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Comment by jedberg | Hacker News Reader

It's a good thought, but the wrong solution.

The US should do what other civilized countries do and send you a tax bill. They can give you a simple form to tell them a few things that a lot of people have (donations, change in marital status, new dependent, other income like rent, etc) and then you can either pay the bill or file the regular return because your situation is complicated.

90% of taxpayers only have income the government already knows about, and with some simple data about donations and dependents, most people's tax bills can be calculated and billed.

The only people who would need to prep forms would have such complicated situations that they need a professional.

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Absolutely, this misses the forest for the trees and mistakes a political problem as an economic or technical one.

The problem isn't a lack of FOSS tax prep software. The issue is the need for it, and the cause is Intuit bribing politicians to keep it that way.

A FOSS alternative might break paid software's stranglehold on US congress. Less money = less lobbying or change of focus for these companies, allowing space for actual change later on.

All this above. Dystopia for you: Track digital exchange or currency at the Fed level, but they still mandate you file a tax return. It's a control mechanism. That and some taxco maybe has a nice condo in the Bahamas for use by friends. It's a whole accounting industry, not just apps. Have to start somewhere I guess, but it won't matter.

What's stopping someone from making an app that creates a printable 1040 that you can mail to the IRS? You don't have to digitally submit a tax return.

There are multiple of those. The IRS even provides such itself: https://www.irs.gov/e-file-providers/free-file-fillable-form...

FreeFileUSA lets you e-file your federal taxes for free even.

The problem is that most people don't know about such things and don't feel comfortable filling in the needed data anyway.

Plus most states have the same requirements and make filing even harder.

Let's not blame the Inuits.

Taxes were complicated before Intuit existed. What was the cause of that? Blaming Intuit really seems to oversimplify the situation.

In reality there are many smaller variables but I think the single biggest factor is how regulation works. You hardly ever see all the rules thrown out in favor of a new system. It takes more buy in than you will ever get. Instead you can just add or remove a few things at a time. Over time cruft accumulates.

Taxes were complicated worldwide before Intuit came along, but then computers came along and made it possible to simplify. In the other countries they embraced computers and made it easy for the citizens. In the US Intuit embraced computers and then lobbied to keep it complicated for their profits.

They also ran a very successful propaganda campaign, it doesn't take long for a "I don't trust the government to do my taxes" proponent to appear when discussing this (despite the fact that they don't have to).

> Taxes were complicated before Intuit existed. What was the cause of that?

Well, people using the tax code to encourage certain moral and political views. Whether that's good or not depends on your political stance, and probably even various between particular deductions/credits.

But I don't think it's relevant. The tax code is however complicated it is. The point is that the government already knows, more or less, all the right answers. Put that information, in bill form, down, and bill the taxpayer; the commenter above you is also attempting allow for adjustments (such as for things the government might not know about, perhaps like a donation) to permit for the cases the government already know about. The question still stands: why can that not be done, thus freeing most people (whose tax situations are simple) from the burden of needing to file using today's system?

To your points about the rules, I think even in a scheme where the government sends a bill, the rules can quite easily change. Most of the rules today fall into either deductions or credits, or how we account for various sources of income. (E.g., normal income vs. capital gains.) That much could stay the same, and then the government can adjust its own accounting.

You point to the nature of the complications. The complicated bits are opportunities to pay less on taxes. As such, simplifications will always hurt people. It’s not evil Intuit trying to inject complexity into the tax system. It’s lots of taxpayers (individuals and orgs) and acting out of their own self interest.

Taxes are just controversial by nature. Every change that raises taxes is going to be opposed by those people who will be taxed more, and when taxes are lowered it will be opposed by a portion of the people that the reduction doesn’t apply to.

> It’s not evil Intuit trying to inject complexity into the tax system.

No, they instead lobby to make it illegal for the IRS to offer the tools that would mitigate the complexity.

Intuit didn't invent tax code complexity, but they sure fight like hell to own the results of that complexity.

https://www.documentcloud.org/documents/6483065-Intuit-board...

The suggestion here is to not change the complexity of the taxes themselves¹. The suggestion here is to change the complexity of filing those taxes. You can keep all the same credits & deductions that exist today, but still move to a system where the IRS says "here's what we know about your tax situation, are there any adjustments to be made?". For a large majority of people, that latter half is pretty small.

But that's a simpler procedure than forcing them to compute most of what the IRS knows from scratch.

¹But if you want to, that's fine too, it's just not what this thread is about.

