Congress Is About to Ban the US Government from Offering Free Online Tax Filing
propublica.org
propublica.org
Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.
1. https://www.npr.org/templates/transcript/transcript.php?stor...
I used TurboTax this year, and honestly I was underwhelmed, especially when it came to the state forms. It didn’t really seem like it did much, and the California form experience were full of obvious bugs. Questions with no context. (“Enter city 2”) Questions being given out of order. PDFs being viewed through a mail slot. PDF forms where the entry blanks and the entries would scroll at different t rates, so you couldn’t read the form. It was super frustrating. The whole thing felt like a cheap unskilled body shop of a program, and made me want to just use a pen.
It's basically as easy as filing out a W2 if you're a full-time salaried employee with no deductions, right?
I have to file mildly complicated taxes due to getting my income from a partnership, and even that I can do in a couple hours by following the 1040 instructions, and the filling out any ancillary schedules that are required.
If you have straightforward W2 income, taking the standard deduction, and a reasonable number of retirement or investment accounts, it should take you an hour to fill out the form following the instructions. Maybe plan on a couple hours the first year, while you get used to it, but it's no so bad.
Edited to add additional details as to what isn't supported.
I admit that they don't have quite the community links that TurboTax does, and there are some situations they won't handle (for instance, income from 2+ states)
EDIT: Ignore this comment, poster threw ID-10T exception
Typically what I do is write a small program that asks the questions in the 1040 form, then gives me a print out of what goes in each field.
For my case, I have one source of income (employer), a couple times I've sold stock, and I have a mortgage, am single, but support my SO and her 4-year old grandkid. I've done my own taxes for the last 20 years, and only a couple times took it to a professional (once to H&R block when I sold stocks, and last year to a CPA). Both times the tax forms were exactly what I figured out on my own.
Regardless, I would pay to have such a service.
As for the lobbying, I have some vague memory of jumping to Tax Act because of someone pointing out that they don't lobby. A cursory bit of searching didn't raise any red flags at the time.
https://www.americancoalitionfortaxpayerrights.org/
Interestingly while looking this group up I found this entire report prepared by Elizabeth Warren's staff about these types of industry groups:
https://www.warren.senate.gov/files/documents/Tax_Maze_Repor...
Last year I went to an independent preparer, which cost me around $160 and took an hour. This year I wanted to save some money so I decided to try filing myself and it was pleasantly straightforward, only taking two hours. The only tedious part was copying over the info from the W2 for both federal and state.
The only case it doesn’t handle for me is Partnership taxes — just the stuff due April 15.
Turbotax was 100% free for both with automatic imports of my forms. As long as you avoid upgrading to unnecessary services beyond their basic service, you can file for free and save PDFs of both returns when you're finished.
Do your taxes by hand/with free fillable forms (name of the online service), you’ll learn a lot. Just follow the 1040 instructions (it goes line by line through the form) and any related forms it tells you to do.
I have heard good things about freetaxusa.com as well.
Both are very reasonably priced, only $15 for state - federal is free. Since I have business income TurboTax wants over $100 to do my taxes.
From their About Us page:
>FreeTaxUSA is an online tax preparation website owned by TaxHawk, Inc.
Just one thing to complain - it didn't discover that I over-contributed to Roth and need to return a bit to prevent a penalty.
Perhaps you can let them know about the IRA thing for next year?
It’s not even an advice in the end, just a reminder the customer lost the battle, and the only alternative is to leave the field with what’s left on their posession to go roam the desert.
It's a superpower, and it is in it's entirety an example that disproves that this is the case.
"Voting with your dollars" is a fools argument designed to impart the feeling that the reader somehow has sway over a monopoly
Pretty sure there's always an option. Nihilism is the worst one.
That’s how we got to this situation in the first place.
We either need campaign finance reform or we need to accept our government is bought and paid for by big oil, coal, the NRA, the car manufacturers, etc.
sorry for the rant
A NOAA employee told me about the time their boss caught holy hell from a Senator because the NWS had the gall to update a particular weather product they offered by adding color to the map. Evidently someone had a business essentially downloading the free NOAA data and improving it by coloring the maps and selling that as a product. When NOAA made it free, they called their Senator in anger. And said Senator slapped NOAA's wrist.
Seems like the same school of thought in a much bigger market.
The eventual dystopian end state could be where the NOAA can’t alert people to tornados and only those subscribing to a weather service would be alerted to get to safety.
You can even pass lat/long points to the forecast page and it will pull up the closest weather station, even points in the ocean work.
https://forecast.weather.gov/MapClick.php?lat=43.4802&lon=-1...
Apparently this was grandfathered in a long time ago. NOAA is only allowed to send weather reports by radio and on specific frequencies. Doing the same with the internet, why that would be communism!
I'm right in Boston, and I can pickup transmissions from the Blue Hill Observatory with my cheap Baofeng.
https://www.amazon.com/Fifth-Risk-Michael-Lewis/dp/132400264...
From the NPR review of the book:
> Take Trump's choice to head National Oceanic and Atmospheric Administration, the Commerce Department agency that, among other responsibilities, oversees the National Weather Service. For that critical position, Trump has chosen Barry Myers, who is CEO of the private forecasting service AccuWeather. As Lewis points out, AccuWeather repackages the weather service's own data and sells it to private concerns for a profit. Myers at one time argued that "the government should get out of the forecasting business." In other words, you want to know if it's going to rain tomorrow? Or which way that hurricane is tracking? Well, buy our app, or subscribe to our forecasts. Myers has yet to be confirmed.
https://www.npr.org/2018/10/02/652563904/the-fifth-risk-pain...
In 2017, the current administration named the lobbyist and co-owner of Accuweather, who's fought the NWS as the head of the NOAA, the parent organization of the NWS: https://www.bloomberg.com/news/features/2018-06-14/trump-s-p...
The fox watches the henhouse when it comes to your weather. Your taxes will pay for Accuweather's profit at your expense.
There's a long history of people doing these things such as with monarchist theory or eugenics for colonialism and slavery. People have theories and frameworks to justify misogyny, child abuse and being harsh to homeless people.
In this case it's an ability to do whatever you want to make money without any oversight, laws, restrictions, or limitations. Being against unethical things such as sweatshops, lying to consumers, or vulture capitalism is itself unethical because it "interferes with the market" oh dear!
It's a symmetrical theoretical framework with beautiful equations to rationalize an otherwise indefensible power structure and insulate reprehensible criminal behavior as essentially the Unquestionable Divine Will.
When anyone justifies things through purity or perfection arguments they're likely pulling a fast one on you. In fact it's this fast one. This exact technique.
and you can replace ruling elite, with people who want to be that. Then you get notions like identity politics, feminism, cultural Marxism, misandry, racism.
There's an interesting second order effect here as well, that drives the narrative aggression and dissent shaming today. Democracies need to create as many of these competing theories as they can to keep people locked in constant conflict and division.
Besides that, I don't think racism and feminism stems from 'wanting' to be elite. People who experience racism just don't want to be killed and threatened, women just want the same opportunities and to be able to feel safe and not be harassed randomly.
The intentions of the ruling elite are formalized into nice-sounding theories that people get easily addicted to.
Racism is a bit more subtle than feminism, in that, "racism", as in discriminating against people of a different race, is a real thing, and it's wired in all of us. It should probably be better called "groupism" or "majorityism". All of us, in whatever sized group, have some mental concept of group identity, us vs them, insider vs outsider. That's just human nature. It's not evil, it's even adaptive. But it is NOT the driver of things like genocide and slavery.
These things are always driven by resources seeking, powerful players competing for resources. Black people sold black people to white people to be slave labor to farm tobacco and sugar.
America wasn't founded by White Christian supremacists, on a crusade against black people. It was founded by economic subjects of the British empire mad about money, and rebelling the attempts by the Empire elites to manipulate them. The civil war wasn't about our built in racism, or about how whites had gotten used to black slaves, it was about the power of a unified country, and preventing secession. Narratives had to be spun to mobilize people's passions to get them to kill for the elites who wanted to get power.
African genocidal wars are not racial. Hitler was not a racist. All of these mobilizations of injustice need a way to rationalize the economic or political driver. So narratives are promoted that hack our wired-in, benign biases and exploit them. Just like social media giants hack our reward systems to fill their pockets, robber-barons and warlords of previous eras hacked our adaptive, genetic heritage of reward and fear circuitry to mobilize large numbers of us to go kill other large numbers of us, by spinning narratives of bogeymen, evil outsiders, etc.
Then, with the narrative created, "Racism" (capital R), is blamed, rather than the actual elite-driven cause. Thus empowered, "Racism" can become a term of abuse, and people are convinced their inherent nature is at fault, when actually these massive injustices were driven by power seeking elites, and enabled by the clever abuse and exploitation of their human nature by these powerful bad actors.
Identity politics is getting more mileage out of the same outsiders bias, by defining legions of new groups, convincing people that membership of that group is tied to self, splashing in some extra strong circuitry if needed (sexuality), and getting groups to fight each other.
It's the same old trick of codifying intentions into nice-sounding theories to get people to go do stuff. It's propaganda, advertising. It's cattle herding with humans.
Wanting to be elite is just making the point how many of these new narratives are adopted by people as substitute "paths to power". These narratives actively substitute people's intentions to build a better life, and hijack their reward circuitry to get them addicted to fake payoffs such as blaming others, not taking responsibility for creating what they want, fake self-righteousness, and cargo-cult like belief that the "movement" will bring them the results. Obviously, if you want to stop people advancing in your society, you want to them be doing things that will never get them anywhere. It's an ingenious and insidious way to disempower people, by directing their actions toward useless, zero result ends, rather than having them try to actually create change or results themselves.
Elites promote these narratives for two reasons: economics and control. The more afraid, angry and triggered we are, the more we consume, and the more easily manipulated and controlled we are. The flip side is, if people actually got happy, and became aware of their personal power, they would definitely organize, rise up and create a better situation. The system preserves its own homeostatic equilibrium by keeping people triggered into their ape-brain as much as possible.
We're all a lot more powerful and good (minus the resource scarcity / resource seeking that leads to war) that these divisive fake narratives would have us think. More important than what "opportunities" someone is given, is what they do with what they have, and what they create for themselves.
The biggest thing stopping people achieving is not "structural inequality", is getting away from this idea that it's about what you "get", rather than what you "make". Nothing will stop a woman being rich, healthy, and happy, if she makes the right choices. Women can stand up for themselves, say what they want and don't want, they don't need a "movement" to get what they want, they can figure out how to get what they want themselves just like anyone else, unless they believe they're a helpless victim by virtue of their sex who has to be saved by some movement and given the success they feel privileged to, but don't want to earn.
People being killed and threatened don't need to fight racism, because our in built racism isn't bad, they need to avoid violence. If you can live in a safe society, that's your best chance. The state probably has a duty to protect its subjects, so pick a state that you like. If you don't want to move, and you live in danger, build yourself a fortress and get good at violence, because fighting the people who are trying to kill you will be your only way to survive.
every human wants self-determination, the power shape their own future, to be in control of their fate.
yet not every one of them are or become racist.
furthermore, there are theories (eg feminism) that are built on fairness (as in A Theory of Justice by Rawls), and there are those that are very much not (eg racism).
the others are simply too vague to simply deal with.
Feminism is based on convincing women they are perpetual victims, that everything wrong in a woman's life is men's fault, that their feminine nature and sexual differences are weakness, and the only way to get self determination is to emulate men (who are evil), and play the fake victim by blaming men and demanding they are given benefit's they didn't earn. It's a toxic theory that disempowers females by discouraging them away from the power of choice and personal responsibility and trying to get them hooked on the addictive fake pay-off of blaming others and playing the fake victim. It's also full of contradictions that no doubt drive neurotic and irrational thinking if you try to really "believe" it. It's a variation of the classic "creation of grievances in order to exploit them" trick. It's not about advancing equality, or women's rights. It's a political theory, promoted and propagated by elites, to divide us into groups, weaken us by attacking something very strong (the human relationship bond, the family bond, the polar sexual bond), and make us more easy to control by being locked in a state of constant triggered conflict and division. To turn us into more political animals, less close to and less trusting of each other, and more dependent on and closer to "the state" or "the cause". It's so effectively propagated because the central notion "that you are not responsible for your life, that you can blame someone else, and that's actually a good thing", is so addictively rewarding, it's a very compelling "fake solution" to all sorts of problems, and it's very hard to unhook yourself once you are taking this.
Any theory that actually aimed to advance equality among people, and the rights for one gender, should advance the rights for both, and cherish both, and not be called "fem"- or "masc"- something, but "humanism" (already taken by a philosophy), or "peopleism" or "personism" (my favorite). Personism would promote equality in the ability of people to make choices and take personal responsibility for their situations, would discourage playing the fake victim, would encourage active listening, empathy and communication about emotions, would promote emotional vulnerability as strength, and would valorise gender archetypes from both sexes (the male and female god/goddess energies) as desirable ideals of strength and power. It would empower people, unify them and not divide them or make them useful idiots and pawns more easily controlled by elites.
I think you confuse being "elite" with self-determination, and power. Ordinary people can have that too. We can all grab it for ourselves, we don't need a "movement" to "give" us those things (in fact, having it 'given' would be contradictory).
By elite I mean the people who treat the rest of us like cattle and useful idiots, to control with mass psychology, and who are actively designing and promoting social / cultural divisions to weaken the rest of us.
