NPR's Planet Money just re-ran an episode[1] related to this. In 2005, California ran a pilot program where they sent simple, pre-filled tax forms[2] to a sample of the population. 98% of people liked them and would use them again. In 2006 it would have become standard for California, but failed in the legislature by a single vote. Opposition was from two factions: lobbying by Intuit, and Grover Norquist claiming that it violated a pledge for no new taxes. Fascinating stuff.
Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.
I might be getting old, but more and more I see “vote with your XXXXX” to be the litmus test for situations there is no decent solution left anymore.
It’s not even an advice in the end, just a reminder the customer lost the battle, and the only alternative is to leave the field with what’s left on their posession to go roam the desert.
Where government is concerned, you’re completely correct. However, voting with your dollars does work well for markets, e.g. grocery stores and the like.
This is something I hear a lot of (overwhelmingly) American people say, after which I am inevitably reminded of poor healthcare, food deserts and exploitative corporate practices. At this point those are all so entrenched in the "american experience", I don't understand how you can say unironically that "the market" is a fix for anything or does in any situation "work well".
It's a superpower, and it is in it's entirety an example that disproves that this is the case.
Vote with your votes. And with direct action and protest. Your dollars are small and easily ignored. Political organizing works when it's political, because it forces change rather than pitting the minnows against the shark one on one.
I have used Credit Karma Tax since it came out (I think this year was 3 years) and it has been a great product and is free for both federal and state filings. Doesn't support some more complex scenarios, notably partial year and multi-state returns (you can still file your Federal return with it, though).
Edited to add additional details as to what isn't supported.
I have not done taxes on both for the same year and compared the two. I have used TurboTax, as well as a variety of other online tax filing solutions, in the past. TurboTax might be better polished and provides better explanations, Credit Karma tax gets better every year, and I find the downsides to be a good trade off for not supporting Intuit.
I did my taxes in both last year (started in TurboTax and learned about their abuses - a coworker suggested Credit karma) and found the numbers to be identical. My taxes are relatively complex, more than most people. I'm very happy with the service for the second year in a row.
I admit that they don't have quite the community links that TurboTax does, and there are some situations they won't handle (for instance, income from 2+ states)
Right, I plan to move to another state in the next year or three, so I am hoping they add that ability next year- they have added new features every year, and it seems like multi-state filing would be the next biggest need on the list. You can still file your federal taxes with them, but filing state taxes separately is a pain!
I have worked with an independent tax preparer for the last few years. In January, I walk over to a nearby restaurant where we meet, I hand over tax documents, she makes sure it's all there and asks some brief questions. A week or two later, she sends the completed state & federal forms along with the appropriate authorizations which will allow her to file on my behalf. I pay $200 for this service and consider it far more pleasant than dealing with TurboTax's incessant questioning.
I also hired an independent tax preparer, to avoid paying Intuit. They did a good job. I was disappointed when I received their payment form and found it was hosted on Intuit. I had paid Intuit by proxy. :(
If your taxes aren't complicated (i.e. you use the standard deduction), there's a service called "Free Fillable Forms" through the IRS that allows you to fill out your tax forms online and e-file them for free. Many states have an equivalent system as well.
Last year I went to an independent preparer, which cost me around $160 and took an hour. This year I wanted to save some money so I decided to try filing myself and it was pleasantly straightforward, only taking two hours. The only tedious part was copying over the info from the W2 for both federal and state.
Free fillable forms allows more than just simple cases — it will handle all paperwork regarding your personal income tax. Highly, highly recommend using. It’s more manual (follow the 1040i instructions document), but you’ll learn a lot about how deductions work, what you can claim, and what is best for you in following years.
The only case it doesn’t handle for me is Partnership taxes — just the stuff due April 15.
I was waiting to finish my taxes for state and federal before replying to this.
Turbotax was 100% free for both with automatic imports of my forms. As long as you avoid upgrading to unnecessary services beyond their basic service, you can file for free and save PDFs of both returns when you're finished.
I use taxhawk.com and would absolutely recommend it, I think the UI is fantastic (and without a fantastic UI, I'd just continue to do taxes with paper and pen). I've been using it since 2011.
I have heard good things about freetaxusa.com as well.
Both are very reasonably priced, only $15 for state - federal is free. Since I have business income TurboTax wants over $100 to do my taxes.
Thank you, you just saved me $164.98 (turbotax self-employed) - $14.99 (taxhawk)! A lot of money given that it's for my kid's $620 income :) And honestly, the taxhawk experience was better, with less cutesy messages and fewer screens. Not to mention the annoying turbotax upsells.
Just one thing to complain - it didn't discover that I over-contributed to Roth and need to return a bit to prevent a penalty.
Yay! Glad I could help! Doing taxes in subsequent years is where it really shines, it remembers your previous year stuff so it goes much faster. It also shows you a side-by-side summary of this year vs last year which I find really helpful.
Perhaps you can let them know about the IRA thing for next year?
Tax Act. And as far as "best in class" goes, I find Tax Act to be far less infuriating that that steaming pile of shite Intuit puts out. I would almost go so far as to say it's decent software.
As for the lobbying, I have some vague memory of jumping to Tax Act because of someone pointing out that they don't lobby. A cursory bit of searching didn't raise any red flags at the time.
The names of these lobbying groups are downright Orwellian. Coalition for Taxpayer Rights. Internet Freedom Coalition. Freedom Online Coalition. All these groups are diametrically opposed to the principles in their own names.
Read the 1040 instructions, and follow them. This works if you don't have a complicated situation, such as business income or if you need to calculate penalties for shortfalls on quarterly filings. Have a CPA do your taxes periodically, then use last year's taxes as a guide for the current year.
Typically what I do is write a small program that asks the questions in the 1040 form, then gives me a print out of what goes in each field.
For my case, I have one source of income (employer), a couple times I've sold stock, and I have a mortgage, am single, but support my SO and her 4-year old grandkid. I've done my own taxes for the last 20 years, and only a couple times took it to a professional (once to H&R block when I sold stocks, and last year to a CPA). Both times the tax forms were exactly what I figured out on my own.
I used to have this idea of a AI chat bot that would ask common questions such as name, address, dependencies, etc... and return a filled 1040 PDF. Turned out I spent more time writing codes to handle the PDF than focusing on the chat bot functionality...
I used TurboTax this year, and honestly I was underwhelmed, especially when it came to the state forms. It didn’t really seem like it did much, and the California form experience were full of obvious bugs. Questions with no context. (“Enter city 2”) Questions being given out of order. PDFs being viewed through a mail slot. PDF forms where the entry blanks and the entries would scroll at different t rates, so you couldn’t read the form. It was super frustrating. The whole thing felt like a cheap unskilled body shop of a program, and made me want to just use a pen.
I have to file mildly complicated taxes due to getting my income from a partnership, and even that I can do in a couple hours by following the 1040 instructions, and the filling out any ancillary schedules that are required.
If you have straightforward W2 income, taking the standard deduction, and a reasonable number of retirement or investment accounts, it should take you an hour to fill out the form following the instructions. Maybe plan on a couple hours the first year, while you get used to it, but it's no so bad.
I swore off TurboTax after finding out about the tax lobby stuff and filed with TaxAct this year. I can't say for sure that they don't lobby but if they do they don't do so as loudly as Intuit.
This. I use this every year and it simply is an online interface of fillable forms provided by the IRS with a “Do the Math” button (actual button text). It works as intended, files for you, and is free.
Do your taxes by hand/with free fillable forms (name of the online service), you’ll learn a lot. Just follow the 1040 instructions (it goes line by line through the form) and any related forms it tells you to do.
Those lobbyists will find ways how to force you into using their services. Not necessarily by eliminating all the different competing companies, but possibly through splitting the rewards through some kind of association, commission, self-regulator etc. If somebody is lobbying against you, fight them, don't just wave your hand, or you might lose your chance to "vote with your dollar" soon
Umm... where do I start? ALL the tax prep companies lobby against free electronic filing. So if I want to vote with my wallet I have to go back to paper forms. Paper forms may be outlawed at some point in the future. Can you solve that issue?
We either need campaign finance reform or we need to accept our government is bought and paid for by big oil, coal, the NRA, the car manufacturers, etc.
Not sure why this is downvoted, but it's exactly right. When you tell someone in the bottom 50% of income earners to "vote with their dollars" you're telling them to piss into the ocean in the hopes of turning it yellow.
Particularly in the case of taxes, where the benefit one gets from having someone else prepare ones taxes is directly proportional to wealth. The people with the most ability to change this situation are the one's who are have the least skin in the game, because they're probably hiring an accountant anyway.
A NOAA employee told me about the time their boss caught holy hell from a Senator because the NWS had the gall to update a particular weather product they offered by adding color to the map. Evidently someone had a business essentially downloading the free NOAA data and improving it by coloring the maps and selling that as a product. When NOAA made it free, they called their Senator in anger. And said Senator slapped NOAA's wrist.
Seems like the same school of thought in a much bigger market.
Michael Lewis wrote about the NOAA and this exact type of thing in his last book. In essence the NOAA spends lots of tax payer money to collect weather data but can’t do much with it other than give it away exclusively to a handful of entities that can repackage and sell it.
The eventual dystopian end state could be where the NOAA can’t alert people to tornados and only those subscribing to a weather service would be alerted to get to safety.
