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Comment by alistairSH | Hacker News Reader

In the US, we've had decades of (largely GOP) messaging that the government can't do anything properly. A substantial portion of the population believes it.

As noted in a sibling comment, the IRS could pre-fill forms that would be correct for the vast majority of tax payers (who take the standard deduction/don't itemize, have a single job, and no other edge cases). These people should not be paying TurboTax either way - the forms they need to submit are relatively straight-forward. People who do need a CPA would have to hire one regardless. TurboTax is literally just ripping off average tax payers.

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It's pretty disgusting. Summed up in one of my favorite tweets, which went something like

> Gov: you owe us money. It's called taxes

> Ctzn: oh ok, how much do I owe you?

> Gov: you have to figure it out

> Ctzn: oh well, then I owe you 0

> Gov: no, no, we know how much you owe, you have to figure it out, and by the way if you get it wrong you go to jail

You can have the irs figure out how much you owe if your income is simple enough. This is similar to a lot of countries just taxing you at your income sources and not requiring you to file a return. However, the American system has a lot of deductions, exemptions, status modifiers, etc... so you often need to pay less than that, hence the need for everyone to do tax returns.

You don't go to jail for filing a wrong number accidentally. Only if you are intentionally lying/hiding income. I know people who didn't pay tax FOR THEIR BUSINESS for several years and they settled the debt for much less than they owed and definitely did not go to jail. This is just misinformation.

It's called hyperbole.

I think you mean tax evasion. Hyperbole is completely different.

This is true, but you can be asked to pay gigantic fines. IRS wanted me to pay more than 50k in fine (luckily they were wrong and accepted that right away). So maybe jail is hyperbole, but it can get pretty serious.

50k fine or 50k back taxes plus fine?

If that's true, then what's the point of paying business taxes? When the IRS finds out, you just pay less than you would otherwise, and much later.

Having a tax lien on your business is not fun. Neither is going through the settlement process. You also are not guaranteed a settlement and could end up owing the full amount plus interest. At best they let you pay it over time. At worst they take your property and liquidate it. But jail time is unlikely unless you had malicious intent.

The thing people misunderstand with the government not being able to figure it out is because there's a huge variety of complexity that is truly individual based. Did you make a contribution to a tax deductible IRA? Did you make a retroactive payment to that account in the following tax calendar year? There's a ton of variables going on here, where the government doesn't have this all-seeing system where everything gets accounted for across the vast array of income sources and employment statuses, dependents, filing status, and all the increments and decrements to those things through time. There's no one central source where all this information is collated and waiting for someone to turn the crank and grind out a number from. Folks have to remember that nothing is implemented by default.

The effort to reduce the complexity of the 1040 into 6 new schedules was a great way to factor out those with complicated situations such that the majority of tax payers are oblivious to those nuances. The crux of the matter is that legislators passed into law all these onerous mass of rules to turn various levers to entice and discourage certain things and bite those with progressive tax rates. It is precisely the existence of these rules as to why the government doesn't know what tax valley you land in that huge parameter space. It will not presume to know your specific circumstances but assume that you being aware of your own money and circumstances are in the best position to know these things. At the least one thing I learned is that with tax laws if you have no idea what a thing is it probably in not applicable to you.

Needless to say all of this would be much more simple if we just pay a flat tax on all income for all people. Nothing simpler than that.

> Needless to say all of this would be much more simple if we just pay a flat tax on all income for all people. Nothing simpler than that.

That would be a highly regressive tax system that dramatically transfers even more wealth to the already wealthy. But sure, it's definitely simpler. That doesn't make it better.

The regression application here seems flawed, that assumes a fixed percentage is applied to a fixed amount, where that amount is invariant to income. That is not the case with a flat tax where a fixed percentage is applied to a variable amount. The flatness of the flat tax is on the percentage, the amount (income) is the variable portion that will be more or less based on the individual. The percents however will be equal. That's about as equal and fair as you can get as far as I can see, equal treatment for all, namely everyone pays the same percentage whatever that percentage is. It's a simple inequality too: p$XXXX(rich) > p$X(poor) so the rich still pay more right?

https://www.investopedia.com/terms/r/regressivetax.asp

A flat tax would be more regressive than a progressive tax scheme - it's a spectrum.

> That's about as equal and fair as you can get

Equal in terms of % of income paid: yes, fair: no way. Your statement makes the assumption that the opportunities to gain higher income are equally and fairly distributed, which they are manifestly not.

Actually I just tried to tease out a definition from the investopedia article, which I was mislead reading the sales tax example which has a fixed amount (the price of some taxable goods) which holds no sliding scale based on income. The regression appears to be strictly around the idea of burden to the individual and how much disposable income they get left with.

Looking at the wikipedia article they claim that flat tax lies between a regressive and progressive tax.

> The opposite of a regressive tax is a progressive tax, in which the average tax rate increases as the amount subject to taxation rises. In between is a flat or proportional tax, where the tax rate is fixed as the amount subject to taxation increases. https://en.wikipedia.org/wiki/Regressive_tax

Where in my statement does the assumption of equal income mobility pop up?

Another hit mentions a proportional tax as a middle ground between regressive and progressive gradients. The central point is how things are treated relative to income. https://www.investopedia.com/ask/answers/042415/what-are-dif...

> Where in my statement does the assumption of equal income mobility pop up? You wrote:

> [A flat tax is] about as equal and fair as you can get

I disagree about the fair part, but we likely have different ideas about what fair means in this context. For me, equal opportunity to income mobility is part of what fair means.

My understanding is that while yes, in some sense a flat tax is neither progressive nor regressive, that's not really what people are talking about when they say a flat tax is regressive. Instead, the issue is that the poorer you are, the larger percent of your income is spent on essentials.

If I go from spending $200/month on groceries and then I get an enormous 300% raise at work, I'm not going to start spending $800/month on groceries, maybe $300. The rest goes into the discretionary part of my budget. So, to someone making $40,000/year, paying 20% of that in rent, 10% for food, 20% for healthcare, and 15% for other stuff, adding a 15% tax is a decent chunk of the rest of their budget. But, for someone making $400,000/year, paying 15% for rent, 2% for food, 10% for healthcare, and 15% for everything else, then 15% of their income towards taxes is comparatively much less of their total budget!