I expand upon racism in this context in my comment on spinach's.
Is it just the importance and influence by being a senator? Or is there some direct control? Or via a threat to cut funding?
My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes.
The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.
Doing taxes is a tax -- in hours and fees. Only the wealthiest people who can spend $10K on tax prep to save $100K via loophole deductions, oh.
But keep in mind, the Democrats controlled congress, so reform had to gain bipartisan support.
If taxes kept up, they would have noticeably higher effective tax rates than they used to have.
P.S. The “Tax Foundation” is a right-wing “think tank” (i.e. activists masquerading as researchers) funded by billionaires and corporations.
I would however recommend reading the whole paper they cite, http://gabriel-zucman.eu/files/PSZ2017.pdf
> Government redistribution made growth more equitable, but only slightly so. After taxes and transfers, income in the bottom quintile stagnated (+4%) over the 1980–2014 period while it grew a meager 21% for the bottom 50% as a whole. That is, transfers erased about a third of the gap between macroeconomic growth (61%) and growth for the bottom half of the distribution (+1% before government intervention). Taxes did not hamper the upsurge of income at the top, which grew almost as much as pre-tax.
> The top panel of Figure II provides a granular view of who benefitted (or not) from growth, by showing the annualized real growth of pre-tax and post-tax income for each percentile of the distribution over the 1980–2014 period, with a zoom within the top 1%. There are two striking results. First, the vast majority of the population—from the bottom up to the 87th percentile—experienced less growth than the (modest) macro rate of 1.4% a year. For instance, the 10th percentile declined by 0.6% a year pre-tax (+0.3% post-tax); the 30th percentile stagnated pre-tax and grew 0.6% post-tax; the 80th percentile grew 1.2% pre-tax (+1.3% post-tax). Only the top 12 percentiles of the population achieved a growth rate as high or higher than the macro rate of 1.4%. Second, even percentiles 88 to 98 experienced unimpressive income gains, between 1.4% and 2.2% a year—in most cases less than the macro growth rate of U.S. incomes for the preceding generation, from 1946 to 1980. The only group that grew fast is the top 1%, whose average income increased 3.3% pre-tax and 3.2% post-tax, with growth culminating at +6.0% a year for the top 0.001%. The top 1% has pulled apart from the rest of the economy—not the top 20%.
etc.
https://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986#Passive...
You are wrong that nobody paid it.
That said, most of those people are still going to see it as a travesty because they had to pay a little more (god forbid people rich enough to have thousands of dollars of SALT pay taxes on the income used to pay that SALT).
Republicans only last year substantially simplified tax filing.
However I do have to file an extra sheet of paper now just to fill out a single line for foreign address that's been removed from the 1040.
In the second situation, the average (complacent) citizen will not look twice at the bill, but rather just pay it and get on with their life. In the former situation, the citizen is forced to have a 3rd party create a statement that says "I owe you this much because x" and because of natural incentives, the company will try to claim the maximum number of [incentives, loopholes, deductions, whatever you want to call them] so that the client saves the most amount of money. Of course the company takes its cut and I'm not arguing that greedy companies are the perfect solution. I'm just saying that there is more to the argument than simply it being a matter of lobbyists getting their way.
And the IRS wouldn't go out and do a system for each state.
Some would say the republicans think this is a feature.
Varies a lot from country to country, but in general they have e.g. more-or-less functional healthcare systems, better parental leave, more vacations, easier access to childcare, stronger worker protections, ....
Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers.
The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.
That number is more like ~25mil, or just over 18% in 2017; +4.6% over previous year[1].
EDIT: I suppose I should probably ask what point you were trying to make? I didn't quite track where you were going with all that.
I was not asked for such a thing, and used a different preparer this year. I was asked to set a PIN for 2018, but I have never had to use a PIN I previously set. I have always been asked for the prior year's AGI for verification. What software asked you for a prior year's PIN to file this year?
> When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior-year Self-Select PIN.
To be sure, a filer's prior-year AGI would serve the purpose almost[3] as well. It doesn't even matter what "code" is actually required of the filer, only that one is required at all for the convenience of e-filing. The point is it just needs to be something arbitrary enough for free filers to easily misplace record of but is routinely captured as yet another database entry by service providers. That's how repeat customers at the bottom end of the economic ladder are maintained...none of this "maximizing returns" feel good theory that the parent spoke of.
[1] https://apps.irs.gov/app/freeFile/
[2] https://www.irs.gov/individuals/electronic-filing-pin-reques...
[3] maintaining record of prior-year AGI has utility beyond just tax returns--e.g. applying for benefits and/or services which are limited to people below certain income thresholds--but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism
It matters to your statement, which is wrong as you made it.
It matters whether the "code" needed is something the taxpayer made up for this one specific purpose or is a number readily available on the form they are supposed to print and file, and can thus easily retrieve.
> maintaining record of prior-year AGI has utility beyond just tax returns
Everyone should be retaining at least three prior years of tax returns, so anything that helps prod them in that direction is a good thing.
> but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism
More effective mechanism for what? I personally think they should just ditch the PIN entirely and rely solely on AGI, for the reason I stated above.
> It matters to your statement, which is wrong as you made it.
What part exactly? You speak from narrow anecdote in your limited encounter with 1, maybe 2, online service providers and have provided precisely zero supporting reference otherwise. I've provided corroborating citation direct from the IRS.
> It matters whether the "code" needed is...and can thus easily retrieve.
No, it really doesn't. All that matters is that it's easily misplaceable or forgotten...the more arbitrary and useless, the better it'll serve the objective role of vendor lock-in in a world where options abound and financial incentives to the filer are the same as a direct consequence of the inherent simplicity of their case filing.
You've also made certain unjustified presumptions on the ease of retrievability. Once upon a time, at least one well known service provider would produce a digital summary of your filing only after the IRS had accepted the return (not to be confused with receiving it), and this personal copy was generated for free if and only if it was downloaded before the tax year rolled over. So if you forget to download it for personal record, they'd gladly reproduce the summary any time in the future...for a nominal fee. In the past, this dark pattern disincentivized e-filing with a different service provider in subsequent years, and it wouldn't surprise me if some still pull this tactic.
> Everyone should be retaining...
What everyone should be doing from a records management perspective is both completely irrelevant to this discussion and disconnected from happenings in the real world, especially as it pertains to individuals on the lowest rung of the socioeconomic ladder. It might surprise you at how many people actually fail to maintain a copy of their vehicle's registration and proof of insurance in the only vehicle that it would be applicable to, or how many people don't even have a copy of their own birth certificate. These are pretty damn important documents, yet surprise: the human condition is real and people are inherently lazy as fuck. That you actually expect the poorest and least educated in society in general to maintain annual records on something as obtuse as tax returns is quite naive. Do you really think the tax return service industry isn't actively exploiting the crap out of basic psychological shortcomings of society to the benefit of their bottom line??
> More effective mechanism for what?
It's the whole point of my original remark: identifying the fundamental mechanisms which are largely responsible for producing repeat conversion in an industry where options abound, the product is free, and little to no differentiating factors of value exist between competing service providers.
At the ass end of the totem pole, the game of repeat conversion isn't about which service provider is going to somehow provide a filer with the biggest tax return as the parent asserted, and to which I disagreed...we're talking about candidates who qualify for free filing; these are the simplest of turnkey cases, hence why the service is offered for free to begin with! It doesn't matter what you think about the pragmatic utility of the self-service PIN because the fact is it's one of two options mandated by the IRS as a requirement to e-file. Some service providers will require you to produce last year's self-service PIN to e-file, some will require last year's AGI...wouldn't surprise me if some require both.
lol. No.
First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations.
Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.
The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.
From a european perspective, having tax returns that are not pre-filled, and having a tax administration that doesn't strive to make payment as easy and quick as possible is nonsensical. Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?
I wouldn't assume that the people who pay for tax preparation every year are idiots.
Please stop assuming the guy you're talking to on Hacker news is a simpleton.
The humans who make up the state are more keen to replenish their own personal coffers in the fastest, most efficient way possible -- good old fashioned graft. No one with significant power personally benefits from an efficient IRS with a pleasant user experience.
What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea.
What would be nice is if we make the easy filing system but explicitly highlight the amount you paid in taxes compared to your income. Most people only judge on refund amount and rarely check the math on the exact taxes owed.
Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years.
> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
Given that it directly affects take-home pay, any significant change is pretty noticeable. Heck, even Trump's very small changes for the middle class were noticed on paychecks slightly, though there was also an unequal decrease in witholding that made people's refunds smaller.
While these may play a small part in why people couldn't budget for it now, I think a bigger part of it is that income tax just did not apply to most people in as large of sums that it does today.
For example. The lowest tax bracket in 1940 was 4% and went from $0-4000. Median income at that time in the US was about $950.
Check out https://taxfoundation.org/summary-federal-income-tax-data-20... for an analysis on 2015 US taxes. The bottom 50% of the US paid an average of 3.59% of their income. MarketWatch claims that 44.4% of Americans pay no federal income tax at all: https://www.marketwatch.com/story/81-million-americans-wont-...
The tax was intended primarily as a tax on the wealthy or middle class, but over time by not adjusting the standard deduction/exemptions, more and more people ended up paying the tax. You could also make the argument that more and more people became middle class.
This would probably require some simplification of the tax code.
Or not.
Source. I live in a country where the vast majority have income taxes handled by their employer. It would still be front page news if income tax rates increased or decreased.
Painful transparency is just pain.
Do it in the US and it's front page news on the day and then it's on the second and third pages January through April the following year.
How many days is it reasonable for something to be front page news? Personally I'd prefer 365 different headlines then the same one for 4 months straight.
This narrative is based on nothing. The overall tax rate has been basically flat bouncing between 15% and 20% since WWII[1].
[1] https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
Non-sequitur. Taxes are already seen on every pay stub and tax return. Even if taxes weren't explicitly state, simply having less money is painfully transparent.
But if I were to design a tax system, it likely wouldn't have withholding. I'd probably mess around with some weird purely transactional/continuous tax system though.
The penalty for not paying is much lower than the penalty for not filling, if you owe.
It's possible your tax prep software does their own version as a middleman, but the IRS offers it directly through the same system that quarterly estimates are paid.
You ask as if it would be a new concept to penalize people who don't pay their taxes...
There are clear laws on the books for tax evasion. No need to doubt about what happens.
https://www.gov.uk/government/news/millions-start-receiving-...
This includes capital gains, rent collected from tenants, AdSense revenue.
The right way to handle this stuff is not immediately obvious to me.
I used to make $80k per year in salary(which is far less than most of the top decile in the USA) and in one of those years had over $10k in capital gains. In the same year I thought about buying a house to rent out. I ultimately didn't do it, but if I had, then I would have had to declare the income as part of my tax return filing process. Just as one data point.
Plus they have the means to spend their earnings abroad.
But a fixed credit could offset some of those concerns.
The paycheck credit I proposed should address that. Plus rich p eople definitely spend a lot more compared to others.
> Plus they have the means to spend their earnings abroad
While that's true, they certainly could be taxes on major purchases. For example, I could buy souvenirs abroad without passing tax on them, but I wouldn't be able to buy a car and not pay the tax before titling it here.
In short, there's a reason that no other developed nation taxes this way, and they all have income taxes. And all those other nations manage to have relatively simple taxes for most taxpayers that don't require paying H&R Block to file for them.
The same thing can apply to real estate as it does for cars. That is, a sales tax you pay when you purchase the home. And the sales tax doesn't have to be a flat amount. It could be a greater percentage of the value of the home for homes that are valued at several million dollars as opposed to those that are worth only several hundred thousand dollars.
> rich people aren't going to be paying much in taxes
Isn't that the case currently (compared to what they could be paying due to all the loopholes in the current tax code)? If we focused on taxing transactions as opposed to possessions and income, then the rich could be taxed far more. Invest in stocks? Then you can be taxed when you buy them. Invest in real estate? Then you can be taxed when you buy property, etc.
> Rich people spend a lot on foreign vacations and travel, which is untaxable domestically for obvious reasons.
That is true, but it seems that the US is one of the few nations in the world that states that you have to pay taxes on income you earn outside the country (assuming you don't pay taxes on it in the other country). That said, I think that we should focus on the majority of tax payers in terms of making how they pay taxes easier and hopefully more fair.
> there's a reason that no other developed nation taxes this way, and they all have income taxes. And all those other nations manage to have relatively simple taxes for most taxpayers that don't require paying H&R Block to file for them.
I don't pay anyone for filing taxes, but it takes days to read through all the instructions for the 1040 form and other associated forms to see what applies to me and what doesn't. Personally, if I was able to take care of my tax obligation by just buying various things throughout the year and getting my full paycheck, then I would certainly be happier and not have to essentially waste several days every year figuring my taxes.
I get the attempt to sidestep the regressive counterarguments normally in play with sales tax replacement systems, but I think this system would be equally regressive.
They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes. That's certainly less burdensome than even just the 1040 form now.
> put temporary financial strain in place when waiting for credit for purchases
What I proposed would be a credit that would be applied to every paycheck, much like the withholding we currently have applied to every paycheck. So the wait for credit wouldn't be ant longer than it currently is before the next payday (assuming they're living from paycheck to paycheck).
> and actually make the IRS more complicated and onerous for most Americans?
Having this credit calculated based on the reported earnings on the W-2 form and filing a W4 is certainly less complex than just filing the 1040 form. Plus, most people wouldn't have to worry come later this month if they haven't had enough withheld from their paychecks in the last year.