You can get an emergency radio capable of receiving VHF NOAA weather alerts. There is typically at least one of the frequencies within range where ever you are. You can subscribe to weather alerts through RSS on their site as well.
> You can get an emergency radio capable of receiving VHF NOAA weather alerts.
Apparently this was grandfathered in a long time ago. NOAA is only allowed to send weather reports by radio and on specific frequencies. Doing the same with the internet, why that would be communism!
Yes! The Michael Lewis book is called _The Fifth Risk_, and it's an amazing read. It's a series of contrasting stories: earnest government workers who have dedicated their careers to protecting all of us from threats like nuclear proliferation, on the one hand, and on the other politicians and narrowly interested lobbyists who view government as either a threat to their self-interest or an opportunity to tilt the economic playing field.
> Take Trump's choice to head National Oceanic and Atmospheric Administration, the Commerce Department agency that, among other responsibilities, oversees the National Weather Service. For that critical position, Trump has chosen Barry Myers, who is CEO of the private forecasting service AccuWeather. As Lewis points out, AccuWeather repackages the weather service's own data and sells it to private concerns for a profit. Myers at one time argued that "the government should get out of the forecasting business." In other words, you want to know if it's going to rain tomorrow? Or which way that hurricane is tracking? Well, buy our app, or subscribe to our forecasts. Myers has yet to be confirmed.
Free market dogma is a scam: an intellectual framework invented to rationalize a position.
There's a long history of people doing these things such as with monarchist theory or eugenics for colonialism and slavery. People have theories and frameworks to justify misogyny, child abuse and being harsh to homeless people.
In this case it's an ability to do whatever you want to make money without any oversight, laws, restrictions, or limitations. Being against unethical things such as sweatshops, lying to consumers, or vulture capitalism is itself unethical because it "interferes with the market" oh dear!
It's a symmetrical theoretical framework with beautiful equations to rationalize an otherwise indefensible power structure and insulate reprehensible criminal behavior as essentially the Unquestionable Divine Will.
When anyone justifies things through purity or perfection arguments they're likely pulling a fast one on you. In fact it's this fast one. This exact technique.
I definitely agree that the intentions of the ruling elite will be formalized into nice-sounding theories, irrespective of their faithfulness to reality or their utility outside of supporting the system of rule. Marxism for example
and you can replace ruling elite, with people who want to be that. Then you get notions like identity politics, feminism, cultural Marxism, misandry, racism.
There's an interesting second order effect here as well, that drives the narrative aggression and dissent shaming today. Democracies need to create as many of these competing theories as they can to keep people locked in constant conflict and division.
How can it be that ideologies such as 'racism' and 'identity politics' are only born from people who want to be the elite? (If this is indeed what you are saying) Was not America's founding based on identity politics and racism by white Christian people? How is the genocide of indigenous people and enslavement of black people not racism and identity politics?
Besides that, I don't think racism and feminism stems from 'wanting' to be elite. People who experience racism just don't want to be killed and threatened, women just want the same opportunities and to be able to feel safe and not be harassed randomly.
Racism can also stem from the elite, as a rationalization for why they are in power. Racism can then, in turn, show up in the underpriveleged woeking / subservient class, as another manifestation of their hate for the elite. It's not a one-way street- the pain just keeps on giving.
I'm glad you're curious to know more. The situations you refer to seem very threatening so I'm going to try to cover all bases.
The intentions of the ruling elite are formalized into nice-sounding theories that people get easily addicted to.
Racism is a bit more subtle than feminism, in that, "racism", as in discriminating against people of a different race, is a real thing, and it's wired in all of us. It should probably be better called "groupism" or "majorityism". All of us, in whatever sized group, have some mental concept of group identity, us vs them, insider vs outsider. That's just human nature. It's not evil, it's even adaptive. But it is NOT the driver of things like genocide and slavery.
These things are always driven by resources seeking, powerful players competing for resources. Black people sold black people to white people to be slave labor to farm tobacco and sugar.
America wasn't founded by White Christian supremacists, on a crusade against black people. It was founded by economic subjects of the British empire mad about money, and rebelling the attempts by the Empire elites to manipulate them. The civil war wasn't about our built in racism, or about how whites had gotten used to black slaves, it was about the power of a unified country, and preventing secession. Narratives had to be spun to mobilize people's passions to get them to kill for the elites who wanted to get power.
African genocidal wars are not racial. Hitler was not a racist. All of these mobilizations of injustice need a way to rationalize the economic or political driver. So narratives are promoted that hack our wired-in, benign biases and exploit them. Just like social media giants hack our reward systems to fill their pockets, robber-barons and warlords of previous eras hacked our adaptive, genetic heritage of reward and fear circuitry to mobilize large numbers of us to go kill other large numbers of us, by spinning narratives of bogeymen, evil outsiders, etc.
Then, with the narrative created, "Racism" (capital R), is blamed, rather than the actual elite-driven cause. Thus empowered, "Racism" can become a term of abuse, and people are convinced their inherent nature is at fault, when actually these massive injustices were driven by power seeking elites, and enabled by the clever abuse and exploitation of their human nature by these powerful bad actors.
Identity politics is getting more mileage out of the same outsiders bias, by defining legions of new groups, convincing people that membership of that group is tied to self, splashing in some extra strong circuitry if needed (sexuality), and getting groups to fight each other.
It's the same old trick of codifying intentions into nice-sounding theories to get people to go do stuff. It's propaganda, advertising. It's cattle herding with humans.
Wanting to be elite is just making the point how many of these new narratives are adopted by people as substitute "paths to power". These narratives actively substitute people's intentions to build a better life, and hijack their reward circuitry to get them addicted to fake payoffs such as blaming others, not taking responsibility for creating what they want, fake self-righteousness, and cargo-cult like belief that the "movement" will bring them the results. Obviously, if you want to stop people advancing in your society, you want to them be doing things that will never get them anywhere. It's an ingenious and insidious way to disempower people, by directing their actions toward useless, zero result ends, rather than having them try to actually create change or results themselves.
Elites promote these narratives for two reasons: economics and control. The more afraid, angry and triggered we are, the more we consume, and the more easily manipulated and controlled we are. The flip side is, if people actually got happy, and became aware of their personal power, they would definitely organize, rise up and create a better situation. The system preserves its own homeostatic equilibrium by keeping people triggered into their ape-brain as much as possible.
We're all a lot more powerful and good (minus the resource scarcity / resource seeking that leads to war) that these divisive fake narratives would have us think. More important than what "opportunities" someone is given, is what they do with what they have, and what they create for themselves.
The biggest thing stopping people achieving is not "structural inequality", is getting away from this idea that it's about what you "get", rather than what you "make". Nothing will stop a woman being rich, healthy, and happy, if she makes the right choices. Women can stand up for themselves, say what they want and don't want, they don't need a "movement" to get what they want, they can figure out how to get what they want themselves just like anyone else, unless they believe they're a helpless victim by virtue of their sex who has to be saved by some movement and given the success they feel privileged to, but don't want to earn.
People being killed and threatened don't need to fight racism, because our in built racism isn't bad, they need to avoid violence. If you can live in a safe society, that's your best chance. The state probably has a duty to protect its subjects, so pick a state that you like. If you don't want to move, and you live in danger, build yourself a fortress and get good at violence, because fighting the people who are trying to kill you will be your only way to survive.
is there anybody, really anyone, who doesn't want to be the "elite"?
every human wants self-determination, the power shape their own future, to be in control of their fate.
yet not every one of them are or become racist.
furthermore, there are theories (eg feminism) that are built on fairness (as in A Theory of Justice by Rawls), and there are those that are very much not (eg racism).
the others are simply too vague to simply deal with.
I know these notions can be scary, but I don't believe there's any good in pandering to people's weaknesses and wrapping it up in a theory pretending to be good.
Feminism is based on convincing women they are perpetual victims, that everything wrong in a woman's life is men's fault, that their feminine nature and sexual differences are weakness, and the only way to get self determination is to emulate men (who are evil), and play the fake victim by blaming men and demanding they are given benefit's they didn't earn. It's a toxic theory that disempowers females by discouraging them away from the power of choice and personal responsibility and trying to get them hooked on the addictive fake pay-off of blaming others and playing the fake victim. It's also full of contradictions that no doubt drive neurotic and irrational thinking if you try to really "believe" it. It's a variation of the classic "creation of grievances in order to exploit them" trick. It's not about advancing equality, or women's rights. It's a political theory, promoted and propagated by elites, to divide us into groups, weaken us by attacking something very strong (the human relationship bond, the family bond, the polar sexual bond), and make us more easy to control by being locked in a state of constant triggered conflict and division. To turn us into more political animals, less close to and less trusting of each other, and more dependent on and closer to "the state" or "the cause". It's so effectively propagated because the central notion "that you are not responsible for your life, that you can blame someone else, and that's actually a good thing", is so addictively rewarding, it's a very compelling "fake solution" to all sorts of problems, and it's very hard to unhook yourself once you are taking this.
Any theory that actually aimed to advance equality among people, and the rights for one gender, should advance the rights for both, and cherish both, and not be called "fem"- or "masc"- something, but "humanism" (already taken by a philosophy), or "peopleism" or "personism" (my favorite). Personism would promote equality in the ability of people to make choices and take personal responsibility for their situations, would discourage playing the fake victim, would encourage active listening, empathy and communication about emotions, would promote emotional vulnerability as strength, and would valorise gender archetypes from both sexes (the male and female god/goddess energies) as desirable ideals of strength and power. It would empower people, unify them and not divide them or make them useful idiots and pawns more easily controlled by elites.
