Just read this cool article Pioneer of the Flat Tax about Mart Laar the first prime minister of an independent Estonia.
It reads almost like the story of a typical hard headed young entrepreneur who doesn’t yet know all the reasons why something can’t be done.
Imagine a place with no tax accountants, where the annual return takes a businessman an hour to complete. Think how you could lead a country and design an economy just as you liked. Consider the joy of creating a tax system with no loopholes and exemptions, where everyone is treated the same.
When he became the prime minister of Estonia at the tender age of 32, Mart Laar saw this opportunity as a beautiful thing. The Soviet regime that once ruled his country had been overthrown, and he was starting with a clean slate – and the confidence that came from reading only one book on economics.
This table shows how it compares to UK Tax.
“Most experts advised against it and said it was a very stupid idea,” he said. “My finance minister said don’t do it, the IMF said don’t do it. But it’s not very easy to convince a young person that he is wrong and I was that type of young person. So I did it.”
This is how Bezos started Amazon. Max and Peter PayPal. Classic hard headed entrepreneurial spirit.
Thanks to Scott at Baltic Blog
for bringing this article to my attention. He says:
As an American with a screwy tax system that confounds me, even that as an ex-pat, doesn’t owe any money but can’t figure out the proper filings forms because of the Byzantine nature of the U.S. tax system, Estonian tax filing is simplicity in itself. It is all Web-based, and generally take 10 minutes to file.
As all of us entrepreneurs know, tax is a pain in the *ss. While obviously paying a huge percentage like we do here in Denmark is bad enough, I think for many smaller entrepreneurs the reporting overhead is actually worse.
Also in places like Denmark you tend to worry more about your deductions than your income. Imagine a 0% tax on your business. What kind of clarity in your daily life would this give you? Focus on your business effect and not the tax effect. I have been considering Estonia for a while as it certainly is an attractive place for a startup.