> but I think this system would be equally regressive.
If people with less income are getting a credit on every paycheck and they spend less overall compared to people who earn more and get less or no credit on their paychecks, then why do you believe that the proposed system would be equally regressive?
This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise. Of course, if the conditions it works were always true, irreducible complexity (that is, excluding the complexity that is maintained simply because both conservative politicians and tax-prep businesses have an interest in making tax prep onerous unless you pay for an additional service) for taxpayers of the current to tax system would be significantly less.
It doesn't, even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.
The current W4 form takes dual income/second jobs into account and adjusts the withholding based on that. Changing that withholding to a credit based on income, number of jobs, dependents, etc wouldn't be any worse than it is now, but eliminating the 1040 and other associated forms would definitely be a big benefit.
> even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.
We have tax brackets now based on income level. Would basing a credit on similar income brackets be any different? Or are you claiming that out current tax system is regressive and my proposal wouldn't fix the underlying issue?
Politics is evil...
Checks out.
I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.
I also believe people should be filing their own taxes and understanding how the system works. I've owed money the last two years by underestimating self-employment taxes, so this year I've set up a spreadsheet that tells me how much I'll owe each quarter with all deductions built in and a tiny bit of overestimation.
All the IRS does is publish the tax code in a specific XML format. MEF (mechanized e-file) is the interchange specification. It's rather a shame there's not more open source effort around tax filings...
This is one place where FOSS just isn't going to work. Let me ask you: are you willing to invest a lot of your time and effort into contributing to such a project? No, I didn't think so. Me neither.
Here's the problems with it: 1) It's not very fun. Volunteer coders don't want to work on something as deadly-boring as tax filing. 2) It's USA-only: lots of FOSS volunteers are outside the US. They're not going to spend their time on a tax tool they're not going to use. 3) It's constantly changing. The tax code changes every single year. Lots of FOSS projects become mature at some point, and only get maintenance or occasional feature additions. Most do not work according to a schedule. The IRS requires you to file your taxes on April 15, and they release the changes to the tax code a certain amount of time before that, so a project would only have a certain window of time to incorporate all these changes. 4) The risk to users is high, since there's no one really willing to guarantee this product. Of course, bugs in tax-prep software don't absolve taxpayers, but there's still a certain appearance that a big company standing behind a product makes it safer.
it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k)
PS: don't have an opinion if this would be a good or bad idea. can see it both ways
What you suggest is exactly how it worked before 1943 and there was a massive expansion of government, government services, and tax rates between 1913 and 1943.
The actual historical evidence strongly suggests this theory is spurious and easily dismissed.
Again, this is just for the sake of argument.
> My bet is that within the first year of this taxes would be massively reduced.
Making the filing and paying of taxes difficult and painful won't change a person's tax liability, it'll just irritate every citizen until we collectively demand an easier process. If you can't pay, you get penalties and a payment plan. Don't forget that the IRS is a government entity capable of legally charging, suing, etc. with the force of law. Why would having to travel to a payment center reduce someone's tax liability?
I guess I want to know more of the argument, for the sake of argument, because the argument doesn't make sense to me as presented.
OP is acknowledging the inverse is also true, and that if "automatic" aspects of the system were removed, people would become much more aware of what taxes they are paying, which would lead to public support for reducing the amount.
It's not about reducing liability at all right now, it's about making more people anti-tax.
Economists will always say that the tax should be explicit, and it should be placed for the people that ultimately pay for it. But pro-taxes people, mainly the government, want higher revenues first, which means putting a tax wherever you can, and that is about what is politically feasible, not about what is economically sound.
The end result is a hybrid of both interests. For example, San Francisco charges sales taxes, known to be regressive and punishing to poor people, but at least you know you are paying them on a ticket. Other countries, like europe, hide the VAT taxes, so it looks like you are not paying taxes at all. VAT reaches 10~20%, sales taxes in SF is around 6%.
Making it explicity DEFINITELY reduces it.
That is not true at all. In all European countries that I can think of you get to see the whole price, including VAT so that, you know, you can actually tell how much the product is going to cost you. The composition of that price is then shown, often in smaller font. This is true of price stickers, receipts and invoices.
I do not find it the least bit misleading, and would be rather annoyed if a cashier told me to pay more money than the price sticker indicates.
The claim was that the tax caused price increase is hidden in the overall price.
And while the reasons for that can be plentiful (even consumer protection, if wanted) one effect is certainly and obviously that it hides the amount of sales tax you pay.
The VAT is usually declared somewhere in the bill.
A pretty lame forced savings plan that nets you zero interest. I'd rather park the money I expect to need to pay in taxes in at least a high-yield savings account and get a couple percent rather than let the gov't have it.
But this ignores the fact that the US income tax system is actually a pay-as-you-go system, not a "you owe your taxes every April" system. You'll note that if you fill out a W-4 form such that your employer doesn't do much or any withholding, you'll find you owe late-payment penalties come April.
My guess is within the first year, they'd be reformed on administration to put less needless pain on taxpayers. My guess is also that with the needless administrative headaches so visible, it would actually make it politically feasible to pass tax increases that would otherwise be impossible, so long as you also deal with the needless administrative headaches.
Plus, I'd guess that even before that, every single politician attached in any way to creating the administrative headaches would be hounded out of office, or worse.
Great example of that today is that most americans believe the trump tax reform didnt help them (only 17% believe it helped them) but it literally and factually increased the income for 80%. At least one reason for that is that withholding was reduced, but refunds were reduced as well. Availability bias makes people remember refunds, but not their monthly payments.
> The law creates a single corporate tax rate of 21%, beginning in 2018, and repeals the corporate alternative minimum tax. Unlike tax breaks for individuals, these provisions do not expire [in 2025].
https://www.investopedia.com/taxes/trumps-tax-reform-plan-ex...
First, a transparent system of the IRS would lower revenue. Second, the deductibles system is very complex for the IRS to pre-calculate it, so they are unable to do it.
2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks.
As the tax refund check is the largest check many Americans receive every year, delaying that payout gets taxpayer advocacy groups up in arms and is tantamount to political suicide.
Incidentally, this same gap is where a bulk of tax return fraud happens—equalling billions of dollars. In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone.
I haven't seen any analysis that such a system would lower revenues (indeed, it would stop billions of dollars of fraud and tax evasion), or that the deductible system is too complex.
This doesn't really pass the smell test for me. The IRS has, what, 7 years(?) to audit your tax return. They can and will do so, and will send you a bill, with penalties and interest included. (Source: this has happened to me, around a mistake I made with self-employment tax the first year I had non-W2 income.)
Not sure how you'd be "long gone", either, unless you're not a US citizen and have since moved out of the US.
My point is that they'll "shrug", accept your return, and issue you a refund. Yes, they may come back later and say, "Actually..."
When I say, "you're long gone", I'm referring specifically to taxpayer identification fraud, where you'd file a (fraudulent) return on behalf of someone else (often a dead person or someone from Puerto Rico[1]), receive their refund in the form of a debit card, and "disappear".
In any case, it's way easier to avoid paying someone in the first place than try and claw it back later.
Neither can I.
Example: your only bank sends your 1099-DIV on February 15, so you file your return. You know that no other bank is going to send you a 1099-DIV because you don’t have any other bank accounts.
The IRS doesn’t know this. The IRS only knows that you didn’t get any other 1099-DIVs after they’ve received all 1099-DIVs and no more are yours.
If they then receive more information later that would affect your taxes, they can bill you, or otherwise just go through the same process they would if you filed your taxes incorrectly under the current system.
1. Move up the deadline for companies to submit tax information to the IRS, or
2. Allow taxpayers to declare that the IRS will not receive any more tax information than what they already have, with penalties for lying (presumably, the same penalties as what happens today if you submit your taxes early and you yourself haven't received all the relevant information yet).
Or we could just pay the one-time hit of "you can't get your refund early" and have the IRS process taxes once the existing deadline has passed for companies submitting tax information to the IRS. I say one-time hit because after the first time, any refunds for following years would occur 1 year after the previous year's refund, just like it does today, it would just be at a different point in the year (assuming you even submitted taxes early to begin with; if you didn't, then no change).
#2 - Probably the best solution, though kind of waters down the revolution.
#3 - Probably what SHOULD happen, but again, political suicide.
I don't.
In France, before this year, if you were an employee, you rarely filled a tax form, you just validated a prefilled one, usually with one click on the internet.
Now it's just taken every month from your salary, and you get a chance to correct it once a year.
But I agree the french gov is less into business.
Moreover, if you set up all yoyr withholdings correctly then you do not need to file anything. You only need to file if you owe (ie you set up withholding wrong) or want yoyr money back (ie your withholding was wrong)
https://www.forbes.com/sites/kellyphillipserb/2019/01/30/do-...
Weak security: [1]
Cost overrun: [2]
Inability to design a highly available website From [3]: > The basic architecture of the site, built by federal contractors overseen by the Department of Health and Human Services, was flawed in design, poorly tested and ultimately not functional.
[1] https://arstechnica.com/information-technology/2015/06/epic-... [2] https://www.theatlantic.com/politics/archive/2014/07/obamaca... [3] http://swampland.time.com/2013/10/24/traffic-didnt-crash-the...
The database will be hacked and all records leaked within the fist 18 months of operation
You know, the same information they need for most people's taxes is already in the IRS database.
I'd also like to say that I've had automatic filing for my Norwegian taxes since moving here to Norway, and always have to file American taxes manually. The emails get sent to a secure email system which you can check. Letters get lost and stolen as well, by the way. The system doesn't have to go down either - I don't even have to interact. I just get the email telling me I can check taxes, but it is not required that I do. (Safer to do so in case of owing). They tell me I'll get my money in a 3-month timeframe. It goes to the same place paychecks go to, though I imagine if anyone gets checks they take longer, as do the people that manually file.
I'm also pretty sure that the reason it would be expensive is that the government isn't exactly known to keep the IRS fairly current and the government isn't really set up to handle the digital age well. But then again, the records are already there. They already plan on getting refunds. And easier filing means more people do tax returns... and it catches more people that owe. Oh, and you won't need as many people working at the call centers because fewer people will need to actually calculate their taxes. I'm gonna guess it would be a net benefit and profit within a very short amount of time.
The main people that do badly with this sort of system are the tax filing companies along with, I'm guessing, some accountants.
I'll grant that voting works only sometimes. And when it does change things, it's often not everything we want changed, and definitively not fast enough. But it can change things. If it didn't, voter suppression would not exist[1]. (One of the ways of suppressing vote is promoting voter apathy, by the way).
The only sure guarantee is that not voting doesn't work.
> peaceably
Even something as seemingly mundane as voting carries a lot of risk of physical violence in some places. That's how voting was in the US in the 1870s[2], if you were black. It might sound like a far away past for certain US citizen, but I (an European) own a house older than that.
[1] https://en.wikipedia.org/wiki/Voter_suppression_in_the_Unite... [2] https://en.wikipedia.org/wiki/Disenfranchisement_after_the_R...
What happens in the real world is that the doctors aggregate (AMA, ADA) and then the patients aggregate (insurance companies) but it never quite gets to a complete single buyer/payer on both sides without government action.
There is also the argument for how many jobs will be lost in X industry if we replace it with a more efficient solution. Here is a recent video of a famous paleoconservative debating it with a famous neoconservative in the US: https://m.youtube.com/watch?v=YFMcq0Vzsb4
Usually the solution is social democracy - letting the private markets operate but having the government run a single payer system for the basic level of service so sellers compete and buyer’s don’t, and everyone is entitled to the basic level.
Single payer can achieve far lower prices, as can eliminating IP protection. But after a while this may have a deleterious effect on R&D (unless you eliminate the IP protection).
I wonder what extent this is decided by how we vote. As long as voters pick the politician who prioritizes the middle man and gets their campaign contribution is selected over the politician who prioritizes the public but whose opponent gets the middleman's campaign contribution we will continue to see this behavior. The moral of the story is to look at the voters' actions and not their words. They select candidates based on oftentimes harmful criteria.
I think you're falsely equating (as do the Norquist types)
a) "the financial burden of the tax should be explicit" (which is fair) and
b) "the paperwork should be unnecessarily burdensome" (which is sadistic).
How much does someone want something if they aren't willing to change their behavior to increase the chance of getting it?
Second, I was just addressing the claim that politicians pass these laws in response to broad support, by questioning whether such broad support actually exists, even if it doesn't translate into lobbying (since the implicit model i that politicians will still care about it).
I see a couple of ways in which it might not be as favorable:
1. It costs more than $100 per tax payer per year to implement (about the cost of Turbotax). However the flat $100 or so that most people pay to Turbotax can be seen as a kind of regressive tax.
2. It is less effective at finding the biggest possible return.
The question is valid, but the numbers do not add up. TT asks ~$50 for federal return. If everyone in US used the service, the cost would amount to over 16 billion dollars. That is more than the entire IRS budget[1] right now.
The better question is how much it costs TT to operate returns, and how much of that $50 is profit-taking.
There is no way an e-File system run by IRS would costs additional 9 billion dollars per year. They already do most of the calculation internally.
Anyway, the government needs to collect and verify all information anyway. So, the sum total of TurboTaxes value is creating screens to collect information. If they can do a better job than the government then let them charge for it. But, by banning the free option they are saying they don’t actually create value.