I think you confuse being "elite" with self-determination, and power. Ordinary people can have that too. We can all grab it for ourselves, we don't need a "movement" to "give" us those things (in fact, having it 'given' would be contradictory).
By elite I mean the people who treat the rest of us like cattle and useful idiots, to control with mass psychology, and who are actively designing and promoting social / cultural divisions to weaken the rest of us.
I expand upon racism in this context in my comment on spinach's.
You can't have a free market competition of government services. It's not free market competition when its companies competing over _providing_ a service mandated by law. That can never happen. Just as private prisons can't be free market (providing a service mandated by government law) you can't provide tax services in a free market environment because it's required by law.
My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes.
The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.
It’s not really about making people more or less aware of what they are paying.
The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.
These anti-tax activists seem to be playing the role of Useful Idiots for the much more substantial reason 1, bearing in mind that the very existence of such companies making tax filing easier does indeed destroy point 2 entirely (in addition to the what OP pointed out which also takes away any credit this idea might have had).
From a european perspective, having tax returns that are not pre-filled, and having a tax administration that doesn't strive to make payment as easy and quick as possible is nonsensical. Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?
As a former US student, and paying my student loans.. I also cannot easily _pay_ them while living abroad. It requires I pay fees to transfer money to a bank account, and pay directly from this account. I cannot use an overseas account nor a credit card or paypal etc. So on top of the ridiculous amount they want, I have to pay money to even pay money.
For most people the state gets paid every payday from automatic employer withholdings. If your withholdings are much lower than the obligation then you may pay interest penalties. So it’s not really necessary from a cash flow perspective but still would be much more efficient.
> Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?
The humans who make up the state are more keen to replenish their own personal coffers in the fastest, most efficient way possible -- good old fashioned graft. No one with significant power personally benefits from an efficient IRS with a pleasant user experience.
The thing is that the form 1040 is laugably straigbtforwards to fill out. If intuit has had any success, its in convincing people that filing their own tax returns is more complicated than it is
This is only true if you don't own anything, never make any contributions, don't have any investment accounts, and don't have any self-employment income. Otherwise the 1040 is a huge pain in the ass requiring forms within forms and raising tons and tons of nebulous questions about your exact status within the legal definitions.
I wouldn't assume that the people who pay for tax preparation every year are idiots.
I make 401(k) and IRA contributions, have been self-employed (and yes, had to file quarterly returns), have several investment accounts. It's still straightforwards. You don't have to be a rocket scientist to fill out these forms. The IRS provides copious documentation and even has a phone line...
Please stop assuming the guy you're talking to on Hacker news is a simpleton.
The US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.
In France, before this year, if you were an employee, you rarely filled a tax form, you just validated a prefilled one, usually with one click on the internet.
Now it's just taken every month from your salary, and you get a chance to correct it once a year.
Many countries do this, because in those countries, the government actually represents the interests of people. If there was ever a clear case of the US government putting the needs of businesses before the needs of the people, it's this: keep taxes as complex as possible in order to create business opportunities to sell products to make it easier again. It's a complete bullshit business that shouldn't be necessary at all. It exists only by the grace of an incomprehensible tax code.
Wouldn't generalise that much in saying my government (UK) is truly representative more than the US, but in the US in general, it seems that whatever business exists there has to be something for the middleman.
Also whatever government function exists must be open to a middleman to take their profit out of it. The US is optimizing for businesses and investors, not citizens.
Recently I was filing my taxes in Chile for the first time and it took about 10 minutes because the tax service already knows most of my activities, including stock purchases via a local broker and dividends from them. I only needed to review the form for correctness and press "send".
This is not done because the IRS doesn't have the power to enforce its tax system, and if it reported the information it had to the people, the people could know they can slip away with not paying anything that wasnt properly reported.
First, a transparent system of the IRS would lower revenue.
Second, the deductibles system is very complex for the IRS to pre-calculate it, so they are unable to do it.
You didn't cover the most important—and political—reason: it would delay refunds.
2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks.
As the tax refund check is the largest check many Americans receive every year, delaying that payout gets taxpayer advocacy groups up in arms and is tantamount to political suicide.
Incidentally, this same gap is where a bulk of tax return fraud happens—equalling billions of dollars. In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone.
I haven't seen any analysis that such a system would lower revenues (indeed, it would stop billions of dollars of fraud and tax evasion), or that the deductible system is too complex.
> In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone.
This doesn't really pass the smell test for me. The IRS has, what, 7 years(?) to audit your tax return. They can and will do so, and will send you a bill, with penalties and interest included. (Source: this has happened to me, around a mistake I made with self-employment tax the first year I had non-W2 income.)
Not sure how you'd be "long gone", either, unless you're not a US citizen and have since moved out of the US.
That's correct, albeit more nuanced than I was getting.
My point is that they'll "shrug", accept your return, and issue you a refund. Yes, they may come back later and say, "Actually..."
When I say, "you're long gone", I'm referring specifically to taxpayer identification fraud, where you'd file a (fraudulent) return on behalf of someone else (often a dead person or someone from Puerto Rico[1]), receive their refund in the form of a debit card, and "disappear".
In any case, it's way easier to avoid paying someone in the first place than try and claw it back later.
Other note that I like to make just because it's interesting: actual audits by the IRS are very rare. They send a good number of collection letter every year, and the collection rate on those letter is very, very good. But those collection letters are categorically not audits, and more "friendly reminders". (Such that any letter on IRS letterhead could be considered friendly!)
The difference is that you know whether you have all your required information. The IRS doesn’t know until it has everything.
Example: your only bank sends your 1099-DIV on February 15, so you file your return. You know that no other bank is going to send you a 1099-DIV because you don’t have any other bank accounts.
The IRS doesn’t know this. The IRS only knows that you didn’t get any other 1099-DIVs after they’ve received all 1099-DIVs and no more are yours.
The IRS could develop a system where they list what information they've received already, and you can then validate that this represents the complete set of expected information and request that they go ahead and process taxes now without waiting.
If they then receive more information later that would affect your taxes, they can bill you, or otherwise just go through the same process they would if you filed your taxes incorrectly under the current system.
Ideally, you'd want the IRS to be able to reliably populate a tax return, where all you do it sign it (or make corrections). A world where the IRS is pre-populating a return that may not be correct starts getting tough, even with such a taxpayer-warrant system.
Ideally, yes. If you need to preserve the ability to get refunds earlier than April 15 then one of two things needs to happen:
1. Move up the deadline for companies to submit tax information to the IRS, or
2. Allow taxpayers to declare that the IRS will not receive any more tax information than what they already have, with penalties for lying (presumably, the same penalties as what happens today if you submit your taxes early and you yourself haven't received all the relevant information yet).
Or we could just pay the one-time hit of "you can't get your refund early" and have the IRS process taxes once the existing deadline has passed for companies submitting tax information to the IRS. I say one-time hit because after the first time, any refunds for following years would occur 1 year after the previous year's refund, just like it does today, it would just be at a different point in the year (assuming you even submitted taxes early to begin with; if you didn't, then no change).
Especially with the tax reform, most folks will be taking the standard deduction. Making the common case easy is still worth pursuing, even if some people will still itemize.
No they don't. There's a gazillion things you could do or claim to lower your tax bill.
Moreover, if you set up all yoyr withholdings correctly then you do not need to file anything. You only need to file if you owe (ie you set up withholding wrong) or want yoyr money back (ie your withholding was wrong)
That is not true. You're generally required to file a tax return if your income is over 12K, depending on your filing status and various other rules, regardless of if you owe money or are owed a refund.
That's the problem. There shouldn't be a gazillion things, and the fact that there are is a major reason why rich, savvy, and unscrupulous people are able to game the system while average people pay full freight.
The second argument is about raising all relevant barriers to submitting your tax return. If I were in this camp I’d be pushing for everyone to have zero withholding and carry cash to a tax filing center. Ideally, there would be very few tax filing centers so you would need to travel far and wait in line. My bet is that within the first year of this taxes would be massively reduced. Also, very few people would actually be able to pay the government.
Yeah ,withholdings are garbage from an anti-tax pespective.
Great example of that today is that most americans believe the trump tax reform didnt help them (only 17% believe it helped them) but it literally and factually increased the income for 80%. At least one reason for that is that withholding was reduced, but refunds were reduced as well. Availability bias makes people remember refunds, but not their monthly payments.
> The law creates a single corporate tax rate of 21%, beginning in 2018, and repeals the corporate alternative minimum tax. Unlike tax breaks for individuals, these provisions do not expire [in 2025].
I don't understand what anyone would gain from this. Citizens would be more cash-rich throughout the year, then cash-poor when tax time came. Over the years, people would learn to squirrel away similar amounts to what they're withholding now. Withholdings exist now as a forced savings plan for the poor and a free loan system for the .gov for the upper class.
> My bet is that within the first year of this taxes would be massively reduced.
Making the filing and paying of taxes difficult and painful won't change a person's tax liability, it'll just irritate every citizen until we collectively demand an easier process. If you can't pay, you get penalties and a payment plan. Don't forget that the IRS is a government entity capable of legally charging, suing, etc. with the force of law. Why would having to travel to a payment center reduce someone's tax liability?