This is true, even though everyone is paying a proportional amount of their income. Another way of thinking about this is as follows: if there is a homeless woman on the side of the street who makes $30 one day begging for change, should she be taxed at 15% and have to give the government $4.50 because it's "fair", or, should she be receiving more value in benefits than the average citizen because there is a floor on how much you can spend on food and survive?

Thus, even a flat tax can in practice be regressive, because essential spending does not scale with income.

An addendum: While it is not relevant to this argument, I also agree with the other commenters that whether a tax system is flat or has marginal brackets is not the main source of complexity, and is relatively super simple. The main complexity comes from determining which sources count as income. Presumably, birthday presents don't, but whoops, now there's an exception. And this is suddenly how tax laws get super complicated.

Yes, I'm starting to awaken to the fact that at this point we're no longer talking about income but disposable income. The points about what you're calling essentials. I'm trying to think about this mathematically, this is what I'm feeling out so far...

Premises

    X = income
    c > 0 (income difference)
    p = tax rate
    e = some expense

    ==> X+c > X   (income inequality)
    ==> (1-p)(X+c) > (1-p)X   (income after taxes)
    ==> 1/[(1-p)(X+c)] < 1/[(1-p)X]
    ==> e/[(1-p)(X+c)] < e/[(1-p)X]  (expense relative to disposable income)

Like with many things people mean different things by the same terms. I'm thinking more along the lines of the second investopedia article which makes the point of This type of tax has no correlation with an individual's earnings or income level.

You're not accounting for the marginal utility of money. The marginal utility of money decays exponentially with respect to income.

It probably does, but why is that relevant? I'm curious about these branching criticisms that come up, another fella above mentioned equal opportunity to earn higher income, you and a few others mention this marginal utility idea. I think these are valid concerns but lumped into taxation break what I think should be an application of the single responsibility principle (https://en.wikipedia.org/wiki/Single_responsibility_principl...). That single responsibility in this case is to make a contribution of our income to fund the government, period. We should have a simple tax formula strictly dedicated to funding the government where everyone has skin in the game and contributes equally along some metric. The flat tax seems a dead simple reasonable metric and is unquestionably equal when focused on contributions.

Once we start trying to equalize along these other dimensions of marginal utility or equality of some other thing we're no longer focused on funding government but enacting some equality/justice endeavor. Those I imagine probably also suffer from holding no simple formula to calculate their equalities against. Let such endeavors be handled by some other government agency dedicated to those causes, why drag the tax system into the mix and complicate things is what baffles me.

> Once we start trying to equalize along these other dimensions of marginal utility or equality of some other thing we're no longer focused on funding government but enacting some equality/justice endeavor.

Creating equal opportunity and administration of justice are functions of government. You seem to agree:

> Let such endeavors be handled by some other government agency dedicated to those causes,

How would you fund such government agencies except via tax revenue?

> why drag the tax system into the mix and complicate things is what baffles me.

The IRS doesn't administer, i.e. Social Security and Medicare. It is just responsible for collecting the tax needed to fund them. Otherwise each government agency would need it's own revenue collection arm, which makes little sense from an efficiency perspective.

A flat tax set at the very low levels its proponents advocate would effectively defund government programs like Medicare and Social Security, which is often the goal behind such proposals.

Note by the way that social Security tax is today an example of a regressive tax which caps out at around $132,000 of income.

> That single responsibility in this case is to make a contribution of our income to fund the government, period.

Yes. And as part of that you have to decide how much each person is to contribute.

> We should have a simple tax formula strictly dedicated to funding the government where everyone has skin in the game

Yes.

> ..and contributes equally along some metric.

Yes, according to their means. The metric is contribution proportional to your ability to contribute and that folds in implicitly the idea that your "means" are non-linear with respect to marginal utility. Noblesse oblige. [1]

> The flat tax seems a dead simple reasonable metric and is unquestionably equal when focused on contributions.

No, it is not. Because 10% of 10K/yr income of someone working at burger king is an undue hardship whereas 10% of 1M/yr income of someone running a big company is no burden at all. 1K to someone making 10K may be the difference between sleeping in a bed and sleeping in the street, but 100K to someone making 1M, frankly, they wouldn't even notice it.

No, we know how much we need to fund the government based on cost of policies enacted. That's not the job of the IRS, that's the job of the budget committee in congress. What the IRS is doing is figuring out how to apportion that burden among the population.

> Those I imagine probably also suffer from holding no simple formula to calculate their equalities against. Let such endeavors be handled by some other government agency dedicated to those causes, why drag the tax system into the mix and complicate things is what baffles me.

Again, the goal is to figure out how to apportion the burden, and that's done by indexing to marginal utility, bringing us back to where we began.

To be clear this isn't coming from someone looking to take from others, I'm in the top marginal income tax bracket, and I think it should be much higher than it is. IMO it should go back up to 70% as it was for much of the 1900s. [2]

[1] https://en.wikipedia.org/wiki/Noblesse_oblige

[2] https://www.washingtonpost.com/us-policy/2019/02/27/top-tax-...

> Did you make a contribution to a tax deductible IRA? Did you make a retroactive payment to that account in the following tax calendar year?

For these specific two examples, the IRS need only introduce monthly reporting requirements for all tax-affecting investments, at which point they once again have sufficient data to do your taxes for you. They already have your SSN, so there’s no excuse not to have integrated reporting.

What tax-affecting data does the IRS need to be collecting that they are not, in order to prepare viable estimates taxes for 90% of citizens?

Who your dependants are and what type of filing you are doing (single, married, married jointly)

“If your tax situation has changed in any of the following ways, please check the appropriate box(es) and mail this back to us or submit online; we’ll issue a revised estimate within 30 days and extend your review deadline accordingly.”

Nah, there's no way to get around that entry level criticism, abandon the plan

If you can cover 90% of citizens with an estimate and a list of predictable circumstance checkboxes that can be phoned in for a new estimate, would that be sufficient to make it viable?

(Or, if you’re being sarcastic, please indicate so more clearly.)

I didn't say ThIS IS IMPoSsIBELE ABAdnON ShiP. Try reading my comment as a response to the specific question that the parent ended with.

