13 States join the IRS direct-file test after tax prep firms dropped the ball

I don’t know how we can possibly not have complex taxes for the rich short of taking all their money.

I don’t get how “big” became a persuasive argument when it comes to the public sector, rather than “ineffective” or “inefficient”. Raw “size” isn’t a good target on its own.

At the end of the day all I care about is that things are done effectively and efficiently, and sometimes maybe we trade those things off so that they can be provided fairly and equitably (such as fire departments, I don’t care if a private sector solution would be more cost effective, I don’t want private companies selectively putting out fires).

It was ~32% pre-pandemic, and excepting for the Great Recession, looked to be stable at ~30%. Considering the governments revenue over that same period, again according to your own source, is also ~30% we're at less than 1/3 of GDP expenditure.

I think that is a reasonable public expenditure for a representative government, especially for the third most populous country on the planet and the largest GDP.

In the US a lot of things are inefficiently pushed into the private sector, health care being a good example. Taxes + private health care costs in the US are a higher percentage of GDP in the US than in any developed nation yet the results are the worst of the same cohort (OECD).

(This isn’t to say that there aren’t things done inefficiently in government that might be better in the private sector. Just saying that single figures are worthless alone).

The actual article is about something more interesting: that they are piloting it with states that have state income taxes as well, and that they will be rolling it out in phases (the right thing to do). The response to Intuit isn't about the meat of the topic.

The complexity was originally a way to effectively have different rules for people with accountants than regular citizens thus allowing politicians to shift the tax burden without making the carveouts obvious.

Now days we just blatantly tax people living off investments less, etc. Thus defeating the original purpose of that complexity.

> This theory was first put forward by economist Bruce Yandle in a 1983 article published in the American Enterprise Institute's magazine Regulation titled "Bootleggers and Baptists: The Education of a Regulatory Economist."[1] Yandle, at the time serving as executive director of the Federal Trade Commission, used the example of early 20th century Sunday closing laws restricting the sale of alcohol to illustrate his belief that "durable social regulation evolves when it is demanded by both of two distinctly different groups" - Baptists, who support a regulation for moral reasons, and bootleggers, who stand to gain economically from a regulation.[2]

* https://ballotpedia.org/Bootleggers_and_Baptists

* https://www.aei.org/articles/viewpoint-bootleggers-and-bapti...

* https://en.wikipedia.org/wiki/Bootleggers_and_Baptists

* https://www.goodreads.com/book/show/20544240-bootleggers-and...

* https://www.ced.org/blog/entry/bootleggers-and-baptistshow-c...

Related?

also directly sprung from Bush Sr. saying "read my lips: no new taxes" and then immediately going the other way. that ruffled a few feathers and took the "tax bad" lobby into the Tea Party / Norquist insanity we've seen.

It is great if you are established. You might have a big house, high maintenance costs, use cleaning services, invest a lot in the stock market and other things that comes with all that. Because not only is it easy but you get a lot of public benefits as well like health care, affordable student loans and mortgages, cost-free education and kindergarten, sick leave and affordable private additions to many of those. You can even use the ease of that to do things like start a company on the side.

For us that are more modest and don't have a lot of assets but mostly want work, get health care and do something else once in a while, it is still a good system. I once checked and approved my taxes in the middle of the night, from a bar, in China. But overall there isn't as much benefit. If I don't want to pay a higher tax rate than those who use all those deductions and want some flexibility in how I use my income (which I honestly rather wouldn't) I need to start a company. But then I would have to file much more complicated taxes and therefor get much less enjoyment from taxes being easy for personal income. Still by not doing so I am giving up tens of thousands of dollars a year.

So while I am in no way suggesting that the US system is better or even comparable, the Swedish tax system today have many of the same overall problems. And that is unfortunately more and more true of other systems as well.

In the US taxpayers track their charitable giving and use it to reduce their taxable income at filing time.

In the UK when you donate to a charity you attest to that charity that you are a UK taxpayer and that the donation is therefore gift aid eligible, and the charity just goes to the tax office and collects an extra 25% on top of the donation.

So in the US, say, you earn $150, pay $50 in tax withholding, then donate $100 to a charity, then claim the donation to the IRS to say you shouldn’t be taxed on $100 of your earnings, so you should only have paid $30 in taxes, and you claim back $20. You have $20, charity has $100, taxman has $30.

In the UK you earn £150, pay £50 in PAYE, then give £80 to a charity, keeping £20 and telling the charity they can giftaid it. Charity goes to the taxman and asks for another £20. End result, you have £20, charity has £100, taxman has £30.

Essentially the same outcome - charity donations are tax advantaged - but the paperwork for taxpayers is much simpler.

I don't buy this. The IRS collected tens of billions in just one year in civil penalties. https://www.irs.gov/statistics/collections-activities-penalt.... Politicians asked for more money for the IRS to increase revenue. I don't buy that this is because all that revenue is from criminal cases especially if lobbying can easily change the tax code.

so it would seem that a) for at least the nominal taxpayer, it’s entirely possible that the government has your information already; and b) unless i get back into consulting or otherwise complicate my income, my tax guy just set himself up to request those transcripts every year!

If it would be free overall, it would take no time to develop or support and would already be rolled out.

Summed across the whole economy, the total $X being paid to America's "Tax-Industrial Complex" is vastly more than the total $Y that it'd cost to have an efficient government-run system.

I'd much rather my money go to the government than to tax preparers, though.

You have 3 kids registered in school? It’s in a db.

Buy an EV? It’s in a db.

But yeah- fair point. There are lots of “quiet” transactions for sure, but that’s likely no different in any other nation with better tax cycles.

The reason you might have heard a lot of fuss around hiring more IRS agents, is that the only way to validate these numbers if to be audited (broadly speaking). There might be some automated checks for very obvious things but much of the process is self-reported.

The software is largely there to help people with the math and accounting for all of the deductions that the average person may be eligible for (mortgage interest being the largest and most common).

Wrong. I did my first tax return by manually filling out the PDF form. Even though I only had a single income and was filing the EZ form, it took at least an hour or two. Then there were state taxes.

The software is not necessarily "required" you could fill out all of these forms by hand and the IRS also provides online software to aide in filling some of the forms. Many people do do this if they have very simple tax situations and they don't mind dedicating some time to it.

However, due to the complexity of the filing it often is just easier to pay turbotax, HR block, etc to ask some questions and auto-populate the forms for you.

There is also weirdly specific forms you sometimes need for certain deductions/situations (foreign income, foreign bank accounts, investments, crypto, living on a college campus, school supply tax reductions, etc) and its not always obvious when you need to fill these forms out, you could read the IRS website but that's excruciating. So often times these tax softwares also ask questions to help you determine what forms are necessary to have a complete return or help you maximize your deductions by finding the ones you qualify for.

Correct. Part of the tax prep scam is convincing people that they will get the death penalty if they screw up their taxes, so they need an accountant or all these fancy software gizmos to do it right. If you can use a calculator, and aren't a SBO or have a massively complicated investment scheme, then you can do your own taxes in an hour or two. The IRS will send you a polite letter letting you know if you screwed up.

Don't get me wrong, it would be a lot better to not do it like you describe, but as far as bureaucracy is concerned, I'll take this over all the other bureaucracy you have to deal with in Europe. It's the one time in the year that I feel I have to actively deal with the government in the US, at least in the state I live.

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

All I'm saying is that the current system isn't that difficult for most scenarios, simply annoying busy work and form filling that should be done automatically by the government. When people talk about the US system, it sounds like most people would need a tax professional for doing taxes when that's not really the case.