I guess I want to know more of the argument, for the sake of argument, because the argument doesn't make sense to me as presented.
The anti-tax group wants to make paying taxes as painful and inconvenient as possible based on the assumption that if taxes suck, more people will be more actively in favor of reducing taxes (as opposed to, you know, making the process not suck).
It's not about reducing liability at all right now, it's about making more people anti-tax.
I haven't heard an anti-tax argument in this topic, but this is a main argument between economists and statists.
Economists will always say that the tax should be explicit, and it should be placed for the people that ultimately pay for it. But pro-taxes people, mainly the government, want higher revenues first, which means putting a tax wherever you can, and that is about what is politically feasible, not about what is economically sound.
The end result is a hybrid of both interests. For example, San Francisco charges sales taxes, known to be regressive and punishing to poor people, but at least you know you are paying them on a ticket. Other countries, like europe, hide the VAT taxes, so it looks like you are not paying taxes at all. VAT reaches 10~20%, sales taxes in SF is around 6%.
> Other countries, like europe, hide the VAT taxes, so it looks like you are not paying taxes at all.
That is not true at all. In all European countries that I can think of you get to see the whole price, including VAT so that, you know, you can actually tell how much the product is going to cost you. The composition of that price is then shown, often in smaller font. This is true of price stickers, receipts and invoices.
I do not find it the least bit misleading, and would be rather annoyed if a cashier told me to pay more money than the price sticker indicates.
The claim was that the tax caused price increase is hidden in the overall price.
And while the reasons for that can be plentiful (even consumer protection, if wanted) one effect is certainly and obviously that it hides the amount of sales tax you pay.
The VAT is usually declared somewhere in the bill.
Whether I'm going through the terrible process to pay $20 vs $20,000 doesn't make a difference. How would a lower tax rate improve anything in this scenario?
The easier and more "automatic" any tax is, the easier it is to hide, and the less people understand that they're paying it. And as they become less aware of what they're paying, it becomes easier to take more.
OP is acknowledging the inverse is also true, and that if "automatic" aspects of the system were removed, people would become much more aware of what taxes they are paying, which would lead to public support for reducing the amount.
A pretty lame forced savings plan that nets you zero interest. I'd rather park the money I expect to need to pay in taxes in at least a high-yield savings account and get a couple percent rather than let the gov't have it.
But this ignores the fact that the US income tax system is actually a pay-as-you-go system, not a "you owe your taxes every April" system. You'll note that if you fill out a W-4 form such that your employer doesn't do much or any withholding, you'll find you owe late-payment penalties come April.
> My bet is that within the first year of this taxes would be massively reduced.
My guess is within the first year, they'd be reformed on administration to put less needless pain on taxpayers. My guess is also that with the needless administrative headaches so visible, it would actually make it politically feasible to pass tax increases that would otherwise be impossible, so long as you also deal with the needless administrative headaches.
Plus, I'd guess that even before that, every single politician attached in any way to creating the administrative headaches would be hounded out of office, or worse.
Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes.
What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea.
What would be nice is if we make the easy filing system but explicitly highlight the amount you paid in taxes compared to your income. Most people only judge on refund amount and rarely check the math on the exact taxes owed.
This is actually how things were done pre WW2. If people were able to budget for it then, why not now? The current system makes filing taxes and getting refunded seem like a reward, it should probably be a bit painful to do your taxes.
Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
This narrative is based on nothing. The overall tax rate has been basically flat bouncing between 15% and 20% since WWII[1].
The point isn't so much that people are taxed. It's that they are taxed by a monolithic out-of-control bureaucracy that has grown much to large for anyone's good. To add to this, I'd be 100% ok if my tax bill was flipped such that the federal government got what my local government had gotten and my local government got what the federal government had gotten.
I’m curious as to how you think your proposed structure would be significantly different from the structure under the Articles of Confederation. It seems as though we’ve already tried having minimal revenue raising structures for the federal government, learned that such a structure does not work well at international scales (240 years ago - we’re even more globalized now) and moved onto a more productive form of taxation.
The things we are spending money on (besides arguably defense) have next to nothing to do with working at international scale. Furthermore, while I'm not advocating we return to the era of AoC, the power granted via the current Constitution does not bestow the power, size, and scope of things that the current federal government has embraced.
Well, one thing that would simplify things and reduce the number of taxpayers that have to deal with filing returns is to simply exempt people who make less than a certain threshold, perhaps $40k. People making so little money are already struggling, so why do they need to pay taxes, and worse, spend time and money filing tax returns for that?
That's already effectively the case, though the numbers are different. If you're married and make under $24k per year, you don't pay tax. (And other credits that low-income people often are eligible for can increase that number.) It is annoying because you still have to file, and if an employer withheld anything, you have to wait until April to get it back.
I meant that it would be nice if people with low (and even middle) incomes weren't saddled with having to file a tax return. It's a huge pain point for people struggling to make ends meet.
This would probably require some simplification of the tax code.
"becomes too easy for the government to nearly invisibly turn up the tax rate"
Or not.
Source. I live in a country where the vast majority have income taxes handled by their employer. It would still be front page news if income tax rates increased or decreased.
That's not my experience. The UK has automatic taxation but the current government lowered effective tax for most people this month and parties make tax-rate pledges during election campaigns.
How many days is it reasonable for something to be front page news? Personally I'd prefer 365 different headlines then the same one for 4 months straight.
It's actually a little ironic who introduced the idea of tax withholding. It was Milton Friedman and little did he know that federal tax withholding would allow the government to grow larger than ever imagined.
> If people were able to budget for it then, why not now?
A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years.
> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
Given that it directly affects take-home pay, any significant change is pretty noticeable. Heck, even Trump's very small changes for the middle class were noticed on paychecks slightly, though there was also an unequal decrease in witholding that made people's refunds smaller.
> A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years.
While these may play a small part in why people couldn't budget for it now, I think a bigger part of it is that income tax just did not apply to most people in as large of sums that it does today.
For example. The lowest tax bracket in 1940 was 4% and went from $0-4000. Median income at that time in the US was about $950.
Using the tax brackets to measure how much we pay in taxes is incorrect. There are things like Earned Income Credit and other credits that generally relieve the tax burden completely from lower income earners.
Far fewer people were subject to the income tax at the time. The average Joe who couldn't read well or do much arithmetic didn't have to worry about it. For this reason the Social Security tax was implemented as a payroll tax.
The tax was intended primarily as a tax on the wealthy or middle class, but over time by not adjusting the standard deduction/exemptions, more and more people ended up paying the tax. You could also make the argument that more and more people became middle class.
> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
Non-sequitur. Taxes are already seen on every pay stub and tax return. Even if taxes weren't explicitly state, simply having less money is painfully transparent.
But if I were to design a tax system, it likely wouldn't have withholding. I'd probably mess around with some weird purely transactional/continuous tax system though.
At least if you're using the tax prep software I did it offers a 'payment plan', which seems like an upfront way of asking to have wages garnished post-taxes due, instead of before (like W4?s do)
This is something the IRS does directly to encourage people to file even if they can't afford to pay right then. This helps with cases like self-employment income or capital gains where you can end up owing at the end of the year even with W4 withholding for your primary income stream.
The penalty for not paying is much lower than the penalty for not filling, if you owe.
It's possible your tax prep software does their own version as a middleman, but the IRS offers it directly through the same system that quarterly estimates are paid.
I've always thought it would be better to replace the income tax with a national sales tax. Then, for those who earn less and have to spend a greater proportion of their income on essential expenses, the government would credit them through their employer's paycheck (essentially the opposite of what federal withholding is now). For those who earn more, they would receive less credit or won't receive any credit.
Wouldn't that make the lower class the only ones that had to file anything at all (for the tax credit), put temporary financial strain in place when waiting for credit for purchases and actually make the IRS more complicated and onerous for most Americans?
I get the attempt to sidestep the regressive counterarguments normally in play with sales tax replacement systems, but I think this system would be equally regressive.
> Wouldn't that make the lower class the only ones that had to file anything at all (for the tax credit
They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes. That's certainly less burdensome than even just the 1040 form now.
> put temporary financial strain in place when waiting for credit for purchases
What I proposed would be a credit that would be applied to every paycheck, much like the withholding we currently have applied to every paycheck. So the wait for credit wouldn't be ant longer than it currently is before the next payday (assuming they're living from paycheck to paycheck).
> and actually make the IRS more complicated and onerous for most Americans?
Having this credit calculated based on the reported earnings on the W-2 form and filing a W4 is certainly less complex than just filing the 1040 form. Plus, most people wouldn't have to worry come later this month if they haven't had enough withheld from their paychecks in the last year.
> but I think this system would be equally regressive.
If people with less income are getting a credit on every paycheck and they spend less overall compared to people who earn more and get less or no credit on their paychecks, then why do you believe that the proposed system would be equally regressive?
> They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes.
This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise. Of course, if the conditions it works were always true, irreducible complexity (that is, excluding the complexity that is maintained simply because both conservative politicians and tax-prep businesses have an interest in making tax prep onerous unless you pay for an additional service) for taxpayers of the current to tax system would be significantly less.
It doesn't, even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.
> This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise.
The current W4 form takes dual income/second jobs into account and adjusts the withholding based on that. Changing that withholding to a credit based on income, number of jobs, dependents, etc wouldn't be any worse than it is now, but eliminating the 1040 and other associated forms would definitely be a big benefit.
