

Some find it unfair that your tax liability does not decrease with, say, the number of children you raise. I am usually very sceptical of well-intentioned but complex tax rules. The income tax does not have to be the place where the state helps you raise children (think child benefits instead). The leaner the income tax process, the better. There are other and less costly means of implementing public policies.

2. Second place: France

The French tax system tends to be complicated, with many ad hoc taxes created by successive administration. Payslips have at least a dozen cryptic lines. However, filing taxes as an employee is a breeze. You can do it online in one minute: just confirm the amount pre-filled by the system, and you're done.

3. The loser: the US

Any normal person will inevitably get lost in the maze of lines you have to fill and questions you have to answer. This is why even employees with a salary as their only income will usually hire an accountant, just to be sure that their forms have been correctly filled, and enjoy the peace of mind that the IRS (the tax administration) will not come haunting them for who knows what mistake.

It is easy to understand why this situation endures. Too many people have a vested interest in it: tax lawyers, accountants, tax advisors etc. The system is skewed in their favour, and not only because of complexity.

First, in the US you cannot file electronically as an individual. You have to go through an accredited company. True, the service they offer must be free if you earn less than a certain threshold. I guess I see where this is coming from: the idea that private companies will run things more efficiently than the government. Well, I'm sorry, it just adds to the horrible complexity of the whole thing.

Second: In the US taxes are withheld, and oftentimes the IRS will pay you back some amount. All companies that file your taxes will offer to advance this amount to you, i.e. pay you now and collect the IRS payment on your behalf a month or so later. Many people are not aware that a sizeable interest rate is charged for this advance. As a result, every year, billions of dollars are transferred from taxpayers to tax companies. I'm not sure where the efficiency of that is.