I recently traveled to the Faroe Islands, a small, semi-autonomous part of Denmark out in the North Atlantic, for a joint reporting project for The American Prospect and the People’s Policy Project. The idea was to investigate the country’s tax authority, which is called TAKS. I’d heard it is the cleanest and most efficient in the world.

Even with those expectations, what I found impressed me. The Faroes haven’t just set up a centralized system that automatically collects tax revenue and disburses welfare payments; they also continuously monitor all of your labor income and adjust your withholding as necessary if you lose a job or get a new one. Ordinary businesses and employees never have to even think about TAKS—no tax return is required.

What’s more, the system almost automatically produces the best possible economic statistics—virtually an identical and contemporaneous picture of the whole economy, down to the last krone—instead of relying on the kinds of laborious and inaccurate surveys used in the U.S. That automation, in turn, has allowed TAKS to cut its budget and staffing while increasing audits on large, rich companies. As an American, I was pretty humiliated to see our clock getting not just cleaned but polished to a mirror finish by a tiny archipelago of just 54,000 people…

Vested interests and ideology are the real obstacles to fixing the IRS. Numerous attempts to streamline the American tax system have run into a wall of money from the tax-prep industry. As Justin Elliott and Paul Kiel reported for ProPublica in 2019, for more than two decades, these companies, led by Intuit and H&R Block, have aggressively mobilized to stave off attempts to create a government system for free tax filing online. They swatted down an attempt from the George W. Bush administration to move in this direction and also blocked the Obama administration from pushing the idea.