> even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.
We have tax brackets now based on income level. Would basing a credit on similar income brackets be any different? Or are you claiming that out current tax system is regressive and my proposal wouldn't fix the underlying issue?
> Wouldn't that be Wouldn't that be regressive, in the sense that richer people spend a lower proportion of their income?
The paycheck credit I proposed should address that. Plus rich p
eople definitely spend a lot more compared to others.
> Plus they have the means to spend their earnings abroad
While that's true, they certainly could be taxes on major purchases. For example, I could buy souvenirs abroad without passing tax on them, but I wouldn't be able to buy a car and not pay the tax before titling it here.
There's a couple of big problems here:
1) Rich people spend a lot of their money on real estate, so unless you're going to come up with a good way of taxing that (which we don't do now; property taxes are local), rich people aren't going to be paying much in taxes, and
2) Rich people spend a lot on foreign vacations and travel, which is untaxable domestically for obvious reasons. Sure, they still have to pay titling tax on cars, but when they're spending tons of money on foreign hotels and such, cars are a drop in the bucket.
In short, there's a reason that no other developed nation taxes this way, and they all have income taxes. And all those other nations manage to have relatively simple taxes for most taxpayers that don't require paying H&R Block to file for them.
> Rich people spend a lot of their money on real estate, so unless you're going to come up with a good way of taxing that
The same thing can apply to real estate as it does for cars. That is, a sales tax you pay when you purchase the home. And the sales tax doesn't have to be a flat amount. It could be a greater percentage of the value of the home for homes that are valued at several million dollars as opposed to those that are worth only several hundred thousand dollars.
> rich people aren't going to be paying much in taxes
Isn't that the case currently (compared to what they could be paying due to all the loopholes in the current tax code)? If we focused on taxing transactions as opposed to possessions and income, then the rich could be taxed far more. Invest in stocks? Then you can be taxed when you buy them. Invest in real estate? Then you can be taxed when you buy property, etc.
> Rich people spend a lot on foreign vacations and travel, which is untaxable domestically for obvious reasons.
That is true, but it seems that the US is one of the few nations in the world that states that you have to pay taxes on income you earn outside the country (assuming you don't pay taxes on it in the other country). That said, I think that we should focus on the majority of tax payers in terms of making how they pay taxes easier and hopefully more fair.
> there's a reason that no other developed nation taxes this way, and they all have income taxes. And all those other nations manage to have relatively simple taxes for most taxpayers that don't require paying H&R Block to file for them.
I don't pay anyone for filing taxes, but it takes days to read through all the instructions for the 1040 form and other associated forms to see what applies to me and what doesn't. Personally, if I was able to take care of my tax obligation by just buying various things throughout the year and getting my full paycheck, then I would certainly be happier and not have to essentially waste several days every year figuring my taxes.
Basically, we wouldn't have to go through the process of filing taxes every year, and we wouldn't have to worry about the potential bill and penalties if we didn't have enough money withheld from our paychecks in the last year.
The W4 form should be sufficient (since it's used to determine the credit, if any, you receive per paycheck). You shouldn't need to file a 1040. Your employer would file the W-2 form which would allow the government to determine your income for the purposes of the amount of credit you receive per paycheck.
Isn't that income also reported to the government via 1099 forms or similar? Do those who make less money typically also have income from sources such as collecting rent or capital gains?
I suppose that reporting does happen or at least could be made to happen under the new system.
I used to make $80k per year in salary(which is far less than most of the top decile in the USA) and in one of those years had over $10k in capital gains. In the same year I thought about buying a house to rent out. I ultimately didn't do it, but if I had, then I would have had to declare the income as part of my tax return filing process.
Just as one data point.
I'd say within six months we would be back to the same tax system. People would either get a monthly bill or withholding would be reintroduced. Payroll processors would give people the option to do the withholding. As an experiment we could try to switch to withholding taxes on a quarterly basis. There would be lots of trouble as people hit that first quarter's reduced paycheck.
He isn't claiming paying taxes is bad, he's claiming (correctly) that lobbying for a complex tax code and to prevent the IRS from offering a free-filing tool because it competes with entrenched tax-filing companies is evil, and it is.
Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his biggest point was that his goal was to support a system where people paid as little tax as possible, and this current system we have is just that.
> However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can.
lol. No.
First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations.
Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.
If private tax filing products saved money for their users, as compared to a hypothetical, IRS-produced product, what are these companies worried about? They'd have a clear competitive advantage over the IRS product.
How could they save money, though? The tax code is the same in both cases, and most people's financial lives are not complicated enough to make it any kind of challenge to get the best refund.
If complicated taxes are a Republican anti-tax strategy, why did Reagan and the 1980s republicans pursue a strategy of vastly simplifying the tax code?
Doing taxes is a tax -- in hours and fees. Only the wealthiest people who can spend $10K on tax prep to save $100K via loophole deductions, oh.
Simplifying the tax code in the 80s was the public sales pitch. The real strategy was to dramatically cut taxes on the wealthy (e.g. by eliminating the top several marginal tax brackets).
But keep in mind, the Democrats controlled congress, so reform had to gain bipartisan support.
No-one paid the top brackets because the tax code at that point was riddled with ways to generate tax losses that reduced liability. The tax reform really was a good thing (unlike 90% of what happened under the Reagan administration)
> Government redistribution made growth more equitable, but only slightly so. After taxes and transfers, income in the bottom quintile stagnated (+4%) over the 1980–2014 period while it grew a meager 21% for the bottom 50% as a whole. That is, transfers erased about a third of the gap between macroeconomic growth (61%) and growth for the bottom half of the distribution (+1% before government intervention). Taxes did not hamper the upsurge of income at the top, which grew almost as much as pre-tax.
> The top panel of Figure II provides a granular view of who benefitted (or not) from growth, by showing the annualized real growth of pre-tax and post-tax income for each percentile of the distribution over the 1980–2014 period, with a zoom within the top 1%. There are two striking results. First, the vast majority of the population—from the bottom up to the 87th percentile—experienced less growth than the (modest) macro rate of 1.4% a year. For instance, the 10th percentile declined by 0.6% a year pre-tax (+0.3% post-tax); the 30th percentile stagnated pre-tax and grew 0.6% post-tax; the 80th percentile grew 1.2% pre-tax (+1.3% post-tax). Only the top 12 percentiles of the population achieved a growth rate as high or higher than the macro rate of 1.4%. Second, even percentiles 88 to 98 experienced unimpressive income gains, between 1.4% and 2.2% a year—in most cases less than the macro growth rate of U.S. incomes for the preceding generation, from 1946 to 1980. The only group that grew fast is the top 1%, whose average income increased 3.3% pre-tax and 3.2% post-tax, with growth culminating at +6.0% a year for the top 0.001%. The top 1% has pulled apart from the rest of the economy—not the top 20%.
By cutting the ability to deduct SALT they made tens of millions of people who would have otherwise itemized do a simple 1040. While not a postcard it did greatly simplify taxes for many people.
That said, most of those people are still going to see it as a travesty because they had to pay a little more (god forbid people rich enough to have thousands of dollars of SALT pay taxes on the income used to pay that SALT).
The idea is not to make the taxes deliberately complex, it is more about the notion of who is telling whom what is owed. A system where the citizen says "hey government, I think I owe you this much in tax because x" is fundamentally different than a system where the government says "hey citizen, you owe me this much in taxes, here's your bill".
In the second situation, the average (complacent) citizen will not look twice at the bill, but rather just pay it and get on with their life. In the former situation, the citizen is forced to have a 3rd party create a statement that says "I owe you this much because x" and because of natural incentives, the company will try to claim the maximum number of [incentives, loopholes, deductions, whatever you want to call them] so that the client saves the most amount of money. Of course the company takes its cut and I'm not arguing that greedy companies are the perfect solution. I'm just saying that there is more to the argument than simply it being a matter of lobbyists getting their way.
> The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money.
Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers.
The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.
> The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.
I was not asked for such a thing, and used a different preparer this year. I was asked to set a PIN for 2018, but I have never had to use a PIN I previously set. I have always been asked for the prior year's AGI for verification. What software asked you for a prior year's PIN to file this year?
There're at least 12 private companies listed by the IRS who offer some form of free filing service[1]. Direct from the horse's mouth[2] (my emphasis added):
> When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior-year Self-Select PIN.
To be sure, a filer's prior-year AGI would serve the purpose almost[3] as well. It doesn't even matter what "code" is actually required of the filer, only that one is required at all for the convenience of e-filing. The point is it just needs to be something arbitrary enough for free filers to easily misplace record of but is routinely captured as yet another database entry by service providers. That's how repeat customers at the bottom end of the economic ladder are maintained...none of this "maximizing returns" feel good theory that the parent spoke of.
[3] maintaining record of prior-year AGI has utility beyond just tax returns--e.g. applying for benefits and/or services which are limited to people below certain income thresholds--but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism
> To be sure, a filer's prior-year AGI would serve the purpose almost[3] as well. It doesn't even matter what "code" is actually required of the filer, only that one is required at all for the convenience of e-filing.
It matters to your statement, which is wrong as you made it.
It matters whether the "code" needed is something the taxpayer made up for this one specific purpose or is a number readily available on the form they are supposed to print and file, and can thus easily retrieve.
