But I am going to play devil's advocate here, did you get the "best deal"?
It all comes down to deductibles. In France, the "one click taxes" option assumes 10% of your salary is deductible, which is often a good deal but sometimes, it may actually be more, especially if you have a long commute. The government app won't help you with that.
It may not help you with incentives too. For example, you may get some tax rebates if you did some work to improve the energy efficiency of your house, what exactly you can declare? And charities, loans, etc... A good accountant may help you save a significant amount with all these details.
Tax software are like a middle ground between simple, no brainer, government issued "one click" tax filling and hiring a professional accountant. Note that in France, most self-employed people hire an accountant, proper tax filling can be a minefield if you are not an employee.
And by the way, that's Intuit's argument. That it is used to justify its evil deeds is a thing, but the argument itself is not without merit.
If you're doing a lot of charity donations, real estate, student loan debt, saving receipts for work related expenses, calculating depreciation on assets, etc, then its worth it, but by then you probably have a personal accountant doing it for you, not a program.
I’ll save my personal political ranting for a different space.
Addressing the GP, yeah our system has been messed with by the tax prep companies. One year I had a complicated (for me) tax situation and I hired a CPA. They managed to make a mistake that lead me to overpaying by thousands. The IRS was nice enough to mail me a check.
The IRS clearly has enough info to run a European style system. We (as a country) just underfund the IRS and have special interest vested in maintaining the status quo. Clearly those special interests are doing a great job if someone with a state certification and professional tax software can mess up the math. A friend had the same issue with this past tax year and owes a balance plus penalties. She has every intention of paying her taxes. Why does our system make it hard for her to do so?
There’s no good reason why we should have to chance these situations. We should just be able to pay our taxes correctly at time we are paid and move on.
And the local IRS has the best paying software development jobs in the government, so they actually have decent software (although they could do with some more UX people).
Obviously I had no idea of this scheme, I have no accountant and my university fees of 5 years ago were far from my mind.
Randomly got €6000 euros income tax back, very nice windfall courtesy of the Netherlands government.
Normally the final dues are a lot less, probably 0 for people who have no mutations and a regular job. I had to pay 300 euro this year because I did a single freelance gig on the side.
edit: Note that this is probably a very exceptional situation. Normally college students don't make enough money to be paying taxes in the first place, I had the perfect storm of having all the deductibles being applicable in a single year, and making a good wage that year. I'm just telling this story because it's an example of the system randomly giving me the sort of tax benefit even a dedicated accountant might have missed, just because it system applied its rules to all the information it has about me.
So I thought you meant you got 6000 back because your university fees became deductable. At 25% tax rate, that would be 24,000 in fees. It sounds like you got a tax credit.
From my experience with the NL tax system, next to nothing is deductible. Very straightforward taxes, they take 51% of all personal income. ;)
> In the Netherlands, the average single worker faced a net average tax rate of 28.7% in 2020, compared with the OECD average of 24.8%. In other words, in the Netherlands the take-home pay of an average single worker, after tax and benefits, was 71.3% of their gross wage, compared with the OECD average of 75.2%.
The specific number wasn't as important as pointing out that NL doesn't have a magically fixed number (and certainly not a high one) for income taxation.
Anyway, what's chilling about it? You're phrasing it in a very weird way, the state doesn't own labor. It is due taxes for its services rendered.
The Netherlands is ridiculously rich and the government takes very good care of its citizens. I think it's hard to imagine for Americans how much value we get from our government. Traveling from The Netherlands to the states. Even your richest cities have poor people hungry, suffering and distressed just camping around everywhere. I'm not saying we've got it perfect, but I'm pretty happy with the deal we got.
There are tons of poor and hungry people in NL, and the gov is actively hostile to homelessness. There’s lots of municipal corruption, and central inefficiency. I know lots of Dutch citizens who are in student debt, and very few families who can afford to buy a home before 35.
It’s a fallacy that somehow this is the /the/ tax rate that can provide for citizens. There is no magic number, and we can always demand more efficiency.
Check this video out: https://www.youtube.com/watch?v=rKo8Sv99MkM That's about Skid Row, it's how one of the US's richest cities deals with the disadvantaged.
Dutch citizens with student debt.. that's a joke right?
Student debt:
https://nltimes.nl/2020/10/27/average-student-loan-eu700-per...
“An average loan of 700 euros per month means that study debts of 50,000 euros are no longer an exception. (…) It makes sense that students work more due to higher costs of room rent and tuition fees and less income thanks to the lack of the basic grant.”