We're talking about US taxes right? The US tax code has lots of places where the complexity is purely happenstance. I think Vox did a piece recently about some of the silliness that's not some loophole helping a few tax payers it's just what happens when a sprawling tax code is appealing to special interests.

The average American uses (or should use) the standard deduction. Those using complicated tricks to pay less on taxes are a minority.

> Taxes are just controversial by nature

Yes, but that doesn't mean that anything tax related automatically has no solution, you have to look at the specifics. And in this specific case things could be a bit better for many people.

Well … so I do agree, in a minority. But for example, I still took a tax credit due to investing, which isn't terribly rare. The best information I can find on taxable investment accounts[1] suggests that approximately 33% of Americans are in that bucket. While I concur it is a minority, it's not exactly a small minority.

There's also state-level taxes, where I took a number of deductions such as from renting, which is also a minority, again about a third, and again from investing², so that same third again. I think those two minorities won't share that much overlap, perhaps even enough to get to a majority.

(I should note too that these are criticisms of the complexity of the tax code itself; none of this invalidates the point that the original commenter above this thread started with: that the IRS knows all this and can simply compute a bill, on top of which — if required — alterations can be made. That seems to stand. But while, yes, many people — myself included — take the standard deduction, there's just enough other junk in the taxes that I feel like you can fairly easily wind up hitting one or two complications.)

[1]: https://www.sec.gov/spotlight/fixed-income-advisory-committe... though a bit dated.

²Some states, mine included, do not tax income from US government obligations; this is pretty easy to get into accidentally if you're just doing something like a robo-account (which is how I have this situation). But this information is a PITA to get, because it is not captured in any box on a standardized form.

Sure, but for something that applies to 30% of people, they could either ask you if that situation applies to you and then ask you to fill in the info. Like how TurboTax asks you a bunch of questions. But the government would have to ask you as many questions as TurboTax because they already have a lot of the info.

Did you know that around August/September you can log into your IRS account and download all the forms the government has on you for that year?

They would just have to expose that earlier. Or just make the tax deadline October.

> Sure, but for something that applies to 30% of people, they could either ask you if that situation applies to you and then ask you to fill in the info.

Yes, I'm aware. (That's even the argument you're responding to…)

The point is that there are several credits and deductions; some with with P(it applies to me) of ~30%. The point is not P(a given deduction applies to me), but P(any deduction applies to me), and that that probability, I think, is fairly high. To say "yeah but most people can take the standard deduction" is a true statement, but it ignores where the complexity of taxes is. (Heck, I took the standard deduction, and again, there is information required for taxes that is known to all the relevant authorities — just not me, at least not via any official means. If it's input to the tax code, it should be given a Box on a tax form, a the very least.)

>The complicated bits are opportunities to pay less on taxes.

Or requirements to pay more.

> Taxes were complicated before Intuit existed. [...] Blaming Intuit really seems to oversimplify the situation.

Having a complicated tax code certainly makes things difficult in general, but has very little to do with the issue at hand.

The IRS could send you an email in March every year, where you click through to their tax portal. It would show you a list of all the income and deductions and other miscellaneous things they know about. If you have extras, or if any data is incorrect, you can click around and add and change things. It might also start with a short questionnaire to ask if any tax-relevant things have changed about your life (change in dependents, change in marital status, etc.).

For the vast majority of US taxpayers, they won't have to change a thing, and it would take them minutes to finish up.

Yes, there are a lot of rules in the US tax code that can make things complicated. But -- critically -- these things do not apply for the vast majority of taxpayers. For those for whom it does, yes, they will have more work. But it's still going to be less work than the current regime, and none of this precludes having a CPA take care of it for you if you'd prefer that.

I suspect even many of us tech-job types wouldn't have much extra to do. The main thing we'd have to fill in ourselves would be cost basis adjustments for RSU vests. (But really, law should be changed so that brokers are required to report that info to the IRS as well; so dumb that it isn't the case.) The IRS could easily keep track of capital loss carryover, AMT credits, etc., over many years if necessary.

It feels like the argument is often "this won't 100% work for 20% of taxpayers, so we should make the other 80% suffer... and make the 20% still do more work than they'd otherwise have to do".

There are still really just two main reasons we have to do our own taxes:

1. Companies like Intuit who lobby to make it illegal for the IRS to do it for us.

2. Buttholes like Grover Norquist who actively convince people that it's necessary to feel the pain of filing taxes, lest the government slip in new taxes that we don't notice (largest eye-roll in history).