> maintaining record of prior-year AGI has utility beyond just tax returns
Everyone should be retaining at least three prior years of tax returns, so anything that helps prod them in that direction is a good thing.
> but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism
More effective mechanism for what? I personally think they should just ditch the PIN entirely and rely solely on AGI, for the reason I stated above.
It's quite apparent that you've completely missed the overarching point of this discussion.
> It matters to your statement, which is wrong as you made it.
What part exactly? You speak from narrow anecdote in your limited encounter with 1, maybe 2, online service providers and have provided precisely zero supporting reference otherwise. I've provided corroborating citation direct from the IRS.
> It matters whether the "code" needed is...and can thus easily retrieve.
No, it really doesn't. All that matters is that it's easily misplaceable or forgotten...the more arbitrary and useless, the better it'll serve the objective role of vendor lock-in in a world where options abound and financial incentives to the filer are the same as a direct consequence of the inherent simplicity of their case filing.
You've also made certain unjustified presumptions on the ease of retrievability. Once upon a time, at least one well known service provider would produce a digital summary of your filing only after the IRS had accepted the return (not to be confused with receiving it), and this personal copy was generated for free if and only if it was downloaded before the tax year rolled over. So if you forget to download it for personal record, they'd gladly reproduce the summary any time in the future...for a nominal fee. In the past, this dark pattern disincentivized e-filing with a different service provider in subsequent years, and it wouldn't surprise me if some still pull this tactic.
> Everyone should be retaining...
What everyone should be doing from a records management perspective is both completely irrelevant to this discussion and disconnected from happenings in the real world, especially as it pertains to individuals on the lowest rung of the socioeconomic ladder. It might surprise you at how many people actually fail to maintain a copy of their vehicle's registration and proof of insurance in the only vehicle that it would be applicable to, or how many people don't even have a copy of their own birth certificate. These are pretty damn important documents, yet surprise: the human condition is real and people are inherently lazy as fuck. That you actually expect the poorest and least educated in society in general to maintain annual records on something as obtuse as tax returns is quite naive. Do you really think the tax return service industry isn't actively exploiting the crap out of basic psychological shortcomings of society to the benefit of their bottom line??
> More effective mechanism for what?
It's the whole point of my original remark: identifying the fundamental mechanisms which are largely responsible for producing repeat conversion in an industry where options abound, the product is free, and little to no differentiating factors of value exist between competing service providers.
At the ass end of the totem pole, the game of repeat conversion isn't about which service provider is going to somehow provide a filer with the biggest tax return as the parent asserted, and to which I disagreed...we're talking about candidates who qualify for free filing; these are the simplest of turnkey cases, hence why the service is offered for free to begin with! It doesn't matter what you think about the pragmatic utility of the self-service PIN because the fact is it's one of two options mandated by the IRS as a requirement to e-file. Some service providers will require you to produce last year's self-service PIN to e-file, some will require last year's AGI...wouldn't surprise me if some require both.
Bottom end of 22% tax bracket is ~$43k/annum based on 2019 Notice 1036...that's a $23k margin before hitting the $66k AGI threshold for free file offerings.
That number is more like ~25mil, or just over 18% in 2017; +4.6% over previous year[1].
EDIT: I suppose I should probably ask what point you were trying to make? I didn't quite track where you were going with all that.
Except the tax preparation industry must be taking a significant enough cut to make it lucrative to spend money lobbying. Is that cut smaller than the total extra tax that would be paid due to mistakes in the auto filing system? I'm skeptical.
I suspect (but don't know) that they make more off of the various up-sells for people with more complex filing situations. Also, the free filing is marketing. It's their foot in the door. If something like rapid return happened, they would lose that strategy.
If republicans wanted to make a system where people would save the most money we'd just reduce the tax loopholes and simplify the system - the system we have now actually only has the wealthy pay the least money.
Some would say the republicans think this is a feature.
This is not true. There are tons of bread-and-butter deductions for the middle class. If you do a cross country comparison of taxes, the biggest difference between the US and Europe is not the rich. It’s the folks making $40-100k, where our low brackets plus tons of deductions (mortgage interest, child care, child credits, etc.) drive the effective tax rate way down
Folks in Europe comparable to the ones you are talking about here (i.e. the 50th–85th percentile) are generally much more financially stable/comfortable than in the USA.
Varies a lot from country to country, but in general they have e.g. more-or-less functional healthcare systems, better parental leave, more vacations, easier access to childcare, stronger worker protections, ....
You can't really compare tax rates without considering other mandatory costs like health care. Include health insurance and the numbers don't look so good for the USA.
You're not wrong, but it should be noted that in some countries (DE, CH) people also pay health insurance premiums to private companies as well. It's just in those countries health insurance is non-profit (unlike the US).
Just a note that the mortgage income deduction, which is a travesty, benefits high-earners far more than low-earners; something like 70% of its benefits accrue to the upper class.
> The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.
I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.
There's a few companies that are allowed to efile that do very little besides convert the IRS paper forms to web forms and do the arithmetic for you. They tend to be a lot cheaper than TurboTax/H&R Block. I've been using one of them (OLT) the last two years has worked well enough for me and efile processes a lot faster than paper.
I also believe people should be filing their own taxes and understanding how the system works. I've owed money the last two years by underestimating self-employment taxes, so this year I've set up a spreadsheet that tells me how much I'll owe each quarter with all deductions built in and a tiny bit of overestimation.
It’s worth it to me to pay a couple hundred dollars not to deal with it it and have someone else's signature on my return - that being said I have a back of the envelope spreadsheet that estimates my tax liability using about 5 inputs and is usually pretty accurate vs my prepared return
Are you under the impression that having someones signature on the return means you do not owe tax penalties if they do it wrong? If you read the copious amount of detailed instructions the irs provides, you'll soon find that thats not the case
Conspiracy theory: what if IRS (the Govt) when designing the free software with all the options--thousands and thousands of pages https://www.politifact.com/missouri/statements/2017/oct/17/r... --lean on the side of the government when in doubt? Intuit, HR Block etc have some sort of guarantee and incentive to save users, IRS not so much. Doesn't even have to be a conspiracy theory ("We need the money so let's make them pay $xx Billion more this year") just the way incentives work. Maybe simplify the code first?
The IRS outsources the development of the free software.
All the IRS does is publish the tax code in a specific XML format. MEF (mechanized e-file) is the interchange specification. It's rather a shame there's not more open source effort around tax filings...
>It's rather a shame there's not more open source effort around tax filings...
This is one place where FOSS just isn't going to work. Let me ask you: are you willing to invest a lot of your time and effort into contributing to such a project? No, I didn't think so. Me neither.
Here's the problems with it:
1) It's not very fun. Volunteer coders don't want to work on something as deadly-boring as tax filing.
2) It's USA-only: lots of FOSS volunteers are outside the US. They're not going to spend their time on a tax tool they're not going to use.
3) It's constantly changing. The tax code changes every single year. Lots of FOSS projects become mature at some point, and only get maintenance or occasional feature additions. Most do not work according to a schedule. The IRS requires you to file your taxes on April 15, and they release the changes to the tax code a certain amount of time before that, so a project would only have a certain window of time to incorporate all these changes.
4) The risk to users is high, since there's no one really willing to guarantee this product. Of course, bugs in tax-prep software don't absolve taxpayers, but there's still a certain appearance that a big company standing behind a product makes it safer.
maybe not exactly the same but it is aguable if the majority of people had to write check to pay their taxes instead of having their taxes auto-deducted by their employer they'd push much harder for lower taxes and less government spending
it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k)
PS: don't have an opinion if this would be a good or bad idea. can see it both ways
What you suggest is exactly how it worked before 1943 and there was a massive expansion of government, government services, and tax rates between 1913 and 1943.
The actual historical evidence strongly suggests this theory is spurious and easily dismissed.
Congress sells out the american people. Congress doesn't work for the American people. Congress works for moneyed interests (corporations). This is congress aiding crony capitalist theft
Oh man, I've had government provided automatic filings for ages now (Finland). US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems). Or have I completely misunderstood what's going on here?
It's because historically our society has treated businesses, their leaders, and the free market as churches, priests, and God, respectively. They've brought us much wealth and power, but putting restraints on them or getting in their way at all are cardinal sins in American politics. Politicians can take bribes and then package the resulting deregulation with euphemisms like "small government" and "supporting the free market". The most brilliant part is how they serve huge corporations, but then sell their actions as supporting all (read: small, too) businesses, even when they don't.
seems like the antithesis of small government to have it explicitly bar itself from providing free services helping its citizens pay for said government. the latter should be as seamless as possible given that failure to comply results in adverse government intervention.
Corporate pressure is important but the fact that people in the tax preparation industry form a decently sized and committed voting block is even more important.
I live in Germany, which is said to have one of the most complicated tax systems known to man. If I had one (realistic) wish for a German government, it would be to do it like Finland.
Sadly there is a whole branch of people working on this, without any interest to make it easier..
Norway is very simple too. Most people can just do nothing at all. The way it works is that the tax authority creates a proposed tax record and notifies you by SMS or email or both or even by letter if you ask for it. If you agree that it is correct you don't need to do anything at all, otherwise you log in to the web site and adjust whatever needs adjusting in a bunch of simple forms.
The tax authorities also have a duty to calculate the taxes in the way that benefits you most.