Home ownership:
https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ow...
The NL and USA differ in home ownership by ~4% (69 vs 65.3). That’s not statistically significant to be honest.
—-
There’s a lot of myths in Dutch society, and the majority of people are not aware of reality.
It's a joke, because student debt is a sign of wealth, not of poverty. My government invested almost 50,000 euro into giving me plenty of time and space to study. I was able to live as a student for 7 years, usually working less than 12 hours per week to supplement the loan. I leveraged that loan into getting an education is super valuable, if I wanted to I could take a job double my current salary and live very comfortably in Amsterdam.
Different story for my partner perhaps, but if she never makes income, after a certain amount of time her loan will be forgiven even without her ever making payments.
I don't know how home ownership is correlated to poverty. It's tied to wealth, sure, and it's a very bad thing that it's so low. But the average renting person in The Netherlands lives very comfortably, so not owning a home is not a strong indicator for poverty.
Homelessness, that's the indicator you're looking for. But you are right, it seems I am living in a bubble, because there's a severe problem with homelessness in The Netherlands right now. https://nltimes.nl/2020/02/17/homelessness-netherlands-doubl...
According to wikipedia there's more registered homeless people in The Netherlands than there are in the states, I don't know how to make sense of that because the scenes I saw in SF, Portland and SLC were unlike anything I've seen in any wealthy European country. It made me think of Hungary and Romania.
You wouldn't last long living on the streets of Fargo North Dakota.
> Dutch citizens with student debt.. that's a joke right?
To be brutally honest, both these statements lead me to believe that you live in a bubble within NL.
I personally know tons of Dutchies in both situations, and I have a feeling you might (unknowningly) as well. Might be worth expanding your social circle if not.
So, imagine knowing very few families who can afford to buy a home. Like, at all. So long as we're still comparing the Netherlands and the US, I don't think there's much of a contest.
That said, the central thrust of your comment holds true; always room for improvement.
Now, this may surprise you, since you haven’t bothered to research it (1), but NL and USA differ in home ownership by ~4% (69 vs 65.3). That’s not statistically significant to be honest.
(1) https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...
I guess that it all depends what do you get back. To live in a well functioning society is worth a kingdom.
In many places your landlord owns more than half of your income, that could be more worrisome. At least I can vote for my representants in the government.
Finally, I pay over 50% on part of my salary in Sweden, with what I have left I have an awesome live and extra to save, so I will not complain.
My understanding of rent in both Sweden and the Netherlands, is that of any EU capital: easily 30-50% of your monthly income goes to landlords.
Could you clarify your view on this?
So, the swedish housing availability is insufficient and prices reflect that. It is an imbalance that is difficult to solve short term. And probably also overpriced as the interest rates are low and predicted to be low.
Now I am not defending turbo tax’s predatory actions in the past but it’s not complicating the tax system just taking advantage of it being complicated.
In europe we just directly regulate behaviour either by directly taxing it or making it illegal.
In the US they set tax levels much higher and then offer breaks as incentives.
The latter has the philosophical virtue of making behaviour "expensive but not illegal" (ie., in europe you cannot legally avoid the tax).
However it dramatically complicates government and makes US citizens dramatically "overtaxed" absent these breaks. What we in europe often miss is that the US anti-tax lobby is reacting to a very different tax environment that is, on paper, very extreme.
Most of the complications in tax policy are affecting a small minority of people and corporations.
That's true, but you need to have other deductions or a fairly large mortgage for it to be worth taking that deduction instead of the standard deduction. Most people are better off with the standard deduction.
So, no, the reason is that they have all the information already and for most people just need you to verify it. In the US, the tax companies are lobbying the government to keep it difficult. The subject has been covered on HN every year during tax season.
edit: so it's not that different, just a different method of doing so. Good to know.
Even this isn't needed in most cases; things are either done employer side (paid from pre-tax income, like pensions) or directly by the government (basic rate tax is semi-automatically added to charitable donations, so only higher rate taxpayers need to declare it, and they all fill in a short return anyway).
Guess, I could claim that £6 per week for Covid work from home stuff. Wish you could claim the cost of repairing your bike, or public transport costs.
Another example of how the system works - if you are working two jobs, both as a regular employee, HRMC will instruct your employer as to what your tax deduction should be for that paycheck to make sure that things are balanced. For <some large number>% of people, this will be correct, and if it's not, it will rectify itself over 2 or 3 pay periods. If that's _still_ not enough, a phone call to HMRC (usually taking less than 10 minuts for the two times in a decade I've had to do it) will resolve the issue in your next check.