That's a great point. IRS already has most of the information and infrastructure to fill out your taxes. Third-party solutions have to build large chunks of the same thing from scratch.
Eventually. Not necessarily by the time you file, and not necessarily on every return. Remember, the IRS only audits a small fraction of returns for accuracy. Auditing every return would be a much bigger job than they currently do.
I'm not saying they shouldn't, but it isn't as trivial as a lot of people here seem to think.
The idea that some business gets to ban the government from offering a service and some people argue that it's good for eveyone is totally absurd to me.. from a country where I log in to our version of the IRS, where my salary information is pre-filled, I only need to add stuff if I had some other income.. and the system is totally free to use for everyone, and most people just spend about 5 minutes once a year to declare their taxes.
It needs to be able to (eventually), but it doesn't. Setting up a system where this was possible requires some significant changes to the tax code, process, and the IRS itself. Of course, this shouldn't stop us from trying.
Sadly there is a whole branch of people working on this, without any interest to make it easier..
The tax authorities also have a duty to calculate the taxes in the way that benefits you most.
Most workers don't need to do anything to get their overpaid tax back thanks to the Lohnsteuerjahresausgleich.
They need to work on their marketing though.
We've been happily using it to file our German taxes for years.
In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.
As long as your PAYE is like Ireland's (ROI) PAYE, then the American's system is far-removed from it.
Even though their tax revenue office gets the reports from businesses for how much they were paid and how much taxes they paid, the Americans still need to fill out a tax form - every year - to repeat the same information (it's an added benefit for the prison system, in that mistakes on tax forms can equate to jail time). They get a form from their employer (which their tax office also has), that contains all of this information.
>In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.
Aye, it's the same in Ireland (ROI). You can just call-up or email Revenue and they check if you've overpaid, by how much, and they just send you the money. No forms. No bullshit. No threats of jail time. It's pretty deadly[0].
You want nothing to do with the Yanks' tax system, trust me.
You seem quite ignorant of the U.S. tax system. There are no criminal penalties for mistakes on your tax form. (the IRS doesn't even have prosecution authority--all it can do is collect evidence of a crime, and refer the case to the Department of Justice.)
And your tax return doesn't just "repeat the same information" as your W-2s. For example, the W-2 reports income on an individual basis, while married couples file a return as a single unit. The amount of tax owed will generally be different for married couples versus the amount of tax withheld. (And there is no federal government database of marriages the IRS can use to match up things on the back end.) The IRS also has no idea how many children you have living with you, and can't give you the appropriate credits for that.
Odd, I thought you faced the penalty of perjury[0]?
[0] - https://www.forbes.com/sites/robertwood/2017/02/15/fudging-y...
> All of those tax credits you mention are given by our respective tax agencies when we become employed and/or we change status with the tax agency and/or we obtain a new job (depending on how you avail of tax credits).
There are many tax credits in the U.S. that aren't tied to changes in job status. Every year, I have to dig up receipts for what we spent on daycare, what we spent out of our HSA accounts, etc. The government doesn't track any of that.
> Odd, I thought you faced the penalty of perjury[0]?
Perjury requires willful (i.e. knowing and purposeful) false statements in your tax return. I guarantee you that if you make false statements using Ireland's online system for claiming tax credits, you're under penalty of perjury as well.
Aside from the daycare costs (as an aside, creche in Ireland is quite decent[0]), isn't all of that is still reported to the IRS? Your HSA isn't sitting in some dark corner that the government doesn't know about, ever since the Patriot Act, yeah?
I'm fairly certain it is reported to the IRS because Americans find getting bank accounts overseas quite cumbersome because your government strong-arms agreements that demand that Americans' overseas bank accounts are reported to the IRS. Surely, more domestic reporting shouldn't come as a surprise or shock.
>I guarantee you that if you make false statements using Ireland's online system for claiming tax credits, you're under penalty of perjury as well.
What do I get for a broken guarantee[1]? :)
This batering back and forth really only arrives at the conclusion that I originally posited:
Those of us in the PAYE system[s] would abhor having to do things the American way and this wasn't meant as an affront (and I apologise if anyone may have taken it that way).
Our tax agencies are responsible for keeping track of these things and the only things we're responsible for is reporting status changes and/or providing receipts for other proofs of burden (such as Independent Contractors who file as Directors of Umbrella Corporations and need to write-off business expenses).
[0] - https://www.citizensinformation.ie/en/education/pre_school_e...
[1] - https://www.revenue.ie/en/personal-tax-credits-reliefs-and-e...
You can reasonably assume that the IRS can use subpoena power to compel a US financial institution or foreign financial institution to surrender records to it. This is an oppositional process and they use it relatively rarely next to the total universe of taxpayers and accounts, generally only after they already have evidence of hinkiness and want to quantify unsurveilled amounts and/or locate assets.
These are not secret facts about the world; the operations of the IRS are exhaustively public (trust me, I have weird hobbies). People on a programmer-dense message board should have more weight for "While I understand that X would be accomplishable via an API if it existed, it is possible that that API does not factually exist" than they often do.
Also, the number of times someone in the financial industry typed in git commit -m "tldr Patriot Act compliance" is orders of magnitude below the number that HN comments routinely predict.
Tax returns really do take a huge majority of repeat information and a tiny amount of additional metadata.
There's no reason for the vast majority of Americans this couldn't be automated.
Alphabet Taxes doesn’t sound too bad.
Keep that in mind when reading stories about the US government, and it all makes a lot more sense.
In the US, the IRS supported an e-file system that basically allowed electronic versions of forms to be submitted, but it was arcane enough that a cottage industry developed to assist users in prepping documents for e-file.
How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?
Even if the US went to an IRS-pre-filled return, there would still be room for third-party tax software that improved on the user experience, so I think if the IRS supported direct filing of taxes it would also be good to preserve the ability for software or designated parties to submit information on the taxpayer's behalf.
The taxation has been pretty automated for a long time.
As a regular taxpayer nowadays I just get a paper form that describes the precalculated taxes, and if they are fine, I don't have to return anything. There are some pre-deducted things, and if I have anything add to that, I'll then just either fill in the paper form or the electronic equivalent.
So yes, there was a basic "semi automated" scheme that has been steadily improving and now the tax authority has just added a web based interface for feeding data into it.
About filling the taxes on behalf of someone else -
There really is no need for tax preparation services unless you are business entity (in which case you likely already have your own accountant doing it) or the wealth is considerable enough to merit actual tax planning. Otherwise the tax code is so straightforward and simple that anyone can do it. If there are some questions, you can always contact the tax services and they will usually offer helpful and professional advice on how to proceed.
So there is no market for that kind of thing in the large. The "defaults" provided by government help in this regard as well.
I kinda understand the adverserial positioning of "people vs. the government" in the US - it just sounds to an outsider the main reason not to make things easier is because that would eradicate business from turbo tax. Kinda like the government mandated you need to own a useless dead parrot, that you can only buy from Parrot Co, that needs to be kept in the refridgerator in an exact position mandated by the law.
The "tax return suggestion" was introduced in 1996. So it predates all electronic filing.
Filling tax returns via a web service became available in 2008.
The first (non-web) electronic tax filings were made in 1997, but those were for corporate returns. Not sure when it became available for income tax returns (that use case is rare here).
Source: Finnish Tax Administration https://www.vero.fi/contentassets/09b6f07e61dd490ab0caabba8e... (Finnish PDF)
> How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?
Electronic tax filing using files is available: https://www.ilmoitin.fi/webtamo/sivut/Esittelysivu?kieli=en
You can use an online service to authorize another person to file your taxes: https://www.vero.fi/en/About-us/contact-us/efil/authorisatio...
The other person can then file using paper, file, or web.
I think you put it just right. Health and Education are the two areas this is bought up, but the taxes are a good example.
https://www.theatlantic.com/magazine/archive/2019/04/why-ame...
If you have no changes then you don't need to do anything at all.
My tax filing is as easy as: Login, verify, click a button.
To be clear the Intuit’s of the world are not acting altruistically, however they’ve created an odd alliance with anti-tax advocates who 1. Think that any government provided system will favor the government over tax-payers and make it easier to sneak in stealth tax changes and 2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.
I don't think we exist in a world where this is possible.
The majority of people are pretty ignorant. Look at all the news articles from early in 2019 talking about the size of tax refunds, and people thinking they didn’t get a tax cut because their refund this year was smaller than the one they got last year. In reality, almost everyone got a tax cut (>90% of taxpayers) but that doesn’t necessarily mean a larger refund.
Theoretically, filling out the tax forms would help people understand their tax liability. In practice I think a lot of people just tune out numbers beyond the size of their refund.
I don't think the first claim is representative, and I don't think the second claim is true? Most people did get tax cuts; even if the bulk of the value went to businesses that's not in dispute. And despite concerns in 2017 that it could happen, there's no evidence that withholdings were artificially over-reduced. People who were already withholding the right amount were basically unaffected, while the people shifted from overpaying to underpaying constitute more symmetrical error. (Which does have some downsides for collection.) Even the Government Accountability Office views this as a purely logistical event.
More cynically, conventional wisdom says that popular perception of tax cuts is based almost entirely on the fact/size of the return received. Increased take home pay was talked up, but reducing the number of people receiving rebates is hardly a productive trick to score votes.
https://www.vox.com/policy-and-politics/2019/2/6/18214039/ir...
>>Not everyone got a tax cut
>>but if you're moderately well off, have more than one home, and live in a state that actually has a functional state government that provides services to their people
Would you say the percent of the population that fits that criteria is maybe ... 10%? I dont see why you would rebut "90% of people got a tax cut" with "well people who own multiple homes didnt."
1. A guess. The majority think of rebate as "money from the government", which partially explains why tax-preparation costs as much as it does.
1040ez is out, so that stat is gone unfortunately.
Either make it so stupid easy a nearly illiterate child could do it, make it unnecessary (just have the IRS file for us), or massively improve the terrible state of the education system in the USA.
The number is even higher if you count those who are unemployed or not working.
"Use us and we will help you avoid the government's stealth tax" would be a marketing field day for intuit and h&r block PR.
If that's an example of their swift thinking, I'll be sure to vote against anyone that carries even a whiff of their ilk. Because if such a candidate could not see a distinction between taxes and the process of paying them, we're probably not going to get along intellectually, let alone politically.
*I can't vouch for this site or its data
Relevant quote from the Tech Crunch article: "One reason why folks Congress could be pushing this through is all of the money that H&R Block and Intuit spent to lobby Senators and Representatives. ProPublica estimates that the tax prep industry has spent $6.6 million to advocate for the IRS filing deal. The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."
https://www.opensecrets.org/pacs/lookup2.php?strID=C00361741...
Not all candidates accept PAC funds, but enough do.
It's disheartening.
I don't know what's disheartening about it. Here in D.C., Democrats are in an ideological war with Republicans. Money is necessary to fuel the war machine: https://blog.nationalarchives.gov.uk/wp-content/uploads/2015.... Of course they want to get larger donors more involved.
That's all they should be allowed to spend. Then they use that money to make their case to the people on merit. No PACs, no contributions, no lobbyists, and equal access to airtime. This eliminates pay-to-play or at least criminalizes it.
[1] https://en.wikipedia.org/wiki/Federal_political_financing_in...
Also this focus on the “merits” is misguided. The US is too big and diverse for votes to correspond very well to actual policies. By the time you get all the stakeholders on board with something the final result won’t appear anything like the original proposal. So we place a much higher emphasis on people, personality, and party than policy.
I’ll give you a concrete example of this: immigration. Canada is much less divided on immigration than the US. Here, you have one side calling immigrants criminals, and the other side calling for open accommodation of hundreds of thousands of low-skill immigrants illegally crossing the border each year. By contrast, Canada’s right is less vitriolic, but it’s left is also far less idealistic. Even Trudeau generally seems to support Canada’s point-based immigration system, which puts a heavy emphasis on English skills and education. That system would be m demonized as regressive and racist were Republicans to propose it here.
So what good does it do to vote for policy here in the US? You think anyone will hash out an immigration policy that makes both sides happy? No. So instead we raise money to go to war and try to bury the other side.
What it does is eliminate the ability of private individuals and companies to purchase time with a candidate. If you allow that, the candidate then will do what you want so they will get money for the next election cycle. It's just bribery with extra steps.
If they know they're going to get money for the next election regardless, no more or less than their opponent, they can focus on things that will improve the lives of Americans (their only donors now) and not private entities.
To your point, Canadians don't have to deal with much illegal immigration (except 18,000 [0.05% of the Canadian population] annually that cross into Canada from the US to escape the Trump administration with smugglers paid $4000USD+ to bring people up North. Many lose limbs and fingers and toes in the winter [1, 2] -- 1 in every 1000 Canadians is now an illegal immigrant who fled America). That's not really relevant to campaign finance, though, it's just horrifying.
[1] https://www.theguardian.com/us-news/2018/jul/24/canada-vermo...
[2] https://www.theglobeandmail.com/politics/article-asylum-seek...
What your opponent will receive in the next election or primary is a bigger issue. And that implied stick is much cheaper than giving out carrots all the time.
Not only do lobbyists get more accessible they get more credibility. The lobbyists are high paid lawyers at respected firms. They have degrees from respected schools. They have worked on the issue at discussion at lemgth. So when citizens are stacked up against these people they seem comparatively crankish.