Agreed, your response was totally cool and I'm sad to see people downvoting it. I honestly didn't think of children as a tax-impacting event, so I was glad it came up.

I do agree, that ultimately there are several deductions that can reduce the taxes you owe in a given year. But most americans don't have enough of these deductions to make a significant difference.

So the ideal solution would be that the IRS sends you a letter in January that basically says "You made $XX,XXX this year, you are in YYY tax bracket, and thus you owe $ZZ,ZZZ money".

So if they sent that in January, then Americans could have until April 15th to either send a check for the amount owed or to send back an approval for the refund.

For most people, the amount the IRS sends us will be accurate. But if you do want to submit additional deductions then there could be a deduction form you fill out that takes the IRS' total and submits deductions against it.

Again, most Americans would not need to do anything. Self-employed individuals or individuals with many investments or donations might need submit additional information. But this would be the minority. Most people honestly could just agree with the IRS' determined amount due.

I have had a similar thought in mind for years!

This is how it works in Sweden, at least for people with reasonably simple situations: You get a piece of paper saying "this is what we think you made and how much taxes you should pay". Unless some reporting is wrong, you just log on to the tax website and approve it.

They also keep a running tab on your tax account, if you underpay or overpay you have an interest-yielding balance that you can either correct or let sit until next year if the amount is so little it doesn't matter. And it's symmetric with respect to a surplus or deficit, unlike the IRS "if we owe you, then thanks for the zero-interest loan you gave us, but if you owe us then there will be interest and possibly penalties" scheme.

Flat taxes would not help at all, because the government still needs to know all your data. After that it is just computations which computers are pretty good at.

Maybe but the point is they'll need to know vastly less data than the smorgasbord of hyper-parameters in use today.

This is the essence of the idiotic premise of the current administration that they simplified taxes enough to fit on a post card... The number of brackets isn't the source of tax complexity, it's all of the other shit. That's why that 'postcard' can be accompanied with dozens of supplemental forms. Predictably they killed the 'postcard' after one year:

https://www.businessinsider.com/the-republican-tax-reform-po...

I thought that argument was because they doubled the standard deduction, making it much less attractive to itemize and hence, simpler. What is idiotic about that? For most middle to lower class families it reduced their tax burden and made things simpler. There were a few exceptions, primarily upper middle class families in high cost of living areas, but those were exceptional situations.

The net effect of the changes was absolutely tiny for low and middle income folks, and disproportionately rewarded the already well off for whom the marginal utility of money is the lowest. It was a totally regressive change.

Just doubling the standard deduction is fine. Capping SLPT was a kick in the nards to liberals on the coasts. It's not just "upper middle class" folks who got hosed, its actually people on the bubble, for whom their SF property tax (1.188%) already eats their entire deduction, and now they're double-taxed on their state taxes. 100K may be upper middle class in Iowa but it won't even get you a studio apartment in SF. That's who gets hosed.

And anyone with way too much money got more money. The net of it was dumb.

Capping the deduction for state and local taxes is proper. The cap should be $0.

If those taxes can be deducted, the nation is subsidizing the more wasteful states. We create a situation where the winning move is to jack up state and local taxes. This diverts more money to the state. The cost of wasteful spending gets spread across the nation, while the benefits stay with those who are wasteful. This encourages a race to see who can be most wasteful, with the federal government being forced to have higher tax rates to make up for funds lost to tax deductions.

That’s double taxation. It’s not fair to literally tax me on the taxes I have to pay to another government entity. I don’t even get taxed on the taxes I pay to foreign governments with no cap (?!). The government is “one” from my perspective wrt taxes. No reason for me to pay federal tax on my state tax, period.

Your argument just makes it more efficient for the federal government to be wasteful than state governments which do way way less. It’s useless. The federal government has no business keeping states “lean” that’s up to the voters of said states. There’s nothing in the constitution that makes it the federal governments responsibility unless I missed an amendment.

Further these high tax states also pay for literally all the other states. California is massive net givers of transfer payments and the flyover states being given a break from this are net takers of transfer payments. It’s just biting the hand that feeds. Of course it’s not politically expeditious to say that. [1]

This was done for votes, nothing else.

[1] https://www.politifact.com/california/article/2017/feb/14/do...

I was in fact thinking of that idea that "high tax states also pay for literally all the other states", and I pointed out a flaw in that argument. They are underpaying their federal taxes. The voters in those states also happen to be the ones voting for expensive government programs, so it is only fair that they pay.

There is no double taxation. You owe tax first to the federal government. The state could let you deduct federal taxes from your state taxes, or not. The federal government has no duty to give you a discount for your choice to live in a place that would divert lots of your income to local purposes.

As a thought experiment, consider the ultimate extreme. The local government takes 100% in taxes, then provides you with everything (house, food, clothes, etc.) as government services. Your region thus pays ZERO federal income tax despite having wealth to enjoy (you are fed, etc.) and receiving federal funds for various things.

What you have is a partial version of that extreme. Your state isn't being 100% unfair to the other states. It is just modestly unfair. The federal government shouldn't enable that kind of unfairness.

BTW, politifact is not credible due to strong partisan bias. I also don't think that "transfer payments" are a proper accounting for differences.

How is it fair that my taxes paid to the state of California, a US state, are much less deductible than my taxes paid to foreign governments? No cap on those. The idea is that taxes paid are not really income but rather my cost of doing business, nothing to do with who gets them. It’s like an expense for a business. No matter how high or who they go to they’re not taxed; they’re deducted against income.

California takes that tax revenue and reinvests it into the populace which is what generates the income the federal government relies on in the first place. Think of state tax revenue as COGS. The federal government has always been second behind the states and been severely limited in scope and responsibilities. You know what if a state had 100% tax, they could decide between themselves and the federal government how that would be used to service national obligations without involving me.

Further it is patently double taxation if I have to pay taxes to two entities based on the same unadjusted income. Fair or unfair (in your opinion or mine) it is what it is: double taxation.

Consider the people of California as a group, not as individuals, seen from the federal perspective. They should not be able to evade federal taxes by spending the money on themselves.

Double taxation and beyond is the norm. You have sales tax, paid to a vendor that pays their own income tax, for goods that were imported with tariffs.

