I have a better idea. Simplify the tax code so anyone can do theirs on an index card. There is absolutely no reason for the gargantuan tax code in a free society.
Aim higher.
In the UK, your employer informs the government about your wages and HMRC figures out how much you paid and whether it's the correct amount. And if you want you can check the numbers.
In other countries it's basically the same but you have to log into the e-government portal to click 'yes, the values you have are correct'.
Obviously if your finances are more complicated then you need to file; but it's not very difficult.
I refinanced my mortgage and paid points for the refi. Those points have to be amortized over the life of the loan (which the IRS knows the law, but doesn't know that I paid points on the loan).
I just refinanced that mortgage again, meaning next year that I'll write off the rest of the points for the previous loan as a 2017 expense.
There's plenty that the IRS doesn't know until you tell them.
Refinance points (and you'd also need to know the refinance term) are not currently collected by the IRS.
But we could move to a system like the UK has where taxes are calculated for you and if you don't have contractor income you don't even need to file. But this would need changes to things like the Married Filing Jointly status.
Think about when these laws were written and look at it through a historical context. Once you do, it will outrage even the most even keeled.
Could you explain this? I don't see where MFJ assumes women make no money.
> if you're a dual income bunch of shmucks, that your wife must make 80%
Also don't see how it means that. Could you explain your argument in a bit more detail?
In 1948, you got the official married filing jointly "status" and with it, the various income credits, deductions, etc. One would think that the married filing jointly tax rates would simply be double what the individual rates were, right? Wrong. The joint rates were about 1.8x the individual rates. Someone was 100%, someone was 80%. This being 1948, the woman in the dual income family was 80%. The IRS didn't want to appear to favor married couples over single people (even though they did), so they said 1.8X instead of 2X the individual rates. If you were lucky enough to be a big wage earning white male in 1948 America, you got a huge tax break since stay-at-home moms were the norm, there was a baby boom going on, and only about 20-25% of women worked.
Married filing jointly is silly. It should be a sum of the family income, divided by two, then mapped to the individual rates.
Certainly not, why would I expect that? That's mean that if there's a family of two paying individual rates, they pay X% of the income, but if they file MFJ, they pay 2X% of the same income, or twice as much. How would it make sense?
> The joint rates were about 1.8x the individual rates.
Do you mean the tax brackets and not rates?
> Someone was 100%, someone was 80%.
That is a weird conclusion - why not each one 90%, or one 110% and one 80%, or one 180% and one 0%? Having MFJ rate does not imply any distribution of income, not that I can see it at least.
> This being 1948, the woman in the dual income family was 80%
What you mean "was"? Do you mean average married woman's income was 80% of average man's income in 1948? Maybe (I have no idea, didn't check) but what this has to do with tax rates? If it was so, it was certainly not because of the tax rates.
> Married filing jointly is silly
No it's not. The fact is our society is organized around families. It's not everybody, but mostly that is how it works (and MFJ is optional of course, so if you don't like the model, you can stay away from it). Taxing family - or household - as one unit makes a lot of sense, because that's how the actual households commonly work, the income and the expenses are shared. Just as taxing a company as a unit makes sense, instead of taxing each employee's production individually, so does it make sense for a household.
> It should be a sum of the family income, divided by two, then mapped to the individual rates.
That's another question. Maybe specific tax brackets need to be adjusted, maybe not - at least this link suggests that MFJ has actually lower brackets (and thus higher taxes) than two individual incomes: https://en.wikipedia.org/wiki/Marriage_penalty
But: all that explanation failed to show where does it say "women make no money". It is true that in 1948 a lot of women did not make any money as employees, and instead were providing services to their families which weren't remunerated monetarily, but I see how having (optionally) the household as taxpaying unit implies "women make no money". It still makes no sense to me.
My parents were audited by the IRS for 5 years straight. They were convinced that my father "was hiding income through losses in your wife's business." My father was a surgeon; my mom ran an antiques shop. The IRS auditors setup camp in our living room for a month going on five years. That quote was straight from the lead auditor's mouth. I remember it very starkly as a young teenager. (I said hi to them each morning on my way to and from school) It really peeved me that they viewed my mom (the woman) as a failure and only a place for my father (the man) to "hide income."
Every year they came to the same results. My mom's bookkeeping was a mess, but she always overpaid her taxes and we got a refund at the end of the audit. The best kicker? My mom made more than my dad. The IRS thinks women should make less than men (by word and by audit).
As for the historic reasons of this thinking, see my reply below.
If married filing jointly isn't sexist, why are the income brackets different? Even for married filing separately, why are they different than for single people? Sit and think about it for a minute.
Look at the law through a historical lense, not today's.
The same forces described in the article are also responsible for lobbying against simplicity in general.
There is a whole giant industry that would go away in a puff of smoke (or at least be drastically reduced) if individual taxes weren't unnecessarily complex.
If you object that this isn't sufficient for you or someone else, I'll be happy to argue that whatever behavior would make you 1040EZ-ineligible should either not be permitted in a free society (because it's a tax-avoidance scheme for certain types of rich people with political power) or should be taxed as W-2 income (because otherwise it'd become such a tax-avoidance scheme), but good luck getting the people who benefit from those schemes to allow it.
Also, charitable donations have weird constraints. My church would like to end deportations of undocumented immigrants based on our reading of Leviticus 19:34, and the most effective way to do that would have been to campaign against certain presidential candidates. We couldn't do that. Another church wanted to end civil recognition of same-sex marriage based on their reading of Leviticus 18:22, but that involved campaigning for a ballot initiative, and they were allowed to do that to the tune of millions of dollars.
I'm obviously not inclined to say "Please start taxing my church," but the fact that we can participate essentially by chance in some political activities and not others doesn't seem like it would exist in a "free society".
> the most effective way to do that would have been to campaign against certain presidential candidates
That's certainly not the most effective way. US law has very clear immigration provisions, which require certain documentation, and US president swears to uphold the law. Most efficient strategy would be to change the law, thus voting for specific - namely, open-border - candidate for Congress, that can change the law so that US has immigration procedures no longer, and thus does not have to deport people who violate them. Note that I did not say "efficient" but "most efficient" - I see no really efficient strategy that would make US a country without immigration law anytime soon, and having such law, it is natural to have to enforce it - otherwise there's no point in having it.
In any case, nothing prevents you to from campaigning for or against any policy or any candidate, be it open border or not, as a private person or as a part of an organized effort. Why you need the church to do it? Just create an independent organization and campaign as your hear pleases.
> I'm obviously not inclined to say "Please start taxing my church,"
If you register a non-profit and make all the requirements that tax-exempt non-profits have, and do charitable work and so on, nothing prevents you from calling your organization "church", but I don't see why doing so should give you any special status not available to any other nonprofit. And if it doesn't qualify as nonprofit, then it should be taxed by the same rules as the rest of organizations are.
For a lot of the folks on HN, I'd bet that isn't true.
At the end of the day, US taxes are super weird. This may be an overly simplistic view, but I'm definitely of the opinion that we need to drastically simplify taxes. Complex systems generally produce more opportunities for exploitation.
I wonder just how simple a viable tax system could be.
The solution to this is to do away with FICA taxes and fold collection of that money into the general tax tables (including the employer side of FICA which a lot of people forget). You may or may not be in favor of this idea?