https://www.politico.com/agenda/story/2018/07/18/tax-filing-...
https://www.politico.com/agenda/story/2018/07/18/tax-filing-...
> 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?
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.
I'm all for simplifying tax filing but if you're just filing basic taxes and are willing to forgo any deductions you may be eligible for such as energy efficiency, it's pretty straightforward.
For example, I went to buy Jeep. 4xe version was $8000 more. But its battery lasts only 2-3 miles and it would have taken forever to breakeven. But dealership kept insisting that I will get $6000 in tax rebate/deductions so the actual cost is only $2000 more.
They had marked up the car by how much government was going to give rebate on and there was no savings for a taxpayer. I tried to have them issue give me discount now and claim my car on their taxes but, of course, that was not going to work. I ended up buying a cheaper model.
EDIT: Just checked the range, it is actually 21 miles on battery, which would have been enough for my usage. At that time, salesperson informed me that it was 3 miles or so. At 21 miles per charge, I may have bought 4xe. Math still doesn't workout, since I work from home I probably fill the gas tank once every 2-3 months. About $200-300 per year for gas. So it would have taken 7-10 years to breakeven after rebates.
Hiding the true cost is the point. Or rather, altering the true cost to incentivize something or other.
The Koreans (Kia, Hyundai) found a loophole: The restrictions do not apply to commercial fleets, including vehicles leased to consumers.
So, they offer lease incentives that are structured to give you $7500 off MSRP if you buy the vehicle out of a lease after the first month.
No IRS paperwork required, and no chances of finding some other gotcha when you file your taxes.
If the law hasn’t changed by the time I buy a new EV, I’m going to insist on this, regardless of whether it is domestic made.
Anyway, the subsidy is really designed to setup the used car pipeline. In 20 years someone with significantly less money is probably going to be driving your car and they aren’t going to be thrilled with having ~14mph.
This is the thing that always gets me. After having seen too many examples of this I soured on these incentivized deductions. The benefit always seems to go to the middle man.
All they do is make everything more of a hassle.
Where the IRS's UX is really bad for the average taxpayer is all the other forms and instructions that Americans feel the need to read and think about despite none of them applying to your situation. However, I think this is mostly psychological, and Americans are wasting their time and money trying to get ahead by finding a "loophole" that applies to them.
And that's absolutely insane. That's tens of millions of man hours per year spent essentially on rote data entry of data that the IRS already has so that you can submit it to the IRS for them to check against their copy.
I'm not bothered by this risk. If a mistake is made and I owe additional taxes, then I'll just pay what I owe. No biggie.
I understand that an hour is valuable, but that hour you spend checking your tax documents may be the highest-leverage hour of work you do that year.
This implies that I'm taking some huge risk or would be absurdly overpaying my taxes or something. I don't think either of those things are true. In the larger picture, this isn't really that big of a deal.
> I guess if you assume
I assume none of those things.
> that hour you spend checking your tax documents may be the highest-leverage hour of work you do that year.
It would be more than an hour, but the time isn't even the biggest issue. The biggest issue is the stress, worry, and hassle. It's just a basic cost/benefit calculation here, no different than other cases where I accept a level of increased expense or some risk because it costs more than I'm willing to pay to mitigate it. I have bigger fish to fry than this. Micromanaging this would reduce my overall happiness by adding an additional thing to worry about.
Everyone's cost/benefit calculation is different, of course, and if yours indicates that you'd be better off being more diligent about this stuff, that's entirely fair as well.
A lot of people have just convinced themselves that getting a Turbotax update or going to the H&R Block booth at Walmart is just one of those annual rituals you have to do if you're sensible.
The problem with that is that there are literally 100 crazy-assed questions that I have to answer in order to fill out all the supplementary worksheets, etc.
For instance: I bought a used EV. Do I take the tax break? Is it a deduction or credit?
Figuring that out will take at least 10 minutes after you find the right IRS bulletin.
Also, we have a roboadvisor, which means we hit all the corner cases for investment income.
Even with turbotax, it takes about 8 hours for our moderately complicated taxes. Just getting the basic stuff that any homeowner with a family has to do takes 2-3.
On top of that, the first year I used turbotax, I found out I had been overpaying ~$200-500 the previous 4 years.
Filing amended returns wasn’t worth it, but paying the intuit mafia would have saved me time and money in the long run.
If I had my way, we would move to a UBI and a flat tax (on income and capital gains).
That reduces the tax code to a two variable equation of a line.
I’d take a scatterplot of the 30-90th percentile of the US’s effective tax rates, and fit the line to that data set with a linear regression.
In addition to creating basic income, this would ensure that the ultra wealthy actually pay taxes.
Personally, I would love a flat tax, although I would probably pay more under that system. It will never happen, though.
If we want a UBI of $24,000/year ($2,000/month) for an adult population of 250 million we are talking 6 trillion dollars in additional government spending. Assume for a minute we can cut 2 trillion in spending so we are talking about a spending increase of 4 trillion. This would mean roughly doubling current government revenues. If you wanted to do so with a flat tax, you'd see rates near the top rate now on all income.
Are people ready for a world where you get $24,000/year from the government and pay something like a 40% tax on all your income? Compared to the current tax code you probably break even at roughly $75,000/year and for incomes above that you'd pay more in tax.