This provision isn't in the bill because Intuit bribed someone. It's because that 6.6 million bought a lot of sit downs with committee members. Sit downs in which lobbyists told a convincing story of how it would actually be better for everyone of the IRS couldn't do this. Honestly they probably made some process argument for this. Something like it would get challenged in court anyway and be a big waste of money. Or about how you should make it illegal so the Executive Branch won't do it on their own and they'll have to take congressional input. And the lobbyist almost certainly believes whatever line their feeding the politicians.
It's like most broken things in life. No one is evil stuff just breaks.
One other factor is that in “government time” we’re not far removed from the Healthcare.gov fiasco and in the middle of a debate over the technical debt of our easily hacked voting machines. Along with that, Premera and Equifax have suffered attacks.
I imagine there is nobody inside the actual government that is willing to try and “outdo” Turbotax.
And half the problem is that we need more lobbying, not less.
Donor access is an issue, but I think the larger problem that no one knows how to address with campaign finance laws of any kind is that someone with enough money can simply use that money to hire an army of persuasive people, much as you described.
Moreover, if paid access is required and that payment goes to the politician - or their campaign which is just an extension of the process to keep them in power, I’m not sure how you can see it as anything other than a bribe that is legitimized by a few layers of well educated lawyers or other experts who do some work to make a case that is inevitably aligned with the best interests of the “donor”. That still sure sounds like pay to play politics to me.
It's an important distinction to make, because almost all reporting and outrage about bribery is about quid-pro-quo: newspaper reports about politicians spending time at five star resorts etc. etc.
If we enact laws (or social pressure) to stop this, but the lobbyists remain in the ear of politicians by unpaid means (going to the right schools, having the right friends) then all that outrage has accomplished nothing.
This is what "moneyed special interests" refers to.
Competition for this ad budget is so fierce that Congresspeople spend more than half of their working hours reaching out to groups they need bribes from. This skews the laws not always in favor of the groups, but really in favor of whatever motivates the groups to bribe harder. Ex: if simplifying the laws would make everything easier for everyone, we can’t have it. We need the existing complexity to fight and have bidding wars over.
No matter what you want Congress to do, they can’t do it until we fix campaign finance. Doesn’t matter what issues you care about. They’ll only be worked on incidentally if they don’t get in the way of the bribes.
You don’t like it. Congress doesn’t like it. They’re trapped and can’t move against it without getting cut off and booted out. We’re all fucked until we find a catch-22-escape for them.
Yes, they do. All the time.
> They put them in their re-election campaigns because without those bribes they will get voted out of office by The People in favor of an opponent with a larger, bribe-based ad budget.
You kind of fail at corruption if you are getting bribes many times the annual salary of a job per year and are feeding them into nothing more than keeping that job.
Most corrupt politicians do not fail at corruption that badly.
Most of them don't need to do something as explicitly criminal as taking money from a lobbyist and using it for personal expenses.
There are far better ways for members of congress to make money--passing laws that benefit companies they or their family members are invested in and taking lucracitive industry jobs after they leave office for example.
Can you point us to some documented examples?
That is also my understating. That is where the revolving door comes in. Many a career Senator or House member has capped off a career with a lobbying job. It's also good to note that most people who ever sit in the House or Senate were quite wealthy before running. You kind of have to be.
https://www.theatlantic.com/politics/archive/2014/09/how-did...
Only direct spending on lobbying gets reported as lobbying expenditure--not campaign donations. Direct spending on lobbying includes the salaries of registered lobbyists and their support staff, contractors and vendors to create reports and ads and websites, law firms to give advice, etc.
When you see "X company spend $6 million on lobbying," not one cent of that money went to the politician being lobbied, either directly or indirectly. At the federal level, a lobbyist cannot even buy a Subway sandwich for a member of Congress. It's a felony.
Campaign donations are reported separately. Those donations are sometimes done to enable lobbying, as the post higher in this thread correctly states. My point is just to clarify how the numbers get reported.
The campaign contributions are just window dressing for the rest of it. It absolutely is bribery.
I kind of wish it were because that would be much easier to do something about. Those things are just the long term effects of paying for access. The frequent close work between lobbyists, politicians and career servants lead to friendships and strong network effects. I'm not defending the system. I'm pointing out why $6.6 million is more than enough to influence a bill. It's because they're not buying a vote. They're buying time to discuss an issue that will probably never get argued any other way to the representative.
In the face of overwhelming pieces of evidence, year after year after year like the article being discussed here, doing so is just pointless sophistry and contrarianism for the sake of it.
For a consequentialist, arguing on the ethics of the acts leading to the consequence is moot (and I think he's quite right that from a consequences point of view, the situation is hard to distinguish from quid pro quo corruption).
Of course, I'd love to see you too reconcile Kant and Machiavel, but you're fighting bad odds here ^^
Part of the reason it's cheap is because most of the time the politicians in question likely tell themselves they're not being bought, because they're taking donations for access etc. or other things that are sufficiently separate from a direct transfer of money that they too are pricing it based on access rather than on the value of a changed vote, as you suggest.
And as I said earlier, the campaign contributions are window dressing for the rest of it and I gave a concrete example. Families like the Clintons have made massive amounts of money cashing out after office, and secured lucrative sinecures for their daughter while in it.
These people and their families are insanely well off as a result of their work in government, and its not because they legislated or governed in the public interest.
The Clintons is a good example of why that would no sense: Their revenue is effectively diversified enough that it would make very little difference. They're trading off their perceived status and recognition - if they'd pushed policy in a different direction, their revenues would just have come from being popular as speakers etc. with different sets of people, it wouldn't have evaporated. It might have been different, and it is possible they'll have thought about that at times, but it is unlikely that they kept thinking "this will increase/lower our income later" because it's way too abstract how it would influence things.
Yes, I'm sure outright vote-buying happens, but I don't think most lobbying is outright vote buying. That doesn't mean it isn't wrong, but that trying to paint it as outright vote buying rather than paint it as wrong by making the point that disproportionate access is equally bad is counter-productive. Because if you accuse the average politician of outright selling their vote, they'll consider themselves unjustly victimized and just think you're a crank that's totally off the mark.
This is institutionalized and legalized bribery, not just 'access' or 'networking' or whatever euphemism you want to use to couch this in niceties.
The problem is that people are too often looking at this as if it is the latter, when it usually is the former. That doesn't mean it's not a problem, but it means that attempts to try to address the latter will be totally ineffective, and addressing the former is far harder in general, because the "payoff" can be very tangentially related and non-obvious.
E.g. it can be as tangential as "look at me giving money to this cause over here that I know that you like (wink, wink)". No direct exchange needs to happen. No direct benefit needs to be had then and there - just the acknowledgement that party X will be very grateful were you to listen more carefully to what they say (not even one on one with you, but say, in a committee, or even in PR releases) and understands your interests.
Direct bribes are "easy" to stop in comparison. And so they're the wrong focus. The consequence of shifting focus to more indirect influence is that the only viable solutions to stop this kind of influence is to disperse power of politicians more by weakening their individual influence, and to reduce the powers of potential beneficiaries of there decisions inherent in accumulation of capital. You draw the conclusions.
Politicians feelings doesn't come into it - nothing you try to do to stop this by regulating their interactions with business will have any real effect.
No need to look into the past for examples. The current administration isn't even waiting until they are out of office to cash out.
Are you implying here that the problem can't be fixed or ameliorated?
> buying a $10,000 plate at this donor dinner gets you a sit down with the Senator
What if there were no donor dinners because campaigns were limited to a set amount of public funds?
I sure hope we can find a way to fix it.
>> buying a $10,000 plate at this donor dinner gets you a sit down with the Senator
>What if there were no donor dinners because campaigns were limited to a set amount of public funds?
I think that would be a pretty good start. Enough so that I spent several years working on getting my state to join the call for a constitutional convention to overturn Citizens United and establish more fairly funded elections.
I think we caught a glimpse of what lobbyists are telling senators when Ted "Series of Tubes" Stevens sloppily repeated the explanation of the internet he was fed.
(To head off the argument: I agree that the "series of tubes" part itself was correct; the problem was the lacking understanding of the relationship between "data transfer has a cost" and "why net neutrality is bad". Also the dubious anecdote about intern emails. "Series of tubes" is just the label for cluster of confusions, not the part he got wrong.)
This statement is false. If you look at Open Secrets, $16,000 lines up exactly with what H&R Block and Intuit employees donated to Neal in 2016 and 2018. H&R Block and Intuit have tens of thousands of employees--it's not surprising that many donated to a Democrat with a high-ranking committee position.
Fun fact: By the article's parlance "Google" gave more to Neal in 2018 than Intuit. Gasp--Google must be in on the tax filing scam too!
Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest, like this issue.
Ugh. If only more of our Representatives and Senators actually worked for the people, rather than for whomever promises them the most money...
This is what PACs and nonprofits do. If you want to participate, there is probably already at least one for whatever issue you care about.
The problem is that those who wish to reform the status quo are not as well funded or financially incentivized to create a counter-lobby. Ordinary citizens, who would benefit the most from making e-file free, would have to form a counter-lobby group and put up at least $6 million in order to have the same level of access as the tax preparation companies.
Zingales' proposed solution is to do away with subsidies and special treatment for individual companies, as they inevitably lead to cronyism.
All I have to add is my deduction items, and BAM! it's done. Also, we automatically pre-pay our taxes because it is calculated and payed for by all employers.
Every year, they add some improvements to the entire system. They basically prefill your entire income and capital. Including stocks, dividends and other things. The only things you need to fill in yourself are some of your deductions (there are some which are prefilled as well).
They open the filing of taxes every year on march first. And every year there are lots of people who fill it in on the first day. This year there was even someone who handed their taxes in 18 seconds past midnight.
At least the Dutch ones tend to just be click-click-check-done, so it's not too bad. But it was sad moving to filing annual tax returns from a much simpler system.
This is generally the case as long as you do not deviate. In the past I requested to delay having to file taxes and they rejected my request because I did not have to. The 'but' is that as soon as you screw up, or one of your bosses screws up, or you forgot to file something, you have to file from that point onward.
It is always a good thing to do anyways as you might get money back.
I owe the government $4,600. I received an "underpayment penalty fee of $44" because I did not "pre-pay an estimated tax" each quarter. Something I have never done in the ~25 years I have been paying taxes.
Not only do they want the $4,600 by 4/15 they also want an estimated $1,200 "pre-payment" for 2019 by the same date or I will incur this same fee of $44 next year.Plus 3 more payments of $1,200 each quarter. So they want to hold my money without paying me interest. At least in my bank I earn more than the $44 penalty in interest each year.
This is bizarre. I surely didn't know about this nor did I read anything about new tax laws as I imagine most people don't.
The estimated payments are not prepayments—they are payments that match what most W2 employees would pay every paycheck, but isn't the case for 1099 (or otherwise self-employed) individuals, since they don't have taxes withheld from their paychecks.
What if I have a baby in January or February? Then I would qualify for a deduction and then I am indeed overpaying them.
What if I lose my job? or get a job that is less money?
It's not their money unless I earn the money to pay them, IMHO.
It should go both ways.....why can't I ask them to estimate a refund then and give it to me in advance?
You sort of can, by adjusting your withholding.
But then if I did that and at year end didn't have enough taken I would still face a penalty.
It feels like taxpayers just have to take it.
Of course—and in my understanding estimates account for this. If you earnings diverge such that you will not owe that money in the end, you don't have to pay it and won't face a penalty, as long as you've paid a certain percentage of your year-end tax liabilities.
And to be clear, I'm not arguing from principle. They should make it much easier and straightforward to pay and understand taxes regardless employment arrangement. However, in practice, they view estimated taxes (quarterly) or paycheck withholdings as required payments or they will levy penalties. :-)
I get both sides of the situation. It just seems the side of the tax payer doesn't matter.
Unfortunately it doesn't help the OP since he'd have to make quarterly payments regardless.
The really annoying thing is that I agree it’s a good thing to have more accurate withholding and smaller refunds. They just screwed it up for political reasons.
All this could have been avoided if they just required employers to get updated W4s instead of defaulting to misinterpreting your existing instructions.
Recommend you submit a new W4 ASAP.
But strictly speaking, they don't see it as holding your money, they see it as your money is due when you earn it and if you are witholding "too much" from your paycheck then you are holding their money.
We have got to pass a law saying all lobbying must be done with full transparency- no secret meetings, etc. We have got to limit the access that megabuck gives to our politicians. It's getting insane.
Perhaps you just didn't withhold enough on ordinary income (which requires overriding payroll defaults). There's probably no safe harbor for that.
You see, they expect me to accommodate them, when it is convenient for them, but they would not accommodate the reverse because it doesn't accommodate them.
If this makes you mad, perhaps you'd be interested in lobbying for lower taxes
* Lack of e-file permission
* Lack of any kind of legal recourse or audit protection for the user
* Constantly changing tax system
After a casual search on GitHub I see a few calculator projects but nothing serious.
I'd be down to help make a free competitor to Intuit. I see no reason to use a non-static site unless it's to keep previous years data, but that's iffy and sounds like it requires a whole other legal consideration.
As the article notes, there are already free solutions for people with basic income situations (W-2, some bank interest, no stock sales) making under $66k. Personally, I don't mind paying $100 to turbotax for the peace of mind of knowing that at the very least, they have a staff of tax experts looking over the details of their filing process.
