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Comment by crazydoggers | Hacker News Reader

This is why we still have the income tax system that we do. It’s a $14 billion a year industry. I’ve talked to people who work the lobbying system very hard. There’s lots of wining and dining to make sure no one messes with the complexity of the system.

We need more people who are immune to lobbying in government positions. We’ll see how this goes.. depending on the next election cycle this will either get quashed quickly, or, fingers crossed, might fight on against a growing backlash.

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Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot of people. The IRS already knows the relevant info: Your employer sends W-2 information, your bank and broker are sending the various 1099 forms for interest, dividends, stock sale gains/losses, etc. Same for your spouse and kids/dependents. Don't even need to itemize in a lot of cases, since the standard deduction is preferable in many years.

Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible.

This is a good first step. Ideally it turns into a "verify this all looks correct & add anything we're missing" kinda thing.

Great way to look at it. It is a significantly smaller jump once the Federal system is in place and already handling returns for millions/years.

The article says that "in one possible scenario included in the agency’s report to Congress, the I.R.S. could fill out tax returns with information it already has." We can only hope :)

That is how it works in many (most?) countries already - the US is an outlier in requiring every citizen to handle their own taxes.

A lot of US GDP is Rube Goldberg machines to skim off the economy. Intuit, Visa/Mastercard, private health insurance industry, etc. Lots of pushback to be expected as government fixes this (FedNow for payments, IRS improvements for taxes, healthcare reform, and so on). Onward.

It is how it works for most people in both the countries (on different continents ) I have worked in. Only people with high incomes or investment income or who are self employed or similar need to file their own taxes.

There are also cheap systems even for business returns - mine cost £12 for the company and I will use the free HMRC system for my personal return. It might be easier to use more sophisticated software, especially if your finances are complex.

> Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible.

I imagine there are heavy software development costs, on par with what it might take to build Turbotax itself.

For instance, someone is going to have to figure out wash sales. Right now your broker does it, but you can wash sale across accounts, which requires you (or more reasonably tax software) to both detect this and track the adjusted basis in perpetuity. More complex events, like straddles, further exist, and even consumer-grade tax software won't handle it correctly.

Even implementing the tax code correctly for regular income is difficult. Examples of calculating Net investment income tax correctly due to ambiguous tax code changes (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=271074&...)

Note the proviso, taxes should be automatic "for a lot of people." Will taxes be automatic for Warren Buffet? No. For GE? No. For Suzie Q. Public? Yes.

I have no idea what "wash sale" is. I only heard that term when I was reading the help page in TurboTax, which I'm effectively forced to use.

Seriously, I doubt there is more than 100k people in US that have this "wash sale" any year. I'm so tired of every time someone suggests automatic tax filling, there is always one guy bring up some tax term that 99.99% people never heard of. Sure, if auto tax filling doesn't solve your wash sale calculation, feel free to go back to TurboTax. Let the other 99% people who have one job and no other complicated tax situation skip this yearly nonsense.

Literally anyone that owns stock could generate a wash sale.

Only 15% of Americans directly own any stock[0]. Vast majority of people who do is done through a 401k or other retirement vehicle.

[0] https://usafacts.org/articles/what-percentage-of-americans-o...

Wash sale rules apply to mutual funds and ETFs also, not just directly holding stocks.

Beware the paradox of averages. I bet a lot more than 99% of people have some wrinkle with their return.

One person has a wash sale, another has some real estate stuff, another became disabled, another has child care stuff, another has education credits, etc etc etc.

Actually now I am curious how many people file the “simplest” return (wage only, standard deduction, and absolutely no other adjustments).

It’s probably less than 99% but it could be the majority in a given year.

> TurboTax, which I'm effectively forced to use

FWIW TurboTax is easily piratable. There are even instructions out there to crack it yourself with a .NET assembly editor.

I do my taxes in a VM without Internet access and mail in the filings, so there's no way for any information to be backhauled to Intuit or anyone else.

IRS already audits at least 10% of the returns. They should have the entire tax system implemented as a software. It is madness that this part was hidden from the wide audience.

As many software projects, the internal system may not be appropriate for external use, but still they should have components very long time ago.

>IRS already audits at least 10% of the returns. They should have the entire tax system implemented as a software

The audits are accomplished by a human re-doing the return with the submitted information. (As no surprise, the low-complexity returns are often chosen)

> but the real problem is the need to file taxes at all for a lot of people.

Yes

In New Zealand where I live most people do not file at all. Tax is all "payroll tax" and sales tax

I have just joined that system myself (after several unpleasant years of not being on a payroll. Whew!

> We need more people who are immune to lobbying in government positions.

What we need to do is stop pretending people like that exist, and come up with a system that works despite people's self-interest, greed and corruption.

Maybe what we have is the best we can do.

More transparency would probably be better. Make them wear NASCAR style jackets and all that.

This is always my frustration when people suggest things for governments. You cannot design a government that relies on people being good. You have to design a government that highly discourages bad actors, make it easy to eject them, and operates while they exist. It's a crazy hard optimization problem and isn't going to work if people are just smart or good. And I never understand why people suggest fixing government by giving government more power and nothing else.

I worked at a government "lab" (MITRE) that maintained the IRS system. The system was allegedly so complicated that if the tax code and the software conflicted, the software won. The stack is legacy and intentionally on minimal life support.

> intentionally on minimal life support

Key word: "intentionally".

Maybe spending billions of dollars lobbying should be illegal

It’s not that lobbying is a major slice of $14B, it’s that they actually spend only $3m and it’s effective:

https://www.opensecrets.org/federal-lobbying/clients/summary...

Notoriously there is also a large contingent of anti-tax politicians and citizens that oppose making paying taxes easier. Their reasoning being the more friction there is the more likely that you will pay attention to how much you are being taxed and support their policies that cut taxes.

Not working. I'd pay more for a convenient tax system.

I will never in my life comprehend how lobbying isn't just bribery with extra steps. The only distinction between bribing a cop to get out of a speeding ticket and a megacorp lobbying random politicians is that the megacorp has much deeper pockets, absolutely ridiculous

1. It's like how networking isn't cronyism

2. Politicians need to know how the businesses they're regulating work, and theoretically they gain a lot from being able to talk it over with the businesses themselves (the existing ones, mind you - not the future ones which might be stifled, and currently have $0)

3. Lobbying is another word for talking with your local politician, what megacorps do (and what basically everyone means when they say "lobbying", really) is paid lobbying, i.e. run the "lobbying" errand on your behalf. Banning the former type of lobbying is impossible, and banning the latter is hard to do when it's a legitimate service for people who have more money than time (and also might violate free speech laws, and also is hard to actually stop)

4. Fuck paid lobbying, it does more harm than good

"There’s lots of wining and dining"

You mean the congressmen are bribed by free food and alcohol? Asking as a non-American.

This should shed some light:

Bill Gurley: "2,851 Miles" https://www.youtube.com/watch?v=F9cO3-MLHOM

Just came back to check replies. This is a great talk.

He mentions Obamacare and the digitization of records, which is very on point and a similar issue. In the interview he mentions, Obama says:

“In some cases, you have economic incentives against making the system better; you have service providers — people make money on keeping people’s medical records — so making it easier for everyone to access medical records means that there’s some folks who could lose business. And that’s turned out to be more complicated than I expected.”

I think “more complicated than expected” is a hilarious and sad way to sum up the whole mess that is greed and Washington DC combined.

Thanks!

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