How would the government be able to know the income and deductions for small businesses? And in the USA at least lots of people have small businesses (cleaning businesses, landscaping, sub-contracting in construction industry, mowing lawns, consulting gigs, Uber/Lyft drivers, etc...)
Does the IRS get a form when a child is born or dies?
You could say, yes, the IRS should keep tabs on all this life activity, but that seems pretty gross.
How is it gross for the IRS to know that when you have to tell them anyway to get the associated tax adjustment?
You'd just report it the year that it starts to apply, and then your future filings would have that accounted for.
I don’t know the % of Americans each year who have a tax-related event that isn’t already reported to the IRS, but given something like the complex eligibility rules for the widely-used EITC, or the number of folks paying back college loans, I’m comfortable saying it’s much higher than 10%.
A ton of tax law is premised on who lived where for how long to determine primary residence. Many citizens—especially poorer ones—move a lot. The IRS should build reporting mechanisms to keep tabs on where everyone lives month-to-month?
You can either simplify the tax code dramatically or increase massively the amount of preemptive reporting to the IRS. Otherwise this idea of the IRS divining the typical American’s tax obligations is unworkable.
There's no reason that for most people in most circumstances couldn't have their taxes done automatically most years. Exceptions will always be the rule and our current processes handle them. That does not in any way exclude the usual cases.
Determine the amount of average deductions for small businesses, benchmark against however much money you want to extract from small businesses, then give all small businesses a blanket standard deduction.
It really has very little to do with TurboTax lobbying, but that’s a framing that sells.