I’ve also lived in “more socialist” countries where I paid higher taxes before moving to the US.
I would have little to no problem passing higher taxes if there was any reasonable assurance that those taxes would go to worthwhile purposes (infrastructure, healthcare, education), and not to the military or pork. Sadly, in America, land of the middleman, we know how unlikely that is.
I tried to do it with the plain forms once about 15 years ago. Somehow I ended up reporting the same input twice or something? I'm still not sure what I did wrong, but I ended up getting taxed for income that didn't exist. I didn't know how to correct it. I wrote letters and called the IRS probably dozens of times. I spent more than 50 hours poring through documents trying to figure it out. I tried to find an accountant that could understand what was happening. Eventually, it went away. I'm not sure what I did differently or if the IRS just got tired of dealing with me and waived it.
I was probably doing all of this incompetently, but I could not get a "foothold". I have somewhat of a tax phobia to this day.
The problem had something to do with some independent contracting I had done that year. I just resolved not to do that anymore.
Cost basis reporting from the broker to the IRS is still blank for non-covered shares though, which leads to the other common case of "forgot a page of 1099, IRS thinks it's $0 cost basis, sends bill for $10k++, but actually you owe ~$0 if you send in the correct info".
This is a direct quote from 1040:
> 14 Add lines 12 and 13
> 15 Subtract line 14 from line 11.
Compared to a real system, that is insane.
You have to deliberately enter redundant information onto a form that should be handled automatically by a computer.
It feels like the only purpose is to catch you out in case you make a mistake.
Furthermore, the system should be set up so most people never even need to file.
You can quickly check in the UK if you need to file via https://www.gov.uk/check-if-you-need-tax-return/
( You don't need even to login to do that one, you can try it out yourself even if you're not in the UK to get a sense for the self-assessment requirements )
Most employed people don't have to file.
And even if you do need to file, you can do so online via another helpful form: https://www.gov.uk/log-in-file-self-assessment-tax-return
Functional online forms which actually take into account your answers and don't ask you to get out a calculator.
And keep in mind that the US tax system feels like it's set up to pretend you "owe" lots of tax, only for there to be a ton of reimbursements or allowances or refunds.
Which is then more forms to fill in (Form 2555 in my case ), each with their own cryptic instructions on where to write numbers and what to add to what:
> Subtract line 25 from line 24. Enter the result here and on line 27 on page 3.
Literally getting you to write it in twice because there's a page break?
Do you really think this is simple?
> 32 Multiply $49.10 by the number of days on line 31. If 365 is entered on line 31, enter $17,920 here
> 33 Subtract line 32 from line 30
> 34 Enter employer-provided amounts. See instructions
> 35 Divide line 34 by line 27. Enter the result as a decimal (rounded to at least three places), but don’t enter more than “1.000”
> 36 Housing exclusion. Multiply line 33 by line 35. Enter the result but don’t enter more than the amount on line 34. Also, complete Part VIII
That's a direct quote of 5 lines in a row from form 2555.
That's not a tax form that's a fucking arithmetic test.
Oh, and that "See Instructions" means a completely different booklet of guidance, in case anyone thought it was on the form itself.
There's also an online spreadsheet version so a computer can do all the math for you without paying a dime to intuit.
I had a job on campus and a stipend, and that immediately tossed me into the deep end of “the tax code is actually ambiguous and the difference is three months rent”.
https://smartasset.com/taxes/heres-how-the-trump-tax-plan-co...
The question to ask is what percentage should always itemize. and how long it takes for them to figure out if they should or not each year.
It is true that some people just won’t bother, but that’s just a hidden tax hike on the middle class. It doesn’t make sense for that group to bother to take the time to learn turbotax or hire an accountant in order to potentially save $1000.
Also, the Trump changes intentionally cause under-witholding, so now people have to fill out the “did I get fined for underpayment?” form, and the “do I need to file quarterly taxes?” form.
The change that intentionally broke the withholding formula was explicitly designed to make tax preparation more painful.
This sounds a lot like the logic the US government uses with regards to normalizing relations with Cuba. They think that by keeping up an embargo, that the Cuban people will rise up and overthrow their communist government. It hasn't worked for over 60 years, but surely any day now it will...
The big problem with sanctions is that they aren't applied completely. The US refuses trade with Cuba, but many other countries don't, so they aren't effective. The same is true with Russia: lots of countries (like China) still trade with them, and many more still buy their oil/gas.
For those who don't know, Grover Norquist is a highly influential, batshit crazy right-wing ideologue who believes the estate tax is morally equivalent to the holocaust. Almost every Republican lawmaker on the national level signs a pledge he has written, swearing they will not raise taxes.
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.
But wow, what an artifact! There has not been, to my knowledge, an instance of a newly elected US Senator publicly saying "signing this absurd thing is beneath the dignity of my office and of course I'm going to try to keep taxes low, the voters of xxx elected me because they know I'm a dedicated conservative, but it is impossible to guarantee that it will not be necessary to levy a new tax of some kind, so I am not going to promise that." Or something along those lines.
He doesn't get to decide who gets the donations, but he does get to administer the Kool-Aid, and it's powerful stuff.
(edit: it occurred to me that given the rules involving political donations, and PACs, and so on, he might be administering all kinds of money and the public wouldn't necessarily know about it, so... yeah...)