That you are charged to file your taxes are the most American thing ever. Over here you just sign your prefilled return via your phone and be done with it.
I'm European. I've lived in the US a couple of years.
The thing is.... you're NOT charged to file your taxes. Filing your taxes is free. People have the option to pay a company that helps them file their taxes.
The peculiarity of the US isn't that you're charged but that the government's own system is shit (which is why many people choose to pay). This isn't uniquely American. I'm sure there's other countries where filing your taxes is a pain - though maybe not in Europe (?).
The reason the government's system has historically been terrible is because of lobbying on the part of Intuit (maker of TurboTax) and others.
There was a great episode of Patriot Act a few years ago that discussed this: https://www.youtube.com/watch?v=7xQQkzWhMOc
https://www.propublica.org/article/inside-turbotax-20-year-f...
Last year I had an error on a form. The finanzamt sent me a letter (from a real person). My partner was able to call and ask some clarification questions. We filed the correction and it was no big deal. I wasn't in any risk of going to jail or being the target of a lawsuit.
Yes, getting a tax advisor (Steuerberater) here is very difficult, and sometimes necessary. But otherwise, the system is way less intrusive than the US's in my opinion.
Slow, sure. But not dangerous.
This is almost verbatim what would occur in the US as well if the IRS believed there was a mistake on your tax filing. People just keep repeating false information about the IRS year after year, and nobody fact checks anything they read from random people on the internet, that now everyone thinks if you miss a zero on your tax filing you committed a felony or something.
Calling US tax filing unnecessarily annoying and in-need of improvement just isn't enough for some people. They need to make up stories and baseless claims to spread fear or something.
If it's a simple arithmetic error, the IRS will sometimes silentliy fix it for you and you'll never know.
But they won’t tell you you were wrong for a few years, during which time interest accrues.
(Source, just paid 5k in taxes+interest for the 2021 year after IRS sent me a letter saying my stock selling profit calculations were off by 4.5k. I think they were wrong (I was certainly wrong too) but I can file an update and get a refund on my next taxes if so. Better to stop the interest accessing while I figure out my bases)
Why do people keep repeating this? It's so obviously wrong I can't believe that saying it can be anything other than bad faith. I have miscalculated my taxes twice now: in both cases, the IRS sent me a letter explaining the mistake and what I still owed, I wrote them a check for that amount, and that was it. No "felony" or even the faintest hint of one was in play. The letters even had an apologetic tone and suggestions for how to set up payment plans, as well as multiple ways to dispute the charges.
In the vast majority of cases the IRS will just send you a letter asking you to pay what you owe.
It is a policy that goes back decades. Reagan was notably adamant that "Taxes should hurt" to the point that he opposed the very idea of withholding taxes. He was the reason that California was the last state with an income tax to start automatically withholding taxes.
>Higher taxes aren't really more complicated to pay.
That isn't the argument. The idea is that the more painful the tax paying process is, the more likely Americans will oppose the very idea of taxes. It is very simple form of Pavlovian conditioning. Preparing taxes is a painful and awful process and people naturally associate that with the very idea of taxes.
3rd parties convince you taxes are complex via underhanded tricks, but that doesn't mean they are. There is a reason tax software puts lots of delays in - they want to you think your computer needs time to do the complex calculations. There is a reason tax preparers interview you and then don't give you the taxes filled out instantly - they want you to think there is a lot of hard work left. Has your tax preparer ever told you that some tax deductible things are not worth deducting or did they just look at and ignore the receipt - that is a way to make taxes seem complex.
If you own a small business your taxes might be complex. However most people have been fooled into thinking their taxes are harder than they really are.
I'm guessing it's far more about the rise of shopping mall tax prep than Intuit lobbying.
The point being made is that anything beyond income tax is essentially impossible to automate since the government cannot (and I believe should not) track your cost side. For instance, the solar tax credit in the US is a scout's honor type form where you can put whatever cost you want to claim that are eligible without receipts. If you get audited, you better hope you can conjure those receipts. How could the government automate such a form?
Since 2008, brokerage firms are required to include sales and their cost basis information on 1099-B forms. There's technically no reason these couldn't be electronically transmitted to the IRS in a standard format.
https://www.finra.org/investors/insights/cost-basis-and-your...
> For instance, the solar tax credit in the US is a scout's honor type form where you can put whatever cost you want to claim that are eligible without receipts.
This is true, but as you say, the consequences of an audit and discovery of the fraud are meant to deter it.
> How could the government automate such a form?
Create a website where the solar installer registers the installation and enters the cost information of the project, and the taxpayer claims the record and associates it with their tax records. They are already doing something like this for car dealers for the EV tax credits:
https://www.irs.gov/credits-deductions/register-your-dealers...
A segment of the population believes that the responsibility is on the government to prove you filed incorrectly. Giving them the authority to collect whatever information they want on you is an issue of privacy. Personally, I'm opposed to businesses sending the government all your information not because I want to make life harder for myself/others at tax time but because I don't believe the information will be used only for taxes. The solar example was meant to emphasize the point that the government can only automate the process if every single purchase is marked and accounted for. Giving them the authority to track all purchases (both digital and physical) or mandating others to record said purchases sets a dangerous precedent. Hopefully we could agree on that.
I'm not arguing that it's free. Nor am I arguing for sending information about every trade someone makes to the IRS. I'm arguing that since they have to generate a summary 1099-B anyways, why not just transmit it to the IRS electronically? There's no change in privacy, since presumably today you'd follow the law and submit the information from your 1099s to the IRS anyways.
I imagine that for really expensive sales, the answer is consult with your accountant.
And of course lots of things happen with cash as long as the amounts aren't too great.
There is no need for the obvious, public, easily accessible tax filing system to be designed around the needs of that 10% (I am in that 10%, btw).