Yes, for a taxpayer who has a salary, a bank account and a brokerage account, and no other income than salary, interest, and investments, the IRS already has every number needed to compute the tax bill. With the last round of tax changes, very few people will have enough deductions (charitable contributions, local taxes, etc.) to make itemized deductions worthwhile. So the IRS could just do what many other countries do, which is to present the taxpayer with a filled-out form, which the taxpayer can either just accept, or amend (perhaps add deductions or unreported income).

>The main thing we'd have to fill in ourselves would be cost basis adjustments for RSU vests.

The cost basis thing used to be a nightmare. At one point with some old stock that got converted to another company's stock with an acquisition, I just threw up my hands and put in a plausible number. (It wasn't a huge amount of money in the scheme of things.) But these days, the only time I've had to manually provide a cost basis to my accountant was when I was donating some stock.

I’ve never had RSUs show up properly without needing cash basis adjustment. Same goes for ESPP shares.

> You hardly ever see all the rules thrown out in favor of a new system. It takes more buy in than you will ever get.

Probably for the same reason that it's rare to see entire codebases scrapped and rebuilt from scratch (and that when you do, it's often the case that you end up with something that isn't an improvement). The judgment behind it has a lot in common with "look at all this terrible complicated code, this could be way simpler, let's just rewrite it." Which also sometimes is hard to get buy-in on, and thank goodness the industry has learned some Chesteron's Fence lessons.

The tax code (like other forms of regulation) does stuff, it's a tool for policy as well as revenue, it creates and reshapes incentives. Criticisms of specific things it does or how it does them make sense. Vague criticisms like "cruft" or "complicated" should be for people who don't have a technical or systems mindset.

And that's before we get to other points. Like the facts that for most people with some W2 income and a few investments, taxes aren't complicated, the system for filing them is, and the reasons for this are some specialized interests combined with partisans who suppose an advantage to making filing aggravating. And where taxes do require professional involvement, that has as much to do with the complexity inherent in situational judgments as proliferation of rules.

I'm glad you're calling out that the US in general has had a complicated tax situation well before the Intuits and the H&R Blocks of the world came into being. It's easy to look to a singular demon when the problem is complex and generational.

However, the callouts for tax return preparation companies lobbying against simplification are still valid. It's also fair to advocate for changing the allocation of energy by the US's IRS from auditing underprivileged folks and slapping them with fines to assisting them in validating that they've met their tax obligations.

But how do you simplify it? You get rid of things. The complexity comes from these different carved out exceptions. This will ultimately hurt some tax payers and they will fight it.

That's not what we're suggesting. You get an email from the IRS that looks like so. The best option for you would depend on your circumstances, but you'd be strictly better off having the choice.

Hello nonethewiser,

We have filled proposed tax returns for you. You may either

[Review and pay proposed return]

[Submit your own return]

They lobby to keep the situation as it is against numerous attempts to improve things.

https://www.propublica.org/article/inside-turbotax-20-year-f...

https://www.propublica.org/search?qss=intuit

That says they lobbied to prevent free filing. There is free filing, so I guess they weren’t effective And don’t have some stranglehold on tax law.

The problem isn't that taxes are complicated. For most people, they're really not complicated. They're simple enough for most of us that - like OP suggested - the IRS really could just send you a bill calculated from the information they already have and you could just pay what you owe (or deposit what you receive).

The minority of tax payers who have more complicated taxes would still have to file returns like they do now. But the overwhelming majority of those people are probably already going through professionals or using commercial software (like Intuit's) - not looking for FOSS tax software to do it themselves.

For the typical person who has a W2 and maybe one of two 1099s, tax filing is really straightforward although the IRS could absolutely make it even more straightforward. And, as you say, most people with moderately complicated taxes where they can't just straightforwardly fill in some obvious boxes are arguably better off using a professional.

Other countries have this figured out, but I guess it just must be impossible in the USA. Thank God we have Intuit to help us!

No, Intuit's hands are not clean in this, and while corporate taxes might be intrinsically complicated (the information does have to enter the system somewhere), personal taxes are largely not.

How would you simplify it? The complexity tends to come from rules that create opportunities not to pay taxes. I think any simplification will hurt some tax payers who will fight it out of their own self interest.

For the majority of people taxes were not complex before Intuit. I did my taxes by hand before they were a company. Trump's tax reformed made taxes a lot easier for most people, and before that Regan's tax reforms made taxes a lot easier.

At one time the rich in theory paid 90% tax rate, but via deductions that needed an accountant could get their real rate down to the mid 30%. Now most deductions are gone and their real rates are still in the mid 30% range. The rich needing accountants spread the idea that taxes were hard for most people when in fact with basic 4th grade math they were easy for most people.

