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Comment by davis_m | Hacker News Reader

Fraudulent tax refunds are a huge issues that the IRS has not kept up with. The IRS itself estimates it paid $5.2 billion to identity theives[1]. Protecting taxpayers without creating too much of a hurdle to tax paying is a very hard problem to solve.

[1] http://time.com/money/3419136/identity-theft-social-security...

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It's an easy problem to solve but the solutions (Estonia style national identity cards or a flat PAYE tax on all forms of income) are not politically viable in the US.

Why is PAYE unviable? It wouldn't have to be flat.

Because there is an entire industry of which Intuit is part of that profits off the complexity of current tax system. Simplify the system and profits go down.

HR Block was caught lobbying against simplification of the tax system for this very reason.

Because Congress never votes for a reform of tax codes because the lobbying from Intuit and HR Block et al is too strong, while there's no lobby for the populace at large to say "This sucks."

I would imagine that the sort of politics involved is Lobbying rather than ideological.

I'm sure people would be very happy to not have to file tax returns.

A mandatory national identity card would be an ideological non-starter to the small government wings of both parties, despite the fact that the information industrial complex would love a government project of that scale to attach pork to.

Oh, yeah the ID card side of things is a problem, same here. But we do have a national PAYE system that no-one complains about - they might moan about the levels of taxation but I've never heard of anyone bemoaning the mechanism.

Taxes should not be collected on income or in any way that requires individuals to "file" anything. Problem solved.

This doesn't seem to affect federal tax returns or anything related to the IRS. (This time.)

> Fraudulent tax refunds are a huge issues that the IRS has not kept up with. The IRS itself estimates it paid $5.2 billion to identity theives[1]. Protecting taxpayers without creating too much of a hurdle to tax paying is a very hard problem to solve.

Eliminate advance tax withholding and pay all taxes in arrears with allowance for a no-penalty payment plan for up to one year after the end of the tax year. You have significant one-time cost from shifting obligations forward, and a bit of an ongoing cost from the time value of money, but you eliminate the problem of fraudulent refunds by simply eliminating routine refunds.

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