Unless you voted against the California politicians, you should enjoy paying your taxes. Those politicians are why we can't cut expensive government programs at both the state and federal level, and why we must tax heavily to compensate.

> Consider the people of California as a group, not as individuals, seen from the federal perspective. They should not be able to evade federal taxes by spending the money on themselves.

Nobody's evading anything. The federal, state and local governments together are your government. That's why you've always been able to deduct the local from your state and federal, and state from your federal. In fact I can't think of a country where that's not true, can you?

> Double taxation and beyond is the norm. You have sales tax, paid to a vendor that pays their own income tax, for goods that were imported with tariffs.

Not with income taxes. Historically not within the United States, and again, as you continue to refuse to address, not for taxes paid to foreign governments. The US has a huge network of no-double-taxation tax treaties with foreign governments because it's not fair to tax people on their taxes.

The IRS has a no-double-taxation treaty with Azerbaijan and yet it can't manage to sustain one with California? [1]

> Unless you voted against the California politicians, you should enjoy paying your taxes. Those politicians are why we can't cut expensive government programs at both the state and federal level, and why we must tax heavily to compensate.

California's top tier is 13.3%, the US federal is 37% + FICA. You can't tell me with a straight face that California's measly tax rate is the reason the US federal government has to charge 40% of both my income and my taxes.

I have no problem paying my fair share. I'm also a non-citizen so I can't vote.

[1] https://www.irs.gov/businesses/international-businesses/unit...

The situation with other countries is irrelevant to the matter of California income evading federal taxes.

If I'm in Texas, my state income tax is $0. My federal tax rate will be higher without having state taxes to deduct. Part of this money goes to you, in California.

If you're in California, you get a reduced federal rate if you can deduct California taxes. The money from California taxes stays in California to benefit you. I do not benefit from your California taxes.

California would be getting money from you without paying federal taxes on it. The money then goes to you, via services provided by California. You're getting that money back in the form of superior services like better schools, homeless services, and roads. You're getting to spend that money in your state, free of federal taxes.

The deduction is thus a massive subsidy to states with high local taxes. It places a greater burden on states that are less wasteful, since nobody there gets to deduct state taxes. Such a deduction thus encourages wasteful local government.

As viewed from outside California, money owed to the federal government is staying in California to be spent for the benefit of people in California. That simply isn't fair.

If you are unhappy with the resulting high tax rate, you can leave the state or you can try to get the state to eliminate taxes.

Nobody is evading anything lol.

> The situation with other countries is irrelevant to the matter of California income evading federal taxes.

No it’s very relevant. You’re trying to have it both ways. Either the state represents an arm of the government in which case taxing taxes makes no sense or it’s more akin to a country on its own where you could make the argument double taxation makes sense. But you argue it’s part of the government to the extent it should be contributing to your state but autonomous enough that it should be double taxed.

> As viewed from outside California, money owed to the federal government is staying in California to be spent for the benefit of people in California. That simply isn't fair.

If you want those services you can move to California. However that money isn’t wasted it’s used to support the people and economy of California which in turn would by itself be the 6th biggest economy in the world. That money is being invested in California and other states benefit from the tax revenue it generates.

> If you are unhappy with the resulting high tax rate, you can leave the state or you can try to get the state to eliminate taxes.

No haha I’m good, then I wouldn’t live in California where the state invests in its people (to an extent).

You can perform all the mental gymnastics you want to justify this but I think you’d feel differently if a democratic administration wanted to tax the tax revenue paid by oil companies or lord help us carbon. This was done plain and simple to own the libs on the coast. Anything else is backing out a justification and fighting for double taxation isn’t a good look.

California is neither an arm of the federal government nor akin to a country. It is in most ways a subservient and inferior government, owing resources to the federal government. That's part of the deal that California got when it joined the union. (in exchange, California gets stuff like a currency and a military)

California (the land and the people and the government and every other way you could view it) must pay. Internal use and abuse of funding shouldn't have anything to do with what is owed.

When you say that the change was "done plain and simple to own the libs on the coast", you presume that the previous situation was fair. It was not. Those "libs on the coast" were evading taxes, plain and simple.

That "6th biggest economy in the world" was doing so well partly because it avoided taxes. That was unjust enrichment at the expense of middle America.

And anyone with a lot of kids. No fun to lose multiple personal exemptions.

Literally all of that information is already being reported to the IRS by the relevant companies on forms 1098, 1099-whatever, W-2, W-4 and whatever other schedules apply. The IRS defines the rules, they built an engine to take all that into account to ensure you're not lying on your taxes. They just have to literally run it and send you the printout for verification with a remittance stub. The rest is regulatory capture and graft.

I wonder if I could FOIA myself my tax return from the IRS for the coming year haha.

Flat tax is totally unrelated and a conversation worth having. It's regressive, disproportionately impacts those least well off (the poor) and doesn't make sense when you index the taxes paid to the marginal utility of money. For someone who makes 10K/yr, 10% is 1K and may be the difference between rent and homelessness. For someone who makes 1M/yr 10% is 100K leaving them 900K to futz with. 1K to a poor person ls worth way way more than 100K to a rich person. That's why we don't do it. That's why almost nobody does it.

Flat tax is "simple" in the way it's always easier to re-write something from scratch: what you're left with tends to be a bastardization followed by a long and expensive lesson in how it got that way in the first place.

(For an example of what it might look like, the Canada Revenue Agency offers this already: https://www.canada.ca/en/revenue-agency/services/e-services/...)

Literally all of that information is already being reported to the IRS by the relevant companies on forms 1098, 1099-whatever, W-2, W-4 and whatever other schedules apply.

But not instantly. And not all of it in time for April 15th. Sometimes those details don't make it to the IRS for years.

We don't yet live in a world of instantaneous information transfer about every American citizen to the government.

Some people also see that as a good thing.

Then by all means, make citizens send in the relevant documents to the IRS- but don't force them to have to figure it out on their own if the IRS's software can already do it with those docs!

> And not all of it in time for April 15th

Tax filing and payment periods can be amended to accomodate that, even the fiscal year. It is not like these periods are unchangeable articles of basic law.

FYI we get all those figures ready by the start of March here in Turkey (Turkish yearly income tax deadline is March 20th). US can clearly figure a way out with three times as more people than Turkey.