(I forget the exact percentage.)
You can either:
* Gift that remaining amount to HMRC by doing nothing (it will not go to the charity)
* Claim it back (I don't know any other way to do this other than filing a self assessment)
If the donor donates that amount as well and we loop infinitely, the final amount received by the charity would be exactly 1.5625x the originally-donated amount (assuming that the HMRC allows arbitrary small fractions of a penny to be claimed).
Explanation: if you donate an amount x, the final amount would be the infinite series x + sigma(0.25*0.2^(k-1) + 0.2^k, k=1, k=inf), which is the sum of two separate geometric series, so for each one, we can use the formula a/(1-r), where 'a' is the first term (0.25 for the first series, 0.2 for the second) and 'r' is the ratio between each term (0.2 in both cases).
Half goes to the charity, and half to the donor.
Someone on PAYE will have most of the deductibles handled by their employer (pension, any salary sacrifice schemes etc).
Oddly, buy-to-let landlords do retain this deductible, though HMRC have fiddled around with how this works over recent times[1].
[0]: https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...
[1]: https://www.gov.uk/government/publications/restricting-finan...
That simply isn't true. An income of £80,000 puts you in the top 4% of adult earners. A salary of £100,000 is probably in the top 2 or 3%.
This was discussed extensively at the last election when Labout proposed a new tax rate for people earning over £125k https://election2019.ifs.org.uk/article/labour-s-proposed-in...
It can be more tax efficient to file tax paperwork, but I don't want to do paperwork, so I just had an umbrella employ me when somebody insisted on hiring me as a "contractor" and the umbrella handled the paperwork for which of course they keep a fee. As far as the government is concerned I just had two PAYE employers, the umbrella and my "real" job.
Having multiple employers also does not require filing taxes. One of the employers gets given a zero tax code and they tax all your pay at full rate, the other one gets a normal tax code which reflects your personal allowance and other considerations. My tax code was oscillating all over the place - but that's not a problem it's all automated.
If you love paperwork you can choose to do all the paperwork. Or if you love money and don't hate paperwork maybe you can save a few hundred quid by filing and I hope it makes you happy. I hate paperwork, and I have plenty of money. So, no, despite earning a lot of money and having worked as a contractor I preferred to stick with PAYE.
The HMRC will take a fair cut of my gross income, which is fine, and then leave me alone whereas an accountant earns money by bothering me with more paperwork.
How do you know it's fair?
Accountants don’t bother you - once a year they ask you to sign your accounts.
I'm guessing you're conflating professionals with contractors, as most high earning professionals I know do not need an accountant to file their taxes, as it's all just done on a self assessment, which is extremely straight forward, and there's little opportunity to game that system effectively.
Meanwhile contractors operating through Ltd entities (now may be hamstrung somewhat with IR35) absolutely should be leveraging an accountant to take advantage of the various ways to reduce their taxable earnings.
Yes you don't need an accountant (and I didn't say that you did) but if you want one instead of doing it yourself they just about £100 rather than I don't know how many thousand that would cost you in the US.
But mostly these days, unless you run a company, you don't really have to change much about your pre-filled tax statement. Only once have I experienced that my housing association made addendums to the yearly tax report that needed to be changed in my tax statement.
I also lost some money on micro loans last year that apparently I had to file deductions for myself, but it amounted to so little money that I just let the state keep that money.
A fairer comparison would be with the tax system of a small US state or a large city in the US.
Edit: Downvoted as it goes against the narrative, lol.
Lobbyists were supposed to be for promoting the interests of small groups that might not have the representation among a politicians constituents to warrant paying attention to. Instead we have rampant and excessive spending by corporations that lobby to keep their monopolies over segments of the market that harm American citizens.
- https://www.nbcnews.com/business/taxes/turbotax-h-r-block-sp... - https://www.propublica.org/article/filing-taxes-could-be-fre... - https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...
I'm not convinced $5m a year would make such a big impact.
* Special-interest groups whose preferential tax treatment might be threatened if there's a push to simplify the tax code (as having the government do the taxes for you kind of requires the taxes be simpler to do so).
* Ideologues who hate government spending but don't think that tax cuts count as spending.
* Anti-tax crusaders who want to make filing taxes painful so there's more grassroots support for cutting taxes. (Think Grover Norquist here).