Now, if the IRS came along with an official app that showed me what information they already had and I just needed to make some small adjustments from there (assuming my tax situation isn't complicated), then yeah, I'd use that. And it's a bit crazy that we don't have that. But unlike many countries, we are taxed at both the federal and state levels, which makes the process much more complicated. And to complicate things further, the two interact: I can deduct some of my state taxes from my federal taxes (though less than before). And don't even get me started with the complications of a move from state to state.
EDIT: thinking about this a bit more. What really annoys me about the current system isn't necessarily that I pay to file my taxes. It's that it's so easy to miss things. Maybe i have a bank account that earned $12 in interest and I earned $20 from money that I put into lendingclub.com two years ago. It's annoying that the government has this information, but on the other hand, it's very easy for me to not see (or forget about) the email/snail-mail that I got about this income and then forget to declare it on my taxes. Yes, I know that the IRS isn't sending me to jail for forgetting to pay $5 in taxes, but in general, the process would be much less stressful if I had some kind of centralized reminder of all the income I made.
Pretty much all the major tax preparers do this, and they are pretty scummy.
edit
Actually now that I think about it, since the standard deduction is increased, you could catch the majority of simple returns by just assuming the standard deduction and including a few disclaimers about the option to itemize.
I see a lot of criticism of the idea, but there's more than one way to skin a cat.
The article suggests that tax filing is an $11B industry and that companies spend ~$6M lobbying your corrupt senators. The chair of the Ways and Means committee received ~$16k in donations from Intuit/H&R.
Wait, what?
Never mind how inexcusably transactional this political 69 sesh is... it's obviously table stakes for these people.
What I can't process is that $11B of revenue only spent $6M to bribe these guys. Why not spend $100M? Why not spend X? Are the senators just selling themselves short?
For perspective, $6M is like 10-12 totally normal homes on my totally normal suburban street.
If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.
I guess, if you're in the business of selling your principles (corrupt politician), you're suddenly competing with a wide pool of equally corrupt people, probably with cutthroat tendencies, who are willing to go cheaper than you and take your place? Could be that driven, principled, smart people are hard to find, but people willing to be corrupt politicians are dime a dozen and replaceable.
Plus, my hope is that good citizens would make money selling sex long before they sell the trust of their electorate. It's only a morally bankrupt crime that could in some cases be treasonous if you get caught, right?
Why, that is classical supply and demand, Economics 101. If you can buy a service for $10, why would you pay $100? If $16,000 is enough to buy the chair of some committee you'd batter not pay her much more than $16,000 or the next time she comes around in some position where she has the power over some piece of legislation which might get in your way you'll have to dig deeper still. Not to mention the fact that your fellow lobbyists wouldn't like you for raising the going price of politicians, senators and committees and you'd be hard pressed to find another lucrative position in this market.
Most years I don't interact with them at all. Don't even have to file.
I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?
I don't trust our government as much as the US population doesn't trust its government but this level of paranoia only leads to inefficiencies. Now instead of a central authority providing codified norms in software, you have countless tax filling vendors providing theirs, lobbying, etc.
Same with right to bear guns against the government. I guess it's the old shovels and gold digging, there's someone profitting from your hopes and dreams, or in this case, fears.
New Zealand has extremely limited deductions compared to the United States: http://taxsummaries.pwc.com/uk/taxsummaries/wwts.nsf/ID/New-.... For example, just from Google, it looks like you can't deduct expenses for daycare in New Zealand.
What we're worried about in the U.S. is that making deductions "opt in" will lead to an effective tax increase from people not claiming them (or being afraid to contest the "bill" sent to them by the IRS). You know the studies showing how organ donation rates shot up when it was made "opt out" instead of "opt in"? Same thing.
The software is actually bad for you because you forget that reading every IRS booklet and form is about the only way to learn the logic of the tax system if you wish to exploit it correctly.
It's the same structure that makes you pay 3% extra for everything you but so you can get 1-2% back as a credit card refund, and makes you get a supermarket loyalty card, and frequent flier miles, etc.
For pretty much everything is prefilled, and you just double check from your own records, fill in the various deduction screens for whatever class of deductions you're claiming.
Even if you are self employed or run your own company you can do most things online, with a nice easy to use form. Last few years when I've done it, it takes around 30 minutes to get everything done (including finding all the numbers I need to enter from banks, my accountant, etc).
There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it.
It's truly an abysmal system and I hope my kids don't have to do a giant math problem every year when they're adults.
Sure you can. Even with the new $750k cap, and if you assume a (very low; chances are it's higher by a factor of 1.5 or 2) rate of 2%, you can get to $15k.
If you assume a 4% rate, then you get to $14k with a $350k mortgage. In various coastal-metro markets that's basically an entry-level house.
The other common itemized deduction is charitable contributions. Unfortunately, I see lots of "average" data for those, when what would be most useful here is median data: the average is presumably heavily skewed by wealthier or higher-income taxpayers. But as an anecdote, I know multiple people who drop $20 in the collection plate every week when they go to church; that's ~$1k right there.
Thanks -- I hadn't done the math, and was mostly grumpy about my mortgage interest + SALT not being enough. No significant charitable donations this year, I bunched up with a DAF in tax year 2017 for several reasons.
They don't actually try to pass a flat tax because it is not feasible to actually do a flat tax in a country like they US with such a wide range of incomes. Even with a low rate, there will be people poor enough that paying the tax is a major hardship. So every even remotely serious "flat" tax proposal has some cutoff and only applies to income above that cutoff.
But then it is not actually a flat tax. It is a progressive tax with two brackets. Once you get there, it is really hard to come up with a convincing argument that two brackets is better than more brackets.
If the calculation wouldn't mystify most taxpayers, what would probably be the most sound theoretically would be a continuous bracket structure.
The other reason they don't do it is that the flatness of the rate structure has pretty much nothing whatsoever to do with the complexity of a tax return. If you changed the rate structure from a progressive rate with several brackets to an actual flat rate, or a more realistic two bracket progressive system, that would shave about 1/4 of a page off the several thousand pages of the tax code and tax regulations.
The complexity of it is all in figuring out which income is taxable. Once you've got all the income classified into the various relevant tax categories, the actual calculations where you use the rate structure is trivial.
With a tiered tax system, individuals need to be the ones who pay taxes because people who combine income from multiple sources need to pay differing amounts of taxes. With a flat tax system, all income is treated exactly the same so governments can switch to collecting income taxes from corporations. Corporations basically report the amount they spend on payroll every year and pay some percentage of that as a tax to the government. Then the government takes some portion of that money and remits it back to individuals as a negative income tax (essentially a UBI).
Flat tax changes the way money flows, instead of company -> individual -> government, it goes company -> government -> individual. It's both easier to tax corporations than individuals and easier to give money to citizens than take money from citizens. These two powerful benefits alone are meant to make up for the severe rigidity and lack of flexibility that flat tax systems intrinsically have. It's an open question whether these two things are enough to make up for all the flat tax flaws but I don't think there's an obvious right or wrong answer that we've discovered yet.
Also what about income from investment?
Income from non-salary sources aren't generally covered by flat tax proposals because they're so complex and the existing tax system would still exist to deal with them. However, for the vast majority of citizens, salary is their only source of income and their experience with the government becomes "how much can I convince the government to give to me" rather than "how do I try to avoid the government from taking from me".
These same people get back a $1500 "return" so they think they are getting a good deal. Its pure greed and theft from some of the most needy members of our society. Absolute shame on everyone involved in this process.
EDIT: Keep it coming! Every downvote proves I'm right.
The debate is not about the services. They may not be needed by everyone, or in the exact form the government provides, but there would still be at least some demand for them in the market if they weren't provided by the government. The question is whether these services are funded voluntarily or by force, by those who want them or by others who just happen to have the necessary resources.
Apart from bribes from those who make tax software (which should be pretty easy to expose) I can't understand why congress wouldn't want to make paying taxes simple and efficient?
1: https://www.npr.org/sections/money/2017/03/22/521132960/epis...
Really? For less than $29?
I paid $39 this year for H&R Block Deluxe, which took care of everything you listed above. Includes 5 e-files too, so you can share it with friends/family.
The IRS is also extremely wonderful to deal with, and is happy to answer your questions. I've had questions about procedures before (even made a mistake), and you just call (or they call you) and you fix them.
Why would that be a benefit? It means more taxpayer money is literally going to waste.
I'm not exactly certain what they are getting by providing this info except advertising for more CC and loans. One of which I used and reduced my auto loan rate(this was also to get it out of Wells Fargo's books).
During the years I was eligible for this program, I used TurboTax for free through it and it worked fine. It was a basic version that didn’t support complex transactions such as capital gains but for most people making under 66k it would have worked fine.
Very interesting to see only 3% use it. It would probably work well for a lot more of those 70%.
The paper forms are also easy enough to do manually, but can’t be e-filed and so the refund comes slower.
Another reason might be that "automatically" filling in your details from uploaded / linked documents is often a paid feature. I uploaded a doc it asked for, it showed me the info, then when I opted for the free tier it cleared the data and made me type it in myself.
However, I noticed that it's back for the 2018 tax year. https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
It's very basic -- it's literally just a way to fill out and submit the paper forms electronically (though it does the "add lines 35 and 36"-type arithmetic for you.) But it's an option for you procrastinators who earned more than $66K last year.
Relatedly, Massachusetts used to run a free online "TurboTax" program for all. To file your taxes you went to a government website and answered the questions. Unfortunately, that program was canceled a year ago when they upgraded systems, and now the only way to e-file is via a paid preparer.
Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.
I also know many cities offer services to help people file simple taxes for free.
I believe this bill also states the IRS cannot send debt collectors after people making less than $66,000.
This bill may not be as bad as it looks. I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge. I question if it's necessary to bar it, but I'm guessing that was to keep their deal with the Free File software.
Either way it would be nice to see representatives state their position & reasoning behind this bill. It seems it has wide support across the aisle which is rare these days.
You did not. You can contact the private companies such as H&R Block and request Their free service if you make less than 66k - and subject yourself to their upselling and scam artistry, to try and get you to pay anything more than "free."
> I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge
The vast majority of people file extremely simple taxes, as they're salaried workers with minimal assets. Most first-world countries provide a pre-populated tax form with the relevant data (since your employer already submits it), for you to peruse, edit, and hit the submit button on. If other countries do it without a problem, I don't see why it's too technically difficult for us to do the same.
I can only suspect that this hasn’t happened because of strong lobbying.
Don't forget data mining. Dunno if these apps have ads, but if they do, be sure to add that in as well.
I don't think the IRS should build software for complex taxes & strategies is all I'm saying. That's what accountants are for.
I do understand the argument that a simple pre-done tax solution would mean some people would miss out on deductions. But if you calculate the time & cost it currently takes to submit your taxes, it probably equals out.
I went back to school full-time for most of last year to get some helicopter ratings and didn't have much taxable income, so I used the free H&R Block service.
There was exactly 1 attempt at an upsell, and it was at the very beginning of the process where I was told if I used the free service I would have to enter all of my information but if I used the paid service they could pull my information from prior filings to save me some time.
Was your experience with one of the free programs different?
Well, I do expect them to:
1. Verify 99% of taxes automatically anyway, and that's a very difficult challenge. There's no way IRS can use a human to verify every single tax filing.
2. Make a public service off it for those 99%.
3. I suppose that even for complex cases it's probably even _easier_ to make a software for that. There's no human that can remember thousands of pages of tax code.
Humans are still needed, but for correcting/adjusting/verifying the software itself.
The IRS already has this software. They are literally the best placed people in the world to make this software.
How do you think they check taxes for 300,000,000 people + businesses? And their software is already pre-populated with data from employers, banks, brokerages, and all the other places that automatically file data with the IRS.
I 100% agree that the IRS should handle the majority of simple taxes. I just don't think it's reasonable to expect them to find all the possible deductions or suggest complex strategies for you. They could offer common suggestions & try to remind you of common deductions though.
Yeah, I've used H&R's free filing for 4 years or so now. When I lived in a state with state income tax, they charged me for that, and offered to charge me to remember my data for next year (I declined). their website indicates that state tax filing is now free, I wonder if it depends on the state, or if things just changed since 2015 tax year filing.
unfortunately I don't have any other tax experiences to compare to, but it was very easy. as a student, I don't have complex deductions or income, but as long as I can use the American Opportunity Tax Credit, and it doesn't take too long, I'm happy.
Say what you will about the greed of tax companies, there absolutely is merit in those arguments. However, there is also something to be said for the effect of large numbers of people being lazy and not fighting to keep every dollar they are entitled to.
Problem solved.
(The recent tax bill went a long way in this direction by increasing the standard deduction)
The IRS doesn't provide any electronic filling services.
Those "free" services are provided by a consortium of private institutions.
There is no way to efile without giving all your data to private companies.
Even worse, when the user calls the H&R Block help number, a computerized voice does offer the user the option to downgrade, but notes that it will have to delete all of the data the user entered!!!
Talk about sleazy.
You build it for free.
This user then adds a tax pro review service but decides later that they do not want that add-on service. But now the user cannot remove that added-on service on the H&R website. The user calls in to an automated phone line which tells the user that, in order to downgrade, the system must clear out all of their data.
Don't attribute to maliciousness what can be attributed to incompetence.
That statute states IRS should continue the program (67 Fed. Reg. 67247), "including any subsequent agreements and governing rules established pursuant thereto."
In 67 Fed. Reg. 67247: "During the term of this Agreement, the IRS will not compete with the Consortium in providing free, on-line tax return preparation and filing services to taxpayers."