> But not instantly. And not all of it in time for April 15th. Sometimes those details don't make it to the IRS for years.

And yet it has to get there by tax time so I’m having trouble believing it takes some tax forms literally years to make it to DC. Especially when you go to jail if they don’t.

> We don't yet live in a world of instantaneous information transfer about every American citizen to the government.

Buuuut it all has to get there by April 15th (actually February right) so I’m having trouble following this line of reasoning.

> Some people also see that as a good thing.

Why would information arriving quarterly (bi-weekly even) instead of annually be a bad thing when that information is legally bound to arrive at its destination anyways?

The only thing you're arguing is that the government shouldn't run their program a few months before you submit the documents, then send it to you for review, instead of afterwards and sending it to a tax judge. That's madness.

And yet it has to get there by tax time so I’m having trouble believing it takes some tax forms literally years to make it to DC.

It sounds like you've never needed to file a revised tax form for a previous year. I have, and millions of other people do it each year.

Especially when you go to jail if they don’t.

The IRS doesn't show up on your doorstep on April 16th if you don't file. There's a process. A long, involved process. Even if you pay nothing, it takes months before they start forcibly taking money from you. If you file for an extension or two, it's even longer than that.

Why would information arriving quarterly (bi-weekly even) instead of annually be a bad thing when that information is legally bound to arrive at its destination anyways?

Because the vast majority of America's accountants are one or two person shops with neither the time nor the technology to make this happen. In spite of the rhetoric you see on the internet, the government (via the politicians) doesn't like to make things hard on small businesses unless it really has to.

I argue nothing. I merely state facts.

> It sounds like you've never needed to file a revised tax form for a previous year. I have, and millions of other people do it each year.

Wouldn’t it be great if it was automatic and right the first time and you didn’t have to file amendments as a consequence because the source material made its way to the IRS AND they told you how much to pay? Or the frequency was dramatically reduced via automation?

> Because the vast majority of America's accountants are one or two person shops with neither the time nor the technology to make this happen.

(a) companies, employers, brokerages, etc all do this filing.

(b) we wouldn’t need nearly as many tax accountants, they’re just a drain on the economy. They’re employed to do the same thing as TurboTax: fill a hole intentionally left open in the IRS as a make work project. Like lamplighters, some jobs get obsoleted by technological and legal advancements.

Regular accountants sure. I’m talking about starting with individuals not business edge cases though.

Wouldn’t it be great if it was automatic and right the first time

Except that life doesn't work that way. Not everything in life is linear. Things have to be changed. Going back and making revisions is what humans do.

Nobody’s proposing not allowing amendments though, just that the government send you a best effort of your taxes to verify and for you to send back if correct. Amend away.

Imagine if the US gov't had spent a fraction of the resources that it has spent on NSA surveillance on the IRS and tax compliance.

The resources and infrastructure to increase tax compliance and make it easier for everyone exists it's just that it has been grossly misallocated.

Not always accurately either for those who have been unlucky enough to have received a corrected W2 or whatever said form is. https://www.irs.gov/forms-pubs/about-form-w-2-c

We have to remember too that the government itself is dealing in approximations and assumptions of its own. People make mistakes including those in government and corporations.

We don't need a flat tax rate to simplify the system, though. A progressive tax rate is just fine, as long as it is consistent across all types of income with no, or few, deductions. Inheritance is income. Capital gains is income. We may still need some offsetting - it seems unreasonable to tax capital gains when moving your primary residence, for example (which the US does now, with some unnecessarily complicated value and time based offsets).

Tax brackets are the simplest thing in the world but I've heard this argument several times. Is it made it good faith? Are there really people who think tax brackets make taxes complicated and not 401ks, mortgage interest tax deductions, capital gains, etc?

A flat tax is completely orthoganal to the complexity of the tax system(which is almost entirely what counts as income, and what type of income does it count as).

If tomorrow we merged all tax brackets into one, no one's taxes would get any simpler, just the poor would pay far more in taxes and the rich far less.

If you have 5 tax brackets, all the other parts of the tax system basically get multiplied by 5 in the number of combinations that could cause weird optimal equilibriums.

Eg, maybe the most optimal retirement plan changes depending on whether you are in the 2nd-to-lowest or highest tax bracket. That means advice for one person might be suboptimal for someone else solely because they are in a different tax bracket.

Factoring in indirect taxes like payroll, in Australia about half my marginal income is directed to government purposes (Australian tax system). Rationally I should be spending 2-3 days/year of thinking time reading up on changes in tax law and scheming on trying to optimise my tax burden if I believe I can find a way of reducing that by 1% somewhere. Having 5 different tax brackets is just asking for me to try and find some complicated scheme where I filter income to unemployed relatives (eg, the ol' put income earning assests in the wife's name). I don't want to be incentivised to be thinking about that sort of thing, I'd rather just know there are no options.

The more combinations there are, the more weird schemes people come up with. Having everyone pay a flat 30% and with some sort of minimum income scheme would reduce the number of alternatives there I have to think about and make it easier to be confident that my taxes are properly optimised.

> I don't want to be incentivised to be thinking about that sort of thing, I'd rather just know there are no options.

That's the flip side to a flat tax, we save a ton on the opportunity costs paid for with time and the development of expertise in all this minutiae. We have entire industries and corporations devoted to taxation. At what point does the benefits gained by our tax complexity get outweighed by the regulatory costs and burdens associated with compliance to that complexity?

A quick check

> Tax preparation is BIG business – there were 300k people employed at 109k firms in 2012 - generating $9 billion in revenue in 2012. The industry grew over 2% from 2010-2015, and is expected to speed up the pace of growth. Revenues of $11 billion are forecast for 2018. https://www.franchisehelp.com/industry-reports/tax-preparati...

What else could we get with that sort of brain/man power?

I forgot to file one of several 1099 forms one year. I got a friendly call from an auditor. He explained what the discrepancy was, how I could appeal if I wanted, and what the payment options were. When I told him I'd take an IRS loan (i.e. a payment plan with interest), he advised me it would be cheaper for me to get a loan from family, friends or the bank.