I do use software. while taxes by hand are not hard, the computer doesn't forget to copy line 13b from form 1234 to line 36d of form 9876 - as I did one time. The IRS caught that mistake, but then I had to redo my state taxes, and the whole thing was a pain - all caused by forgetting something a computer does automatically.

Tax software makes it seem hard by adding a lot of waits while they calculate. In truth any 8 bit computer could do your taxes in less than a second once the numbers are entered - the rest is just artificial waits to make it seem like it is more complex than it is. That less than a second includes calculating all scenarios to see if you can save money with some deduction or not.

The above applies to 90%. There are situations where you need help - but if you don't already have an accountant to help you with your books that isn't you, and taxes are easy.

Artificial waits in software are something I have to try hard not to think about, else I get really upset about them.

This so much. Taxes every year consist of me telling the IRS what it 100% already knows and doing the math it does to check my filing anyway. All the income related forms I get are copied straight to them too. It's such a waste of time and stress, just send me the bill, with my status and what they think I made. If I think something looks terribly wrong fine I can deal with that. If not I pay it and I'm done. Same with states.

I agree that's the main problem that needs to be fixed, but even so some people and most business will still need to file taxes because the federal government isn't omniscient. It would be better if those people had free software to do do their taxes on.

I could imagine a scenario where everyone from your average taxpayer to a large corporation uses the same desktop application to pay taxes. For most taxpayers, they'd fire it up and it downloads all the relevant data from the IRS and asks you if it's correct -- done in five minutes. If people need to add more information they can enter it.

You could accomplish the same thing with an IRS website, but I think it's a little better if there's a desktop app that talks to the IRS over a standardized API, as it means users aren't locked into using the app if they don't want to, and if the source code is available then if someone wants to add features or improve the interface, they can. It's also good to have the business logic be out in the open in a way that users can inspect and change.

(Best case might be an app that can run either as a stand-alone desktop application, or as a web app. The IRS could run their own instance for users who just want a website with the default experience and don't want to install software. States could also run their own instances with whatever extensions they need so you can figure out state taxes at the same time.)

On the contrary, I think this is the only solution that will actually occur.

The reality is America is incredibly difficulty to change. There are just too many people and groups with interest.

And I don't even mean this in the conspiratorial way--it's just that simple taxes are in opposition to some of our other goals.

For instance, we want simple taxes. But we also want to use the tax structure to incentive certain actions (having kids, buying an electric car, or whatever). Every exception is another check everyone else has to do. This is why every year you need to select whether you were a member of the railroad workers union, or invested in tribal lands, etc.

I just am very pessimistic about America's ability to adjust. America is legacy software.

By analogy, there's no way we could have reformed the taxi system. It was only by flanking the issue that anything changed.

> we also want to use the tax structure to incentive certain actions

I may have missed that vote.

The IRS already figures out your taxes, but they only tell you after the fact if they disagree with your own filing.

It seems like it should be possible to do so up front and pre-fill the form online on freefilefillableforms. Then you could either accept it as-is or make changes as needed.

> 90% of taxpayers only have income the government already knows about

Can't these people already file their simple tax returns for free using a number of tools (including Intuit/TurboTax)?

https://www.irs.gov/e-file-providers/free-file-fillable-form...

In civilized countries taxes are paid automatically, and the only time you have to do something is when you have deductibles.

This is pretty invasive then. That means the government will have eyes on everything you do.

A better solution would be to scrap income & capital gains tax altogether, thus sparing 90%+ of taxpayers from having to file at all.

Shifting to a higher consumption tax would put the onus on businesses that sell things, not the average person.

It would also greatly reduce the need for governments to surveil citizens to make sure they're not evading taxes.

At that point what keeps companies from leasing stuff instead of selling it? That approach sounds like the easiest way to avoid taxes ever, and it has the side effect of making ownership for poorer classes unnecessarily more difficult.

There are a number of influential libertarian & fiscal conservative lobbying groups that have significant sway, that argue that doing so means people become unaware of how they're being taxed, and for how much. Signing the form becomes a tick box exercise.

I can see and empathise with their concerns, but... eh. Just let me have my form thank you.

I really miss the UK's PAYE system.

A tax bill that includes everything you have to pay but no deductions. So you have to pay for tax software or someone to do your taxes anyway or you get ripped off by the government. I would rather get ripped off by a corporation.

70% of taxpayers just take the standard deduction. So they're already covered.

Most of the rest take some pretty standard deductions so with a simple form would be able to input those and have their bill updated.

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