The reason the tax code is so complicated is BECAUSE OF TurboTax. They lobby heavily to keep things complex and have brought down potential competitors through legal means.
As such, "killing TurboTax" is the correct first step.
As such, "killing TurboTax" is the correct first step.
Hmm, if the government were to run a quadratic funding of charities thing, with only rather limited requirements for eligibility, perhaps that would somewhat alleviate the "undemocratic" complaint? (It would have to make it illegal to pay someone else to participate in your stead though.)
The rest of your post is based on the implicit assumpion that anything government run is inherently bureaucratic and slow and charities are instead simple and fast. But that's an orthogonal issue. Some level of bureaucracy is needed to prevent misuse, otherwise you have a rich guy pay their fines from their charity. Beyond that, there is no inherent reason for charities to be more efficient. You could make those governmnent-charities have local oversight, they could be organized very efficiently too and have the advantage of democratic legitimacy.
If only there was a massive logistics network for getting food everywhere we could use.
then you run into those who think , why should I give to charity because its the government's job to fix that...
and finally those who just don't care
charity exist for those want to focus their person effort to fix their world and should be encourage but never be required
But plenty of other countries have those too and manage to not have an insanely complex tax-filling regime?
> but it's not that simple
I think if the main difference between the US and other countries is the aforementioned "corporate bogeyman", it probably does boil down to being that simple.
Citation needed. How can you have a non-complex tax filing regime when you have so many deductions and credits that only the taxpayer knows about or has documentation of?
When I donate to a charity, they don’t report my donations directly to the IRS (nor should they - we don’t want the government to be collecting data on everyone’s charity giving). I have to collect the letters they send me at the end of the year and total my donations in order to deduct my charitable contributions. The government never even knows what charities I donated to unless I’m audited and they ask for proof.
Therein lies the rub, I suspect; other countries do know about what you're doing with the deductions and credits which means the tax office can handle all that for you - and, indeed, they are much more suited to be handling this - rather than pushing it onto each individual to try and scrabble together once a year.
I suppose we can add "incoherent fear of the government" to "corporate bogeyman" to the list of reasons the US has a messed up tax situation.
> (nor should they - we don’t want the government to be collecting data on everyone’s charity giving)
You do if there's specific tax breaks for doing that.
In a democratic government, you might like how a powerful tool is being wielded when your people are in charge, and be terrified when the 'other' is in charge.
I think it’s unlikely that Intuit has the power to steer the complexity of the tax code. States like NY and CA, for example, oppose a standardization of tax law for “road warriors” because they make so much money from non-resident workers who step foot in their state.
US tax policy is about 70,000 pages (mostly regulations, bulletins, and case law). And that doesn’t include state and local taxes.
If you stop being an easy case, for example you want to claim FEIE within 5 years of spending > 30 days in the US, then the IRS tells you to get a lawyer to pay for a private letter ruling. This is because, where other countries don’t tax their citizens income worldwide, the US does and then gives a moderate exemption. AFAIK, US tax code complexity dwarfs that of any other country.
I find it hard to believe that it’s TurboTax’s fault, a day after reading about Sen. Warren’s plan for a wealth tax and a $100B to the IRS to help them calculate and enforce it...
That's not how the proposed systems work. The proposed system is: gov sends you a notice "here is your filled out tax return based on everything we know about you" and then you look over the return, make any modifications you believe are correct, and send it to them. You're not "challenging" something.
Or more likely, they send you their estimate, based on a tiny fraction of the tax code, you recalculate it from scratch, send it to them, and then they audit you.
Civil disagreements with the IRS start under the assumption that the IRS is correct (e.g., “your cost basis is zero,” or “that wasn’t a valid deduction”), and then you must prove to them that they are wrong.
I've yet to hear any stories where anything like your nightmare scenario has actually happened. Perhaps you would not be part of the group who could rely on a pre-filled return - and you would still have to file manually, but nobody is proposing taking that option away or even making it harder than it already is.
Can you give an example of any country whose tax code is more than 70k pages long?
Or a country where it requires, by default, taxes paid on money earned while living oversees, depending on a large number of international treaties, case law, and expensive private letter rulings? Or a country that requires you to file a different tax return in almost every state you step your foot in while working remotely? Or a country that requires you to essentially recalculate taxes on a quarterly basis to determine if you should be fined for underpaying estimated taxes?
> nightmare scenario
That’s not a nightmare scenario. That’s just a standard audit. They assume, e.g., zero coat basis, or residency, or it wasn’t used for business, or ... and you have to prove otherwise.
> As of 2014, the tax code was only about 2,600 pages long
The usa hardly has a monopoly on tax code complexity. We're talking about personal income tax right now and I can't find a complexity index for that, but for business taxes the usa ranks fairly low on https://www.taxcomplexity.org/
> That’s not a nightmare scenario. That’s just a standard audit.
The "nightmare" scenario was "you recalculate it from scratch, send it to them, and then they audit you." - a scenario you put forward where this improvement to the tax code (auto-filled returns) results in a world where any time your return isn't what they auto-filled you get audited. That sounds bad, but has not happened anywhere where auto-filled returns have been implemented.
> “a tax practitioner who relies just on the tax statutes will go to jail” - Tax Foundation
https://taxfoundation.org/how-many-words-are-tax-code/
> nightmare scenario has not happened anywhere
I’d be surprised to learn that any country had zero audits, because their file-free tax system worked for everyone. Is that the case anywhere?
Nearly every bill out of Congress can effect tax law and this includes even special appropriation bills; all the covid bills have had tax law changes.
there are some three thousand pages comprising Federal tax law however much of this is additionally subject to various regulations that can affect when and when not a tax takes affect. then throw in every state, city, and more.
To be honest I don't know of a good fix. there are too many forms of income and taxation that Congress would have to reduce the number of definitions for what is income into much simpler categories, say employer paid income, interest, capital gains, money transfers from others, and such, and then macro the rest into miscellaneous subject to a permanent fixed rate.
As in, account for the most common forms of income at a lower rate and they get all those that don't fit that definition and charge it at a higher rate as likely none of these would ever be claimed by the average tax payer.
when it comes to deductions, simply do what the Trump tax change did in 2016 but do it again, raise the standard deduction so that if you are under 250k you never need to itemize.
https://www.nytimes.com/2006/03/05/magazine/who-needs-the-mo...
People have been arguing about unnecessary complexity in the tax code since before computers, let alone before TurboTax, so it can't be that simple.