This was about as far from being threatened with prison I've ever been... And believe me I've come pretty close to being arrested (during exercise of my 1st & 4th amendment rights on multiple occasions).

I think are more steelman'ed version of the GOP argument is: when government does things badly, they can go VERY VERY badly. It's a risk viewpoint. Whereas the progressive viewpoint letting government do more and more things. The other risk is bloat. Once a government program exists, it is very very hard to stop it and get the funds back ( from a political perspective ). It's unpopular to fire people. When government does bad, it gets more money ( bigger ), to do worse things, or other pathological outcomes. When industry does bad, it merely gets replaced by another company. It's not so much saying that all government is bad, but it's looking at worse case scenarios and balancing risk.

> the GOP argument is: when government does things badly, they can go VERY VERY badly.

Sounds conveniently like Regulatory capture: https://en.wikipedia.org/wiki/Regulatory_capture.

Competition also plays a role here... not that there should be competition in filing simple tax returns... but competition often leads to better goods/services. There is not much to incentivize a government run program to be better other than the current administration cracking the whip so they can get re-elected.

People tell me this, but I've been waiting for years in the US for competition to make our healthcare cheaper/better than other countries, but it never seems to come.

Sure, but that argument just doesn't track. Both parties are similarly aggressive about big government programs and spending. The real variables are what they want to spend money on (health care or national security or schools or the Farm Bill or whatever) and where they think the money should come from (tax the beneficiaries of these programs or tax their children and grandchildren unto the tenth gener-- er, finance it with debt).

Different stories get told during election season, of course. One of the most perplexing things about politics, though, is the way that everyone generally acknowledges that all politicians are shameless liars, but not during election season, when the person who's hawking the tastiest-looking pile of horseshit is speaking God's truth, and it's just all the other politicians who are shameless liars.

People are irrational and complex. Its not surprising.

Whats really disturbing is the amount of "my team is the best" thinking that is out of control, which I believe is learned from the various sports franchises? Regardless, when applied to politics, it can lead to a very unhealthy outcome. The worst that can happen if your team loses in sports is: they lose in sports. The worst that can happen in political battles is that you're economy is hamstrung, your community doesn't get the support it needs etc.

Maybe there have been corrupt wolves in sheeps clothing... but the word "republican" and the word "democrat"... the "republic" is the very few set of rules which usually limit what the government can do, and the "democracy" is all the oodles and oodles and oodles of legal code on the books. So, if the parties respected their names, republicans would be for smaller gov, and democrats for more gov. I would say modern day "libertarians" resemble the republican name most truly.

> Once a government program exists, it is very very hard to stop it and get the funds back ( from a political perspective ).

Experience in the UK tells me otherwise. Our government has been doing little else for the last decade.

> It's not so much saying that all government is bad, but it's looking at worse case scenarios and balancing risk.

It's funny how worst case scenarios (like monopolies or oligopolies) aren't considered for private companies. Doesn't seem like a balanced risk analysis to me. Internet service would be a prime example of this in the US.

Edit: oh, I forgot about healthcare. You guys are currently living pretty much a worst case scenario (bar there not actually being any healthcare provision).

Yeah, I'm waiting on the replacements for BP, Wells Fargo, Comcast, ...

And even worse if the government institutes some horrible system that benefits some key group it will never be removed.

There's also a political lobby (see: Grover Norquist) for the idea that filing taxes must never be made easier, because that will make them more palatable. Combined with their axiom that taxes are inherently bad, the result is an argument that tax filing should actually be as painful as possible. (The surprising strength of this lobby is one possible reason that the "file your taxes on a postcard" idea died a few years ago.)

Yeah, I don't buy Norquist's theory. Making taxes easier doesn't make them any more palatable. Probably the opposite because people would have a better understanding of how much they're paying. Right now, a lot of people mindlessly fill in their needlessly complex forms, and pray they get a refund or don't owe more than $20 or so (because that's all they have in their wallet).

Worst case is you take the standard deduction. After being doubled in Trump's tax bill, it's often the right choice too.

It's not really about the yearly filing but the withholding. Imagine if employers stopped withholding, each person got their full pay in their bank, and then had to write a check to the govt each month like they pay their power bill.

It's also anti-tax activist like Grover Norquist’s Americans for Tax Reform who hate automatic filing and prefilled forms too. Their reasoning is if taxes are "too easy" then somehow Americans will blindly accept tax increases so they actually want to keep tax filing as difficult as possible.

> Their reasoning is if taxes are "too easy" then somehow Americans will blindly accept tax increases so they actually want to keep tax filing as difficult as possible.

It's simpler than that: They want taxes to be a pain in the ass so people hate them.

I am definitely not a Grover Norquist fan, but I do taxes for a living and a lot of people are VERY surprised at the amount that is withheld from their paychecks, but they never notice how much it is unless something happens and they are required to write a check.

A couple illustrations:

It's very common for people to owe tax at a lower rate than they did the year before, but be upset because they have to write a check (and this is when the amount is trivial relative to wealth, so it's not because of financial inconvenience). They don't think in terms of tax rates, just in terms of do they owe or not. Owing is worse than not owing, regardless of total tax paid. And these are successful, otherwise financially savvy people.

There are also people who try things they think are "tricks" to maximize their refund that are literally just paying more in. They think a giant refund is great, not realizing that it's just money that they could have not sent to the IRS in the first place. Once again, owing bad, refunds good.

This is all to say that I believe people are indeed, to some extent, blindly paying more taxes than they would agree to if they had to write a check every month for the amount due. For a lot of people, even people who don't make very much, if they paid their half of their payroll taxes with a check every month, it would be pretty close to the biggest bill they have each month, and it goes basically unnoticed by most people.

For the record, I don't have any problem at all with current tax rates, but I know very well what they are, and I think if there was more transparency and education, I don't believe it would lead to people wanting to raise tax rates, but that's just my opinion.

I think this is where things get unfair. As a system we are more comfortable taking advantage of these people’s ignorance than teaching them. As your said even savvy people don’t get this concept because it means understanding the whole system not just when they get their checks.

I agree completely! I think it’s impossible to have a productive discussion about taxation on the national level when no one even knows how much they’re paying and where the money is going. Not that that information isn’t fairly easily attainable, but in my experience, very few people attain it and even fewer fully understand it.