However, this Turbo Tax monopoly needs to go. There should be a free (OSS) software that can file the taxes.
Having filed taxes in America and Norway, the American system is designed to make you fail and to use paid for nonsense to do something that is incredibly easy.
But why? Both have the same outcome but one is more work and costs more as well as has a greater chance of you getting it wrong and being fined in the process.
Would you also prefer supermarkets to make you calculate the total amount you owe when you get to the cashier, making sure you applied all promotions and frequent shopper deductions manually?
Like In every negotiation the advantage is on the side of the party who has the most information. The government first disclosing what they know gives you as taxpayer an advantage.
So many reasons why I don't support this. Ease of filing is one of the aspects, rather small for me.
1) USA's government is far more incompetent than Dutch
2) If US IRS sends me a prefilled tax form with erroneous income, say off by 10%, sure I can correct it and file it but now the onus of proof is on the citizen to disprove the error. You might say 'Ok, it is just prefiling it, you can always correct it' - future laws will ask for proof.
3) For a small and nimble country like Netherlands it works very well. Voicing concerns in Netherlands is direct and easy. Not here, USA would mess this up big time.
4) Ideologically, I have issues. It would be extremely orweillian and big-brotherish to get a tax bill from the government - yes I know its just 'pre-filling the boxes' but it will creep up from there.
5) I hate paying for Turbo Tax but there is no denying - it works extremely well. USA's federal system with 100% gaurantee would not be as good. We need to go open source, not put more power in the hands of the massively incompetent IRS and more generally Federal Government.
6) Local and State taxes - this would mean absolutely a patch work of systems that are supplied by shitty software companies to local and state governments. Hard pass.
7) Laws would creep up and change to not just say pre-fill the tax forms but would require massive effort from the citizen to disprove the government. If the filing process initiates from the citizen, the government has to go out on a limb to prove that it's incorrect which is how it should be.
8) I would support ease of filing taxes. But hey! We have that. It is called 1040EZ which takes no more than 10 mins for simple taxes. No software required.
9) I prefer totally offline tax filing. I use Turbo Tax but always print out the tax forms. You might think this is old fashioned but I like doing things old fashioned way. I don't want to digitize anything especially when it comes to automated shitty SaaS hired by the government, I have zero confidence.
10) Even without OSS, I just think that $79 + $____ owed taxes is the marginal rate. $79 -> goes to private industry (Turbo Tax, which does a great job) and $_____ owed to the government. I don't want tax payer money to fund a massive national 'prefiling' tax program. I would support getting rid of $79 effective flat tax that only goes to Turbo Tax.
If the only advantage is the 'pre-filling' part, then I much prefer assembling the data (W2, 1099s, etc) myself and file taxes. Period.
Why? The government gives you all they know and you can then accept, amend or totally rewrite the return. I don’t see the downside to this.
“2) If US IRS sends me a prefilled tax form with erroneous income, say off by 10%, sure I can correct it and file it but now the onus of proof is on the citizen to disprove the error. You might say 'Ok, it is just prefiling it, you can always correct it' - future laws will ask for proof.”
The burden of proof is on you already when you write your return from scratch. It gets compared to what they know already which is the data a prefilled return would contain.
That said I did not downvote.
The problem is that I am not a tax expert and but it rings a lot of alarm bells of expansion of government power.
We're effectively bandwagoning behind Netherland's system while ignoring the massive differences between levels of government, size of population and scale, and the overall law making process.
All for a stupendous reason = Ease of filing. Filing taxes on a bus while on vacation is such a outrageously insignificant 'feature'.
To be honest, I objectively like Dutch system for simple taxes similar to 1040EZ form in USA. I philosophically and ideologically oppose it. And, furthermore, I have no faith in our government and its ability to run efficiently.
Citation very much needed; that’s not true for anyone running a business (even a side business), for anyone with shares of stock purchased before Jan 1, 2011 or mutual funds before Jan 1, 2012, and many other not uncommon situations.
Rather than as “the IRS has the same limitations in individual tax return preparation as the Dutch system”.
(GP then goes on to claim that while the IRS has this ability, they are philosophically opposed to this becoming the standard method of tax preparation, which further biases me to thinking that the first reading was their intent.)
And I have no privacy (ooh ooh)
I always feel like somebody's watching me
Who's playing tricks on me?
And I don't feel safe anymore, oh, what a mess
I wonder who's watching me now (who?), the IRS?"