In Portugal, of all places, it’s just a web form. This year it took me a grand total of 3 minutes to review all info and less than 10 clicks after logging in.
Just a few weeks ago, I logged into Elster, opened the pre-filled tax return (Belegabruf) and sent it. Instead, I could have filled the short and simple Vereinfachte Steuererklärung by hand which covers all common cases.
Most workers don't need to do anything to get their overpaid tax back thanks to the Lohnsteuerjahresausgleich.
Aldi (or Lidl) every year sell a Tax Prep software for 5 euros. Our in-laws buy a copy, install it, then pass it on to us (same key works on multiple PCs). The software's UI could use some...clarity in certain places but it is incredibly full-featured.
We've been happily using it to file our German taxes for years.
Yes, the US really values the middleman. There is something to be said for it, since middlemen can compete and innovate. In computer science, this is called indirection — it provides more flexibility and without it, you have one-size-fits-all solutions. In the real world, you have for example Uber/Amazon/Apple /Google/Facebook squeezing providers, due to their monopoly powers.
What happens in the real world is that the doctors aggregate (AMA, ADA) and then the patients aggregate (insurance companies) but it never quite gets to a complete single buyer/payer on both sides without government action.
There is also the argument for how many jobs will be lost in X industry if we replace it with a more efficient solution. Here is a recent video of a famous paleoconservative debating it with a famous neoconservative in the US: https://m.youtube.com/watch?v=YFMcq0Vzsb4
Usually the solution is social democracy - letting the private markets operate but having the government run a single payer system for the basic level of service so sellers compete and buyer’s don’t, and everyone is entitled to the basic level.
Single payer can achieve far lower prices, as can eliminating IP protection. But after a while this may have a deleterious effect on R&D (unless you eliminate the IP protection).
The question I have is whether a government provided automatic filing would actually be cheaper (or more effective) than say, Turbotax.
I see a couple of ways in which it might not be as favorable:
1. It costs more than $100 per tax payer per year to implement (about the cost of Turbotax). However the flat $100 or so that most people pay to Turbotax can be seen as a kind of regressive tax.
2. It is less effective at finding the biggest possible return.
>The question I have is whether a government provided automatic filing would actually be cheaper (or more effective) than say, Turbotax.
The question is valid, but the numbers do not add up. TT asks ~$50 for federal return. If everyone in US used the service, the cost would amount to over 16 billion dollars. That is more than the entire IRS budget[1] right now.
On the other hand, the IRS generally already does many of these calculations, since they receive many forms of income directly (W-2s from your employer, 1099-INT from your bank, etc).
The better question is how much it costs TT to operate returns, and how much of that $50 is profit-taking.
It's an order-of-magnitude estimation. Turbo Tax offers multiple products with different prices. Even if you plug in more exact numbers and use the cheapest product you get a hefty sum of 9 billion (150M individual returns * $60). IRS total budget is 11.5 billion and they do way more than just process returns.
There is no way an e-File system run by IRS would costs additional 9 billion dollars per year. They already do most of the calculation internally.
First, adding a host of third party’s increases the risk of data breaches for minimal benifit.
Anyway, the government needs to collect and verify all information anyway. So, the sum total of TurboTaxes value is creating screens to collect information. If they can do a better job than the government then let them charge for it. But, by banning the free option they are saying they don’t actually create value.
>the government needs to collect and verify all information anyway.
That's a great point. IRS already has most of the information and infrastructure to fill out your taxes. Third-party solutions have to build large chunks of the same thing from scratch.
> Anyway, the government needs to collect and verify all information anyway.
Eventually. Not necessarily by the time you file, and not necessarily on every return. Remember, the IRS only audits a small fraction of returns for accuracy. Auditing every return would be a much bigger job than they currently do.
I'm not saying they shouldn't, but it isn't as trivial as a lot of people here seem to think.
The IRS does basic verification on all returns. An audit is a more extensive check, but when somone makes a math error on a paper return they will end up getting a bill.
Doesn't the government already need to calculate what everyone has to pay so it knows when someone hasn't paid enough? The IRS probably already has the same systems being developed and maintained to keep track of everyones taxes, the system would need an user friendly public interface, but it wouldn't have to be developed from scratch.
The idea that some business gets to ban the government from offering a service and some people argue that it's good for eveyone is totally absurd to me.. from a country where I log in to our version of the IRS, where my salary information is pre-filled, I only need to add stuff if I had some other income.. and the system is totally free to use for everyone, and most people just spend about 5 minutes once a year to declare their taxes.
> Doesn't the government already need to calculate what everyone has to pay so it knows when someone hasn't paid enough?
It needs to be able to (eventually), but it doesn't. Setting up a system where this was possible requires some significant changes to the tax code, process, and the IRS itself. Of course, this shouldn't stop us from trying.
But TurboTax has many other incentives besides making tax filings more efficient, including reselling user data, targeted ads for their own products, they might even have reasons to nudge you towards certain options and dark-pattern others.
On the other hands, Americans are much less likely to commit tax fraud than other countries, so perhaps the netherlands should encourage more people to report their sheltered assets?
>US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems).
I wonder what extent this is decided by how we vote. As long as voters pick the politician who prioritizes the middle man and gets their campaign contribution is selected over the politician who prioritizes the public but whose opponent gets the middleman's campaign contribution we will continue to see this behavior. The moral of the story is to look at the voters' actions and not their words. They select candidates based on oftentimes harmful criteria.
Is the public really to blame for this? Is there an actual broad constituency that doesn't want this, or at least who trusts an interest group to represent them and who doesn't want this?
Want and behavior aren't always aligned. Does anyone want to be unhealthy? Yet many people act in ways that makes them very unhealthy, some of whom have the ability to change it but choose not to.
How much does someone want something if they aren't willing to change their behavior to increase the chance of getting it?
Well, first of all, lobbying for good laws is a public goods/collective action problem, so it may not be optimal to spend money on pursuing it even if you are the "go getter" type.
Second, I was just addressing the claim that politicians pass these laws in response to broad support, by questioning whether such broad support actually exists, even if it doesn't translate into lobbying (since the implicit model i that politicians will still care about it).
I don’t want this? We are very bad in America about hiding taxes, e.g. through unfunded mandates and mandatory cross subsidies. We don’t need to do anything more for people to have even less insight into what the government actually collects from their paycheck.
That seems more like an argument for a different interface than against the service entirely -- that would justify making it so that you still have to see and sign a form that shows how much you're paying against what earnings.
I think you're falsely equating (as do the Norquist types)
a) "the financial burden of the tax should be explicit" (which is fair) and
b) "the paperwork should be unnecessarily burdensome" (which is sadistic).
Can someone explain how rayiner's argument goes against the idea of IRS-prepared taxes itself rather than the UX of the implementation? It sounds like he’s just trying to be devil’s advocate (to put it nicely).
Why are Norquist types inclined to impose even more burden on what the tax burden actually is? Even if the IRS calculated your taxes, you'd still get the bill to pay it. That's already more than could be said for payroll withholding, which is the primary "unseen" tax.
I don't know! I actually strongly lean toward the Norquist "taxes suck and need to be lower" approach. But for me, that was about making sure people are aware of the rate and amount. Making it painful to file is just sadistic (as I might have suggested before).
Same thing here in Norway.
We get the tax return forms pre-filled and if we want to make changes it can be done on a government web page easily.
Capital gains, most deductions and assets/loans are also registered automatically.
If you have no changes then you don't need to do anything at all.
Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?
In the US, the IRS supported an e-file system that basically allowed electronic versions of forms to be submitted, but it was arcane enough that a cottage industry developed to assist users in prepping documents for e-file.
How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?
Even if the US went to an IRS-pre-filled return, there would still be room for third-party tax software that improved on the user experience, so I think if the IRS supported direct filing of taxes it would also be good to preserve the ability for software or designated parties to submit information on the taxpayer's behalf.
"Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?"
The taxation has been pretty automated for a long time.
As a regular taxpayer nowadays I just get a paper form that describes the precalculated taxes, and if they are fine, I don't have to return anything. There are some pre-deducted things, and if I have anything add to that,
I'll then just either fill in the paper form or the electronic equivalent.
So yes, there was a basic "semi automated" scheme that has been steadily improving and now the tax authority has just added a web based interface for feeding data into it.
About filling the taxes on behalf of someone else -
There really is no need for tax preparation services unless you are business entity (in which case you likely already have your own accountant doing it) or the wealth is considerable enough to merit actual tax planning. Otherwise the tax code is so straightforward and simple that anyone can do it. If there are some questions, you can always contact the tax services and they will usually offer helpful and professional advice on how to proceed.
So there is no market for that kind of thing in the large. The "defaults" provided by government help in this regard as well.
I kinda understand the adverserial positioning of "people vs. the government" in the US - it just sounds to an outsider the main reason not to make things easier is because that would eradicate business from turbo tax. Kinda like the government mandated you need to own a useless dead parrot, that you can only buy from Parrot Co, that needs to be kept in the refridgerator in an exact position mandated by the law.
> Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?
The "tax return suggestion" was introduced in 1996. So it predates all electronic filing.
Filling tax returns via a web service became available in 2008.
The first (non-web) electronic tax filings were made in 1997, but those were for corporate returns. Not sure when it became available for income tax returns (that use case is rare here).
I would love automatic filing in France. The process isn't that complicated, as long as it's just a single income. I dread the day where I'll sell my shares or qualify for a tax-return, because it's not going to be fun.