Could not agree more, and it's incredible to me how few people feel this way. I'm not an accountant but I have a lot of friends who are (I was a software eng at a tax software company) and they all say the same thing as you. IMHO it comes down to psychology. Out of sight, out of mind is universal and will bite even very attentive people.

There's actually some wisdom in that sentiment I imagine since many personal finance sources suggest putting everything on autopay be it savings, utility bills, etc because you're less likely to screw things up or deviate from the course. It's human nature to let inertia set in and have one less thing to think about. In fact there's an age old saying to this phenomena: _out of sight out of mind_.

Along the same lines, there used to be three different tax forms: the standard 1040 form, then two progressively more simplified forms for people who didn't want to do itemized deductions.

Well, the GOP takes power in 2016, and declares that they will "reduce" paperwork by removing... the two simplified forms! Now everyone has to fill out the complete 1040, which is also now strangely cramped and calls out to a dozen different worksheets, since the GOP also wanted to brag about how the form "fits on a postcard", and it has to contort itself to use every square inch of paper. A miserable experience! I miss the 1040-EZ.

See the sibling comments about Grover Norquist; this wasn't incompetence: there's actually a pretty strong political group in favor of this kind of thing.

From a refactoring perspective this actually made a lot of sense. One source of truth (1040) not three (1040, 1040A, 1040EZ). The complex parts of the 1040 have been refactored into separate functions named Schedule 1, Schedule2, ..., Schedule 6. The problem isn't in the forms its in the laws which necessitate line items in the form to begin with.

If you think about it the 1040 has taken on the more simple case as the default and the more complex cases have been shifted into schedules. That's a good thing in my book.

The new 1040 is not much different than a 1040EZ. Just split over two sheets with a few extra cells for filling in results from optional forms.

> decades of (largely GOP) messaging that the government can't do anything properly

... which requires actively sabotaging anything that is being done properly.

The funniest and most ridiculous thing is when they cut taxes so they need to cut back on federal agencies so they cut the resources OF THE IRS so now the IRS can’t afford to audit rich people and their staff, only poor people. Perhaps it was intentional?

(By the same people who complained the IRS was targeting them for audits.)

You can go further back to the founding of the nation for why this is. It didn't start with the GOP. Things that would be nationalized in other countries like the railroads have always been private in america. Even when Alexander Hamilton and George Washington had taxpayers of New Jersey pay for the country's first manufactories in Paterson, they were all private industries. Abraham Lincoln privatized all the railroads and telegraph lines after the civil war. (We had nationalized them for the war effort, so taxpayers paid for thousands of miles of railroad that was handed off to railroad companies.) You can even go further back, before the united states was even a thing and look at mercantilism, where merchants/private industry ran the country, but it was understood that they were subservient to the nation, economic growth's sole purpose was for national defense, and you took care of your citizenry because they were your troops. Thanks to the civil war, the 2nd industrial revolution, the gilded age, globalism, america has taken more and more turns towards 'every man for themself' and not giving a shit about the country, so obviously well-intentioned privatization of public utilities makes less and less sense.

I don’t think it’s quite as simple as “not giving a shit about the country”, as much as it is the simple fact that different reasonable people can have different opinions about collective ownership.

Recall that both companies and countries are abstractions; they are not real. Some people (reasonably) think that it is logically impossible for a country to own something. Others (reasonably) think it is logically impossible for a corporation to own something. Reasonable people disagree on these things sometimes.

I have had a different experience. Last year I filled out my 1040EZ and was unhappy with the final amount owed. I decided to click through turbo tax who found me a lot of deductions related to student loans and things. I think I only paid like $35 and they saved me over a thousand I would have missed otherwise.

And truthfully, it's not a lot of money. I would gladly pay $30-40 just to not have to deal with the hassle of filling out a piece of paper and mailing it and all that. Now that the IRS seems to have a decent electronic system, I'll give that a go this year and see if turbo tax is worth it anymore.

Yeah, turbo tax is a pretty scummy company with all the lobbying and deception. I won't argue that. But their product is genuinely good and provides utility to me, and I'm sure I'm not the only one.

For non-americans reading this I presume the parent poster means "paying on top of the amount already withheld by the government", not total income taxation.

Even most Americans struggle to understand this actually. It shocks me at the amount of Americans that still think the government is gifting them money at tax time.

No it is like buying a stick of gum at the gas station, you give the cashier a $10 and he gives you $8 back. That $8 isn't a gift, the cashier was giving you back money you gave him that you didn't owe. The majority of tax refunds are exact this, a refund of your own money that the government took from you, and is now giving back to you without paying interest for holding it for ~1 years

> I decided to click through turbo tax who found me a lot of deductions related to student loans and things.

We require any companies who collect interest payments on things like student loans to automatically report that to the IRS. We could then have the IRS fill that in for your tax return automatically.

But special interests don't want that to happen.

Of course the system could be better. But it's not better.

For better or for worse, tax software does add utility for most people.

Hopefully this reform from the IRS actually improves the situation.

The majority (~70%) of tax-payers don't have $12k/$24k (single/married) worth of things to deduct. Yet, ~90% of tax-payers use either a CPA (~50%) or tax software (30%) to file.

Between overly complex rules, heavy advertising, and lobbying, the tax prep companies have us all convinced we'll go jail if we don't pay $40-$400+ for prep services.

I'm a CPA, and I pay another CPA specialized in taxes to do mine. Our tax code is far too complex. Basically no one can just sit down and do their taxes and be sure that they are paying the minimum amount they owe.

I do it every year. I have nothing to deduct so it makes no sense to pay someone else to fill in numbers I already have.

On the contrary. I would wager that the vast majority of Americans can do a very simple tax computation (especially after the Trump administrations' increase in the standard deduction, whatever you think about the politics of it) and get their taxes correct.

Yes, there are several million people with special cases. If there were 3 million of them, that's not even 1% of the population. A significant group, but hardly demonstrative of "basically no-one".

Income - [ 3 or 4 basic deductible items ] - [ N * exemptions ] - standard deduction => go to tax table => tax. Done.

I still think you are seriously discounting the added convenience and peace of mind.