The question is: why we want this bill? It is not giving any benefit.
That's what "ban the IRS from creating a free e-filing system" means.
https://www.congress.gov/bill/116th-congress/house-bill/1957...
> The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.
https://www.govinfo.gov/app/details/FR-2002-11-04/02-27909/s...
> during its term, the IRS will not compete with the private sector by providing free on-line tax preparation and filing services to taxpayers
https://waysandmeans.house.gov/media-center/press-releases/w...
> Sec. 1102. IRS Free File Program. The IRS currently works with electronic tax preparation services to provide free tax preparation software and electronically fillable forms. This program is known as the IRS Free File program. Generally, there is no fee for taxpayers using the Free File program provided they meet certain income thresholds. This provision codifies the existing Free File program and requires the IRS to continue to work with private stakeholders to maintain, improve, and expand the program. The provision also requires Free File program members to continue to provide basic fillable forms to all taxpayers. This provision is estimated to have no revenue impact over the 10-year budget window.
Unfortunately, the people most effected by this bill are likely too busy working to afford the time to contact their representatives.
> The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.
I've never used it so I wouldn't know if it's chockful of upsell adverts. It's certainly very hard (I couldn't do it, at least not in the past 5 minutes) to find a reference to the Free File Alliance on freefillableforms.com. But this is what is buried on IRS.gov:
https://www.irs.gov/e-file-providers/about-the-free-file-all...
> Free File offers a multi-year agreement between IRS and the Free File Alliance to provide free service(s) to more taxpayers. Previously, free offerings were not consistently available and were subject to modification or discontinuation from year-to-year. With Free File, taxpayers have easy access to IRS.gov, which offers a list of all free offerings on a single web page. Under our agreement, Free File Alliance companies offer both free preparation and free e-filing services. There is no cost to qualifying taxpayers.
> Note: We do not endorse any individual Free File Alliance company. While the IRS manages the content of the Free File pages accessible on IRS.gov, it does not retain any taxpayer information entered on the Free File site.
https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
I've been happy, but this year I couldn't e-file my state return and Indiana claims my daughter's was figured wrong.
Germany also has some of the most draconian anti-free speech laws of all first world nations, so I really don't think they're a good example to use as a pillar of freedom.
I don't know much about the German healthcare system but it's quite possible that you also don't have as many choices for healthcare as in the US due to increased governmental regulation.
I'd also add that healthcare is one of the least free aspects of US culture especially post-ACA. We are now mandated to have insurance, even if we don't want it.
You have strictly more choices. In the USA, chances are you cant afford healthcare and have none.
I know I am exaggerating and misrepresenting a lot of people with this characterization.
To me the solution seems obvious: you don't need private companies to do the job of the government. You need a less corrupt government, capable of doing its job. With the middlemen you just move the corruption around.
> Don't feel sorry, we are fine.
Rank 6 on the Economic Freedom index https://www.fraserinstitute.org/economic-freedom/map?geozone...
Rank 17 on the Human Freedom index https://www.fraserinstitute.org/sites/default/files/human-fr...
Rank 45 on the Press Freedom Index https://en.wikipedia.org/wiki/Press_Freedom_Index
Rank 10 on the World Index of Moral Freedom http://www.fundalib.org/wp-content/uploads/2018/07/World-Ind...
Rank 53 in the Freedom of the World index https://freedomhouse.org/report/freedom-world-2018-table-cou...
Rank 12 in the Index of Economic Freedom https://www.heritage.org/index/ranking/
That is not a bad score overall, but is a far cry from an unchallenged "we are the most free".
It’s a republic. There’s a meaningful difference.
One name is about the act of governing and the other is about the property of the governing body.
It's not hard and no accountant had ever dabbed me more than they cost.
If you can code you can fill out a form. Every year I day in going to automate it but it's easier to just fill out the forms.
I'm looking forward to an audit for the free tax advice.
Be legit. Stop worrying. Keep living.
Imagine, as complicated as tax forms are, and as obtuse as the IRS instructions are compared to TurboTax.
Now imagine the government puts up a website for you to file your taxes.
Do you really want to use that? Do you think it will be as easy to use? Do you think you'll have a nice wizard to walk you through it? Will it be faster than TurboTax?
Now, a year or two after their site has come out, and TurboTax has seen a huge drop in revenue (they don't know it, but it's only temporary), they decide to shut it down because they can't compete with both free and "government guaranteed" even if the site sucks.
Will you be happy then?
Seriously - I get the frustration of the current situation, but if you've ever done it on paper and have anything other than the 1040EZ form, this should give you pause.
In other words, for the same reason we have laws against unfair competition.
Business for the sake of business is not necessarily good. If the business does not provide real value any longer, it shouldn't exist.
Government for the sake of government is never good.
Some things lend themselves very well to for-profit businesses. Others do not. Firefighting and filing your taxes to the government strike me as two things the government can probably handle better than capitalists.
Imagine if back when we had paper forms H&R Bloch had managed to lobby Congress to prohibit the IRS from providing free forms and mail in processing directly to taxpayers, and instead required them to work with private vendors to provide proprietary forms and postal tax filing solutions? Would this really be better? How does “with a computer” change this?
And, yes, I've done 1040 and 1040A filing by paper in the past
To make that fair, they would have to lobby against E-File.
If you make under $66,000 a year, filing your taxes online is probably free.
Every year only about three million people — of the nearly 100 million eligible — take advantage of the private partnership the Internal Revenue Service has set up with tax giants such as Intuit Inc and H&R Block Inc. to provide free tax preparation online, according to Tim Hugo, director of the Free File Alliance, which is made up of major tax preparers that manage the Free File program.
SOURCE: https://www.marketwatch.com/story/how-to-file-your-taxes-for...
I can actually make this comparison, because corporate tax returns still require paper forms.
Now I know the US tax system is much more complex, so take this with a grain of salt. But "free and government provided" doesn't necessarily mean "bad".
And if it were successful enough to drive TurboTax out of business, that would be a massive indicator of popularity and a net win.
I find it utterly absurd that the USA is beholden to this kind of regulatory capture. Forcibly preventing the government from delivering better services to protect an entrenched player? That's an absolute perversion of capitalism - I'd actually say it's reminiscent of communism more than anything.
Tyler Cowen (and in his own way, david graeber) made a point that really stuck with me. Badly paraphrased:
The introduction of PCs & software to the office, has not increased office worker productivity at all. It's very hard to define or measure white collar productivity, but to the extent that it can be measured... it hasn't improved. From another angle, university administrations, tax collectors, accountants, legal departments, international customs agencies, etc. have as many or more people and don't seem to be producing a whole lot more.
To paraphrase Graeber's more beligerent take on it: Getting more efficient at paperwork just produces more & more complicated paperwork.
> Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.
But the IRS already has one. I used it yesterday to fill out and e-file my taxes. It's "Free File Fillable Forms" (freefilefillableforms.com) that is basically an online replica of the tax forms, some fields get automatically calculated, but you have to manually calculate the actual level of tax you owe, and it's submitted electronically.
And all income levels can use it, unlike the free tier of commerical tax prep programs which are limited to below a certain income level.
I use it out of principle -- it's harder to use, closer to filling out tax forms by hand (unlike the "wizard"-type interfaces of commercial tax prep software), but I don't want to support the commercial solutions exactly because of lobbying like this.
So I can't tell what this bill aims to do specifically. Is it trying to get rid of Free File Fillable Forms, or is it preventing the IRS from building something better?
EDIT: Free File Fillable Forms is apparently a private organization that the IRS website links to. In my years of using it, I'd always assumed it was provided by the government. Wikipedia clarifies:
"Another component of Free File is Free File Fillable Forms, which is available to all taxpayers, including taxpayers whose incomes are greater than $66,000. It is an alternative to Free File Software, although both are free. Free File Fillable Forms is operated by a private organization, the Free File Alliance and not the IRS. Though IRS links to it, they do not endorse it or any product... There are no income restrictions for using Free File Fillable Forms... It provides free electronic filing. Free File Fillable Forms is managed by the Free File Alliance." [1]
I'm still unclear, however, if there's pressure to get rid of this option that is free for everyone. I sure hope not.
[1] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...
When companies make contributions like this, why don't politicians just take the money and then do whatever they want anyway? The companies have no recourse to complain or get the money back do they? How does this work?
They'll back your opponent in the primaries/elections, and run smear campaigns on you.
With a limit of two terms.... should only be able to vote to keep a certain person in office, but all persons in office should be selected just like jury duty.
Want to know how fucking retarded the world is. Do this. but at least it will diminish corruption from the likes of Pelosy and others who spend DECADES in their positions...
The definition of an honest politician is one who stays bought.
Nobody in politics receives a single "campaign contribution" aka "bribe". Instead, it's an ongoing revenue stream.
Lobbyists frequently lobby on behalf of a number of companies, on a number of issues. The lobbyists know which politicians can be trusted. The politicians know which lobbyists can be trusted.
That does seem somewhat cynical, and the whole business does seem a bit seedy if not sordid. But what is the alternative? Our republic seems bad, but it functions better than most other countries out there.
It's embarrassing and absurd how cheap it is to buy off congress from making everyone's lives easier. Can't a gofundme raise more than 16k to counter them?
How about we go back to when politician wasn’t a full time job, and you barely got paid for it? Make it illegal to pay politicians for any public services apart from a set nominal salary.
What if a fixed/low salary only attracts the already-rich whose interests will never be well aligned with the general public?
If you want superstar government that is the very best at what it is supposed to do, you need a superstar salary structure, something more like professional athletics. Our president should be paid millions (with complex incentive structures for measurable achievements), but under “at will” employment terms and accountable to the people.
Citizen overheads for essential services are as high or higher in the US as in mainstream developed nations, but laws dictated by corporations mandating (or making essential-in-practise) private provision clumsily hide them behind a fake 'low tax' banner.
Here in Aus our ATO makes the (dead simple) etax directly available to end users. Its popularity speaks for itself, and there'd be hell to pay if the ATO ever removed the service. Cf public healthcare etc - corporations are rightly scared of public provision. People like it & it's very sticky.
If you make under $66,000 a year, filing your taxes online is probably free.
Every year only about three million people — of the nearly 100 million eligible — take advantage of the private partnership the Internal Revenue Service has set up with tax giants such as Intuit Inc and H&R Block Inc. to provide free tax preparation online, according to Tim Hugo, director of the Free File Alliance, which is made up of major tax preparers that manage the Free File program.
SOURCE: https://www.marketwatch.com/story/how-to-file-your-taxes-for...
The ROI on those costs must be stupendous! Say 100 Million people file taxes in the US, it doesn't take long to hit 10x or 100x returns.
Am I missing something? (I'm not from the US)
For most filers with W2 income, there’s nothing to it and they could easily do that. It’s fairly simple and you just need to read the directions and do maybe a half dozen additions and subtractions.
Where the real return has come in is the millions, if not billions, of dollars that the industry has spent convincing consumers that taxes are super hard and complicated and open to tons of interpretation, that their tax filing experts know this ONE WEIRD TRICK to get you thousands back, and if you screw up even once the IRS is going to come after you hard and put a lien on your house and put you in jail. The reality is not like that at all - if you do screw up they are happy to help and it’s actually pretty simple for most people. But this has engendered an incredibly deep mistrust of the IRS - most people would still taking their taxes to one of these firms or their local accountant because they’d be convinced they could get more back.
I’m not saying the system couldn’t be even better for these filers, but it does require the federal government and the IRS to start collecting data they they don’t right now, and the actual gain is pretty minimal in real terms - taxes for most filers is already incredibly easy and free. And the you’ve only solved half the problem - what about state taxes?
You can also claim back the cost of filing here I believe, so if you need to use a third party they are essentially paid by the government. Maybe that's why they make it so easy here?
To the people complaining about the possibility of a government run site being poor have you used TurboTax? I've used it twice now and will never use it again. The dark patterns, upselling and fake loading screens really obscured how simple my taxes actually were to do.
I don't know if it's the same way elsewhere. Maybe it is, and it just isn't as widely reported. But the fact remains that we know this to be an issue and we're not campaigning enough to solve it.
The only other issue that I feel is as pervasive is the end of the Fairness Doctrine and the spiral into chaos that ensued.
'Everywhere else' is usually < 30M people which is a totally different ballgame.
Can you imagine an EU level healthcare mandate? It'd be out of control impossible, and yet it works well enough a 'the state level'.
It'd be nice to see some really forward thinking states lead the way and forge a path, if a few caught on and there were material examples of 'how it could be done' then maybe there'd be hope.
Made a video to help raise awareness of the problem and solution
Companies have no natural right to continue making money without competition from the government.
EDIT: Where does this ban the IRS from creating their own portal? It requires the IRS to continue the Free File Program, but does that explicitly bar the IRS from its own system?
Missing option #2: it is just foolish to trust the tax collector to tell you how much you owe. The only way this would possibly work would be radical simplification of the tax code. Since that is not going to happen...
Second, I'm tired of people blaming TurboTax. The headline says "Thanks TurboTax". No, TurboTax does not vote on laws, our Congressmen do. If any Congressman is taking bribes and voting for this bullsh!t, then the Congressmen are at fault and need to be voted out of office.
I decided to take a quick look at the bill to see if it's really as outrageous as the article makes it, but I can't even understand what the bill says. It's like a 30 page document of legalese. Where in the document does it say that the U.S. would be banned from offering free tax filings? Why the hell do laws have to be written like this to be so overly verbose and indecipherable to anyone without a law degree? There should at least be a succinct summary at the top.
