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After a recent post[0] suggesting the federal tax code was already online in machine readable form, my first thought was "could I write my own US tax-filing software?" But the answer is still no.

Paying taxes doesn't mean just paying federal taxes. Users don't want free Federal taxes software if it means they'll have to re-renter all their information into different software for their State taxes -- especially when more than one state is involved, such as for people who cross state lines for work, or moved mid-year. A tax service is a massive value add.

The "free" software you get to do your federal taxes will be no threat to TurboTax until the states are required to publish their tax codes in the same machine readable format as the feds.

[0]: https://news.ycombinator.com/item?id=45599567

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Except people living in one of the nine states that don't have income taxes. They're laughing all the way to the bank.

Are the sales taxes generally higher in those states, which offset the lack of income tax?

Depends on the state, some have higher property taxes.

Higher sales tax tends to be regressive because it doesn’t tax money you don’t spend, nor does it tax things where sales tax doesn’t apply like buying assets.

Sales and/or property taxes are typically used to make up the difference. TANSTAAFL

Depends on the income tax you compare with.

My state is 9%, and it kicks in at under $20K. No state has a high enough sales tax to offset that income tax.

Concrete numbers: Say you and spouse collectively make $300K. That's a bit under $30K in state income tax. On top of that you'd pay property taxes (admittedly low).

Sorry Texas, but your property + sales tax isn't that high.

I’m curious what state that is.

> Are the sales taxes generally higher in those states, which offset the lack of income tax?

Sales and property taxes are often higher, but this (which shifts the tax burden down the income distribution compared to progressive income taxes) usually does not fully offset the lack of income tax; the no income tax states are generally low average tax burden states (but may still have higher tax burden at low-to-moderate income.)

> They're laughing all the way to the bank.

Laughing I suppose until they get their property tax bill, or pay incessant road tolls.

(Sorry, I clearly have an axe to grind.)

I lived in WA and NV and didn't notice either of these. I miss not having to deal with state taxes not to mention the 10% of my income that goes away to who knows what.

No but everything in WA costing 10% more than the sticker price is a pain in the butt, especially if you are a lower income individual.

I'm Canadian so I guess I was used to this and its now worse in California with state income tax as well!

If you are high income, of course you don't notice differences in levels of regressive taxes on consumption (including real property taxes, which, while not nominally this, for most people end up as a—direct for homeowners and indirect for renters—consumption tax on housing) as you do levels of progressive taxes on income (which is why frequently the income-tax-heavy states with higher average tax burdens also have lower tax burdens at equivalent income levels for median and lower incomes.)

It looks like Washington state makes most of their money from sales tax. And, wow, that's regressive.

Also in Ilinois, the state tax form starts with "enter line __ from your federal form" so you don't have to redo stuff. Dunno if others do that.

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