If I was an older person who wasn't super comfortable dealing with computer programs, I would absolutely pay a CPA a few hundred bucks to do my taxes. It saves me time and I don't have to worry about screwing it up.

It's the same reason people get food delivered. I'm paying someone to cook food and bring it to my house. It's something I could do myself, but its a hassle that I can pay to avoid. Plus, I can be confident that a professional chef is much less likely to prepare me burnt / raw / untasty food than I would be myself.

But Turbo Tax is only useful because of how terrible the IRS is. It's a whole cottage industry propped up by a complex tax code and poor filing system.

In Norway, the government already has the data needed for your tax return: Withholdings, bank interest, capital gains, property income, loans, etc. The exceptions are things like foreign income, property, etc. that don't get automatically reported.

The tax return is automatically filled out for you, and if you don't amend it by the deadline (which you do by logging into the government portal and editing the form, adding additional forms, etc., all digitally), it's automatically submitted as-is.

(And the forms are simple! When I look at my US tax returns, which are prepared by a CPA, I can barely make heads or tails of it. But I could easily do a Norwegian tax return from scratch myself without a CPA.)

Most people don't need to anything at all, even if they have a situation that in the US would require a bunch of number crunching.

The above is also true about most European countries, by the way.

Back 10 years ago I had a complex tax situation and my gut feeling on reading the IRS booklets is that the tax preparer (I tried 2 of them) were taking the "safe" route to prepare it. I called up the IRS hotline and they directed to me an expert who agreed that I could file it in a better way that saved me $5000+. And they were even willing to go over the form line by line to help me fill it out. I've heard that since then the help lines have been gutted as part of a crusade to weaken the IRS in auditing rich people.

>A substantial portion of the population believes it.

I think it is somewhat disingenuous to suggest that these people were simply duped. The average person has tons of exposure to government incompetence in other arenas.

> messaging that the government can't do anything properly

I would love to hear about things the government has done exceptionally better than private companies. Please go on.

The Interstate Highway System, manned spaceflight, and National Parks come to mind.

The first is crumbling and a major cause of urban sprawl and global warming. The second has brought some benefits like a microwave, but nothing of any meaningful use. We lack moon bases for example. National parks should be state run. This is a massive power grab by the feds under feel-good logic.

National Parks exist because we are a nation of united states, not an independent fiefdom of states. All citizens of these united states deserve the same right to enjoy the natural beauty of this country, and no individual state should have the right to remove such privileges from the rest of the citizenry through inaction, nor through lack of management make it less than ideal to enjoy.

Conservation of land is a national priority. As such, no state or private entity should be entrusted or made to be solely responsible for the upkeep and management of said valuable resource for all the people. That's why Yosemite Valley's management was transferred from the State of California to the Federal Government.

As Wallace Stegner said, "National Parks were the best idea we ever had. Absolutely American, absolutely democratic, they reflect us at our best rather than our worst." (Except for that whole disinheriting the native peoples of their own lands thing... but definitely American...)

Then there is no limit to the power of the Federal government. If they can say, “We can do a better job than you, person or State”, then can run roughshod over personal and State’s rights. I guess that’s fine as long as they are running over people and States you don’t like. What happens if Trump goes into California and takes over due to the humanitarian crisis that the State brought in itself ie the tent cities?

The states are subservient to the federal government as restrained by the constitution. If the federal government (Trump, Obama, Nixon, Clinton, it does not matter) wants to take over California and can find an emergency power to do so authorized by Congress then the federal government will take over California.

The argument isn’t “we can do a better job than you” it’s “we are allowed to do this job for you”. Whether they can do it better is irrelevant.

As an aside, if we are looking as a whole, the federal government generally can and does do everything that they do better than the states could do it.

Healthcare comes to mind since we're discussing US politics.

Roads might be the canonical example but I'm not familiar with any examples of privatized roads.

Toll Roads? Generally better maintained and provide a shorter pat for a small but willing-to-pay segment of the population that government programs overlook.

I do pay several hundred a year in tolls but as far as I can tell it all goes to state or local DOTs.

Countries with public rail systems (or railway companies that are largely owned by the state) are usually way better than privately operated railway lines. Private railway service almost always sucks (crappy trains, high fares) and is only profitable on the most popular routes.

The M6 toll is a pretty nice road as roads go. I believe it was privately funded.

USPS is often faster and cheaper than private delivery companies, delivers to all addresses (unlike FedEx and UPS, which contract to USPS in rural areas), and would be profitable if not hamstrung by pension funding restrictions from Congress that are more stringent than private companies.

USPS is almost never cheaper than UPS or FedEx except for areas highly subsidized (AK and HI) and light weight international items. USPS has special (and anticompetitive) arrangements with foreign countries that UPS and FedEx can't have. Even with the special arrangements USPS is more expensive and less reliable than private carriers.

  Prisons
  law enforcement
  firefighting
  warfare
  regulation of industry
  regulation of environment
  protection of civil rights
  equal opportunity employment
  employee benefits
  retirement
  healthcare
  research & development
  protection of intellectual property
  passenger rail
  postal mail
  industry standards

How about fire fighting, defense, and the Internet?

"What have the Romans ever done for us?" [0][1]

...

"All right... all right... but apart from better sanitation and medicine and education and irrigation and public health and roads and a freshwater system and baths and public order... what have the Romans done for us?"

[0] https://www.youtube.com/watch?v=Y7tvauOJMHo [1] http://www.epicure.demon.co.uk/whattheromans.html

Private schools have never succeeded except for tiny % of rich kids

Also, big one, GPS

Based on empirical evidence the government is terrible at doing pretty much anything. I don’t remember the last time I had a logical, efficient, pleasant, and cheap interaction with a US government agency. I happen to have those with private companies all the time.

> In the US, we've had decades of (largely GOP) messaging that the government can't do anything properly. A substantial portion of the population believes it.

What are your top 5 well-run federal government programs?

Slate likes these: https://slate.com/news-and-politics/2014/04/the-top-dozen-fe... Includes things like land grants, patents, and highways.

Mother Jones likes transfer programs (for efficientcy measured by % of funds transferred, rather than effectiveness of achieving stated goals): https://www.motherjones.com/kevin-drum/2012/01/chart-day-fed...

Yeah, I couldn't come up with any either.

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