I basically only have to enter the deductions I wish to claim. Of course, if I earned money on the side that wasn't reported, I can self-report it too.
The only reason you'd pay for an accountant here is if you have complex tax affairs, or wish to save yourself time. Even when using one, you're ultimately responsible for the accuracy of your tax filing, and you're supposed to review the submission they draft.
I certainly believe that tax law should be understandable by the layman if all they're doing is a simple salaried employment, and by extension in all cases a person should be able to complete their tax requirements entirely on their own (even if that involves learning a large amount of tax law knowledge). There's something deeply unsettling to me about the concept of tax law being too obscure for the everyman to file themselves even in simple situations. Tax is a contract between the government and its citizens. The idea that a third-party private entity must be involved by law seems, to me, very opposed to the libertarian concepts that the US apparently holds dear.
That's the dream. Put the onus of doing the calculations on the government, and you get the right to disagree if you find fault with it.
Wouldn't that be great!
Most deductions and credits should also be done away with to simplify the tax code, but I doubt the Intuit lobbyists would let that happen.
There are multiple private companies providing this service for low amount, as many have mentioned; for free for incomes below a threshold.
1) Why would you want the IRS to duplicate this effort and compete with these companies? Remember 'Free' in this context means paid for by tax dollars. Do you think the IRS is going to spend less to implement a filing system than one of the existing vendors has? If they do it in-house, do they even have the expertise? If they contract it out, is that much different from what we have now?
2) Everyone needs to file state taxes anyway. Seems unlikely the IRS is going to handle this, as it adds a great deal of complexity and isn't really part of their mandate. So if you create a free IRS filing system, then people still need to go to one of the existing vendors and import their info and pay to file state taxes anyway.
There are good reasons to think the IRS creating a system is a bad idea. Blaming passage on a few $K in lobbying is lazy.
1) They could still provide free federal tax submissions 2) State taxes could still be submitted through the companies
If the companies do in fact provide a service that is valuable the IRS should not be competition for them.
Now with that said. Intuit loads up their service with tons of dark patterns, and they spend money lobbying... why would they be doing that if they provide a valuable service?
I used Free File for over a decade when I had a lower income and 1040 type employment.
You seriously click a button here: https://www.irs.gov/filing/free-file-do-your-federal-taxes-f... Pick a provider and fill out the form. It doesn't even take more than 5 minutes. 10 if you're slow.
How is it on a site full of highly intelligent and educated individuals, there is one single comment about Free File and how simple it is. And it has been around for many years.
There are tons of comments in this thread about how income tax is not automated and free in the US, when it is actually almost automated(fill out name and address and income and the software does the rest) and free for 70% of people in the US. How? How are this many people commenting and no one appears to be aware that almost all of the comments in this thread are incorrect?
On the state level, the federal government, for obvious reasons, cannot control that, but you will be happy to know that many states also support forms of Free File, although are often more restrictive. But with that said, many state taxes are just percentages of what your federal tax liability is so they are often half a page long forms for most people.
And regardless of all of that, and regardless of income, if you have a typical 1040ez income, you can go down to the public library, get the form which is literally two pages and fill it out and mail it in. It also takes about 15 minutes and in 100% absolutely free. Well, you have to purchase a stamp.
Seriously, do you not realize this has been the case forever? Are you located in the US?
And if you make over $66k a year? Come on, you can afford $50.
...I don't understand what possible value you believe the American public gets by paying companies money to do something that the IRS could/should be offering for free?(not meant to be curt... just trying to understand your perceived value proposition)
What is wrong with an electronic filing system offered by the IRS without a charge?
The IRS should really just prepare everyone's tax return for free automatically using your submitted documents, then provide you the opportunity to approve or correct your filing. This would save everyone a huge amount of money and time (aka money). It would be a, you know, "public service", the thing governments are supposed to do.
1) I'd like the IRS to at least have a role, since the IRS is the only one who has a copy of all my tax information provided by employers, banks, brokerages, etc. They have a unique role in that they can pre-fill all the information, where someone like Intuit cannot. However, an opportunity where they simply provided that information to a third party with my permission could also be an interesting model. I haven't seen any exploration of that.
2) California, at least, already provides this service. But few use it because the federal government doesn't. If the federal government stepped up, many states would follow.
I believe that the IRS providing it like most of the rest of the world would be a big step forward, but would be open to a role for private industry too.
Is tax collection not a function of the government? I'd rather my taxes fund a free, easy tax filing system than pay fees to rent seeking middle men. Those fees are just an inflated tax by another name. We should be eliminating those kinds of taxes, not entrenching them.
> If they do it in-house, do they even have the expertise?
Government websites and software have a reputation for being ugly, slow, broken and poorly designed. Government is also capable of building good tools. Two organizations that have done good work and could conceivably work with the IRS are:
I'm also pretty sure the IRS has plenty of expertise around the filing of federal tax returns.
> Everyone needs to file state taxes anyway.
I don't see your point? Everyone will continue to file their state taxes separately, electing to use or not use available tools, as they always have.
You make it sound like that's a bad thing. If federal taxes don't go towards things that _the entire country's population_ could use, then, why are there taxes in the first place again?
If you've got a complex tax situation that TurboTax asks you to file by mail, or even if you just want to file yourself, you have to go to - you guessed it - the IRS' website to get all the forms and instructions. The IRS already has to navigate all that complexity to put out all these forms and instructions for every field, tax table, eligibility flow charts etc and the government certainly employs developers[1] already. The government also has to budget for printing millions of 1040 pamphlets for the entire country, and they somehow are able to come up with budget for things like that Trump wall, so surely coming up with budget to implement electronic filing isn't a question of money waste?
If you forget to file them for two years the gov will do an automated filing for you and transfer the money you are due to your bank account.
Preferably, they'd have to count paper bills with their own hands, savoring each one for just a moment, before handing it over to the government.
If the government is going to collect taxes they shouldn't be giving a certain industry a leg up on for charging money for people to pay taxes.
Can anyone explain given the unbelievably bad record of government, why they would ever want more of it?
There is the same sort of corruption and inefficiency in a corporation as well.
imagine if New company offered software to do this free?
I'm guessing rules make this impossible
I've said it often, we are all mere resources to government, law enforcement and corporations.
The solution to excessive, complicated rules is less, simpler rules.
To me this sounds like a great deal for taxpayers. In exchange for not spending tons of taxpayer money on a project which may or may not turn out well, makers of existing high-quality products agree to voluntarily give free access to it to the majority of taxpayers.
The bill additionally codifies funding for the VITA program which provides free in-person preparation services for low-income taxpayers.
I think this is about as good as the situation can get without actually simplifying our tax code.
https://www.washingtonpost.com/technology/2019/03/07/when-ta...
Assuming one actually believes it’s an affordance, as opposed to a pointless inconvenience and cash grab. I suspect those whose views you’re attempting to impugn generally have the latter viewpoint.
In addition to just about every major country other than the US, California already has this and it's absolutely fantastic. I've literally never heard anyone who's actually used it complain about it and say they'd rather not have the option of filing their taxes in this way.
Imagine if your cell phone bill worked like US federal taxes. They would send you a blank sheet of paper and make you write down your minutes, texts, and megabytes for the month, and any other applicable fees you might owe, calculate the total bill yourself from that, and send a check for that amount. The provider already knows what you owe and calculated it themselves; they just aren't telling you, and you're threatened with additional fines or burdensome audits if your calculations don't match theirs. This causes you weeks of anxiety and dozens of hours of lost productivity every year. (Paraphrased this argument from the subject of the Planet Money episode.)
[1] https://www.npr.org/sections/money/2017/03/22/521132960/epis...
The IRS could no doubt offer a great "public option" for tax filing software that would blow the others out of the water, AND be free. We need this.
So much of this is just re-running information that other entities like employers, banks, etc. have already furnished to the IRS with a slim bit of additional data on top of it (vast majority of Americans) that there's no reason the IRS can't just compute it directly since that's what they're doing already when they validate a return.
E.g. the State of Oregon contracted with Oracle to create a health insurance marketplace. $200 million dollars later there was nothing but lawsuits. https://en.wikipedia.org/wiki/Cover_Oregon
Let that sink in. Two hundred million dollars and they couldn't get a fucking website working. Two hundred million dollars!
Anyone who has played with TurboTax or H&R Block software knows that the software is at least pretty good. There are plenty of nuances in the tax laws, and the software at least attempts to cover those. Sure, a good tax accountant probably can do a lot better, but for 98% of people the software is good enough.
Does anyone seriously believe that the IRS would do better? Why waste taxpayer money to find out?
I can’t see any downside to the taxpayer, only upside. E
I just finished my taxes and filing taxes in the US is such a stshow. But where do we start? We want to simplify filing, but that might depend on simplifying the tax code, which might be orders of magnitude more difficult. Sigh!
Actually, it would be trivial to simplify the tax code. It couldn't be done overnight, it might take a long weekend. All you have to do is come up with a very simple tax scheme with no complexities and no loopholes. Why couldn't a simple tax system be contained in a 10 page law?
At first make it optional for anyone to switch to the new scheme. After a few years, start a 20 year phaseout of the old system. Tell the holdouts that, first year of phaseout, they must pay 5% of the tax required by the new system and continue to pay 95% of the amount calculated by the old rules. After 10 years it becomes 50%/50%. After 20 years the old system is gone completely. Holdouts can switch completely to new system at any time, but once you switch you can never go back to the old system.
If we simplify the tax code, some group somewhere will no longer benefit. I'm sure they and their lobbyists will fight extremely hard to make sure this part of the tax code remains. Multiply this by all the different groups that would be in a similar position and now you might see why I think simplifying the tax code would be extremely difficult.
Of course. You are 100% right. I was describing a fantasy world, you are describing practical reality.
Edit: just to be clear, I'm not trying to be sarcastic in this post, even though it contradicts what I said earlier about how "trivial" it would be to simplify.
The reality is as you describe. Any serious simplification would be extremely difficult to achieve.
You can dispute it, but in the multiple times it has happened to me, they were right, and refunded or charged me sometimes modest sometimes small amounts.
They could've just done that and saved me the $$ spent on Intuit (do it yourself) or accountant services.
The one time it happened to me was much more opaque. Basically, some years after filing, the IRS said something like "you owe us an extra $5". Without much explanation as to why.
Okay, easy thing is to pay $5. But what if it was $500? Still not cost effective to pay an accountant to help you understand why. And what if it's $5,000? Is it worth battling a Kafkaesque bureaucracy for that? What if it's $50,000?
The current system sucks but it sure is better than having the starting point for taxes being the government tell you exactly how much you owe them and you having to battle them to prove otherwise.
There’s a continuous stream of evidence to the contrary, particularly if you’ve ever worked for large companies and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.
The difference of course is that one costs tax payers whereas the other costs shareholders, and in one case (government and tax payers) there is some hope of oversight and accountability. If shareholders actually knew about this sort of waste I am not sure they would ultimately care because they may chalk it up to the cost of doing business.
There's also a continuous stream of evidence not to the contrary, particularly if you've ever worked for the government and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.
The difference of course is that one costs taxpayers whereas the other costs shareholders, and in one case (government and tax payers) the only feedback mechanism is votes every couple of years, which don't really make any difference because incumbent reelection rates are in the high 90s even though Congress's approval ratings often drop into single digits. Whereas shareholders (or their proxies, mutual funds) can simply sell a company's stock if it looks like the company is wasting resources; stocks get traded every day.
It’s interesting to see the same arguments resurface as they do for healthcare.
Most non-Americans here live in countries where salaried employees have almost zero contact with the country’s ex agency. No returns, no filing, it all just magically happens behind the scenes.
So it’s kinda weird to hear Americans say “that’s impossible! How can you trust government?!”.
The worst thing about American exceptionalism is that it blinkers Americans from things that are not only done better by some other countries, but also the things that literally every other rich country in the world manages.
Our tax code is also absurdly complicated- https://www.businessinsider.com/2014-how-many-pages-in-the-u... as an example. As I've said elsewhere, some of the most significant opposition to the IRS pre-filing taxes is trusting that it operates in good faith - or at least competently - and appropriate applies all deductions that a person is eligible for. Simplifying the tax code would go a long, long way to alleviating most people's concerns, I think.
To be fair though, I think this is somewhat less of an issue after President Trump's tax reforms; with the doubling of the standard deduction, it's become less fruitful for most people to attempt to itemize their deductions.
Source: worked on a payroll system that had to be heavily rearchitected when we tried to deploy it in the US.
Yes
> such as county + state + federal
Plenty of countries with this, aren’t there? Germany, Australia, Switzerland, etc?
The net result is you have systems being put together using objectively bad processes and whose outcomes are guaranteed to be more expensive and less likely to work as intended.
A former employer of mine was a small startup in the intelligence analysis space, and had a product that generated a lot of interest in various government circles, as it solved some problems better than what they were currently using. The red tape to actually get any sort of contract approved was so tough to get through the owner seriously contemplated hiring a company whose sole purpose was helping other companies negotiate said red tape.
In the end, they pivoted to the commercial space.
To bring this back to the original point: I would love to have a super-simple tax system that didn't require paying third parties to file for me to make sure that I filled everything out correctly, and leveraged the tax code to best fit my circumstances. However, I do not have much faith that such a thing will come about anytime soon... once bitten, twice shy, that sort of thing.