>Is this similar to PAYE or do you actually have to submit a tax return but it's pre-filled for you?
As long as your PAYE is like Ireland's (ROI) PAYE, then the American's system is far-removed from it.
Even though their tax revenue office gets the reports from businesses for how much they were paid and how much taxes they paid, the Americans still need to fill out a tax form - every year - to repeat the same information (it's an added benefit for the prison system, in that mistakes on tax forms can equate to jail time). They get a form from their employer (which their tax office also has), that contains all of this information.
>In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.
Aye, it's the same in Ireland (ROI). You can just call-up or email Revenue and they check if you've overpaid, by how much, and they just send you the money. No forms. No bullshit. No threats of jail time. It's pretty deadly[0].
You want nothing to do with the Yanks' tax system, trust me.
> Even though their tax revenue office gets the reports from businesses for how much they were paid and how much taxes they paid, the Americans still need to fill out a tax form - every year - to repeat the same information (it's an added benefit for the prison system, in that mistakes on tax forms can equate to jail time). They get a form from their employer (which their tax office also has), that contains all of this information.
You seem quite ignorant of the U.S. tax system. There are no criminal penalties for mistakes on your tax form. (the IRS doesn't even have prosecution authority--all it can do is collect evidence of a crime, and refer the case to the Department of Justice.)
And your tax return doesn't just "repeat the same information" as your W-2s. For example, the W-2 reports income on an individual basis, while married couples file a return as a single unit. The amount of tax owed will generally be different for married couples versus the amount of tax withheld. (And there is no federal government database of marriages the IRS can use to match up things on the back end.) The IRS also has no idea how many children you have living with you, and can't give you the appropriate credits for that.
Technically, the social security administration gives out social security numbers. But that aside, more than 40% of children don't live with both biological birth parents: https://ifstudies.org/blog/more-than-60-of-u-s-kids-live-wit.... So your automated calculation will get it wrong almost half the time.
> All of those tax credits you mention are given by our respective tax agencies when we become employed and/or we change status with the tax agency and/or we obtain a new job (depending on how you avail of tax credits).
There are many tax credits in the U.S. that aren't tied to changes in job status. Every year, I have to dig up receipts for what we spent on daycare, what we spent out of our HSA accounts, etc. The government doesn't track any of that.
> Odd, I thought you faced the penalty of perjury[0]?
Perjury requires willful (i.e. knowing and purposeful) false statements in your tax return. I guarantee you that if you make false statements using Ireland's online system for claiming tax credits, you're under penalty of perjury as well.
>Every year, I have to dig up receipts for what we spent on daycare, what we spent out of our HSA accounts, etc. The government doesn't track any of that.
Aside from the daycare costs (as an aside, creche in Ireland is quite decent[0]), isn't all of that is still reported to the IRS? Your HSA isn't sitting in some dark corner that the government doesn't know about, ever since the Patriot Act, yeah?
I'm fairly certain it is reported to the IRS because Americans find getting bank accounts overseas quite cumbersome because your government strong-arms agreements that demand that Americans' overseas bank accounts are reported to the IRS. Surely, more domestic reporting shouldn't come as a surprise or shock.
>I guarantee you that if you make false statements using Ireland's online system for claiming tax credits, you're under penalty of perjury as well.
What do I get for a broken guarantee[1]? :)
This batering back and forth really only arrives at the conclusion that I originally posited:
Those of us in the PAYE system[s] would abhor having to do things the American way and this wasn't meant as an affront (and I apologise if anyone may have taken it that way).
Our tax agencies are responsible for keeping track of these things and the only things we're responsible for is reporting status changes and/or providing receipts for other proofs of burden (such as Independent Contractors who file as Directors of Umbrella Corporations and need to write-off business expenses).
The IRS does not in the ordinary course receive informational returns about people's bank accounts. They do receive informational returns about interest generated by bank accounts (and other places), but they don't get e.g. transaction lists by default. Google "1099-INT example" to see one of these informational returns. They're minimalistic and they are minimalistic precisely because a large portion of the US polity hates the notion that the IRS would have arbitrary read access to people's financial lives.
You can reasonably assume that the IRS can use subpoena power to compel a US financial institution or foreign financial institution to surrender records to it. This is an oppositional process and they use it relatively rarely next to the total universe of taxpayers and accounts, generally only after they already have evidence of hinkiness and want to quantify unsurveilled amounts and/or locate assets.
These are not secret facts about the world; the operations of the IRS are exhaustively public (trust me, I have weird hobbies). People on a programmer-dense message board should have more weight for "While I understand that X would be accomplishable via an API if it existed, it is possible that that API does not factually exist" than they often do.
Also, the number of times someone in the financial industry typed in git commit -m "tldr Patriot Act compliance" is orders of magnitude below the number that HN comments routinely predict.
Also, AFAIK, most people don't even need to file because HMRC handles the simple situations automatically (I've never had to do a return, for example.)
For ages, it's for how long exactly? 10-50 years of more or less "success" history is nothing. It doesn't prove it's save and works in a long run.
Also consider scaling. 5.5 mln in Finland, 22 American states have more than that.
(in the US) I would trust the government provided tax-return software to provide the smallest refund possible. It will also take $50 billion and 3-4 years to develop, and it will be down from April 1st to May 7th due to overload on the system. Your confirmation emails won't come through, and the database will be hacked and all records leaked within the first 18 months of operation.
Then you can go ahead and use the option to check them for things they forgot. You can also probably use an option to file yourself, which might be the case if you have complicated taxes. The great majority of Americans, however, are pretty poor and qualify for few tax breaks that cannot be done automatically. All they need to do to encourage the automatic filing would be to consistently prove to be accurate.
The database will be hacked and all records leaked within the fist 18 months of operation
You know, the same information they need for most people's taxes is already in the IRS database.
I'd also like to say that I've had automatic filing for my Norwegian taxes since moving here to Norway, and always have to file American taxes manually. The emails get sent to a secure email system which you can check. Letters get lost and stolen as well, by the way. The system doesn't have to go down either - I don't even have to interact. I just get the email telling me I can check taxes, but it is not required that I do. (Safer to do so in case of owing). They tell me I'll get my money in a 3-month timeframe. It goes to the same place paychecks go to, though I imagine if anyone gets checks they take longer, as do the people that manually file.
I'm also pretty sure that the reason it would be expensive is that the government isn't exactly known to keep the IRS fairly current and the government isn't really set up to handle the digital age well. But then again, the records are already there. They already plan on getting refunds. And easier filing means more people do tax returns... and it catches more people that owe. Oh, and you won't need as many people working at the call centers because fewer people will need to actually calculate their taxes. I'm gonna guess it would be a net benefit and profit within a very short amount of time.
The main people that do badly with this sort of system are the tax filing companies along with, I'm guessing, some accountants.
We used to have a telefile option where you spent ten minutes on the phone punching in numbers off your W-2 forms and then you wrote down a confirmation number. It only worked if you had a really simple tax situation, but it was so easy. I assume it was killed by the same lobbyists.
Some flash website sites from the government don't do much to address actual concerns.
Weak security: [1]
Cost overrun: [2]
Inability to design a highly available website From [3]:
> The basic architecture of the site, built by federal contractors overseen by the Department of Health and Human Services, was flawed in design, poorly tested and ultimately not functional.
I'll grant that voting works only sometimes. And when it does change things, it's often not everything we want changed, and definitively not fast enough. But it can change things. If it didn't, voter suppression would not exist[1]. (One of the ways of suppressing vote is promoting voter apathy, by the way).
The only sure guarantee is that not voting doesn't work.
> peaceably
Even something as seemingly mundane as voting carries a lot of risk of physical violence in some places. That's how voting was in the US in the 1870s[2], if you were black. It might sound like a far away past for certain US citizen, but I (an European) own a house older than that.
To be clear the Intuit’s of the world are not acting altruistically, however they’ve created an odd alliance with anti-tax advocates who 1. Think that any government provided system will favor the government over tax-payers and make it easier to sneak in stealth tax changes and 2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.
2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.
If that's an example of their swift thinking, I'll be sure to vote against anyone that carries even a whiff of their ilk. Because if such a candidate could not see a distinction between taxes and the process of paying them, we're probably not going to get along intellectually, let alone politically.
Poor phrasing on my part - I’m not implying they would insert new taxes on the sly, but rather that in areas where tax payers have some discretion, the government software would default to the least favorable treatment for the tax payer, the effect being a higher net tax...
What would stop people from consulting to get more favorable taxes? Very few people need tax optimization[1], and government default doesn't preclude it - maybe Intuit could offer this as a service instead. In any case, I don't think the net tax would be higher than the current one that includes paying hundreds for TurboTax or a tax accountant (multiplied by all filers).
1. A guess. The majority think of rebate as "money from the government", which partially explains why tax-preparation costs as much as it does.
Your premise is incorrect. Under 20% of people file a 1040ez, the simplest tax form. (Which doesn’t allow you to claim basic deductions like student loan interest.) That means the vast majority of filers see some benefit from “tax optimization.” If your computerized system did just the 1040ez calculation, for example, that’d be a huge effective increase in taxes.
I can imagine it happening. The US tax code is so complicated that most tax payers don't really understand it. Heck, most tax payers don't understand how marginal tax rates work or why having a large refund isn't actually a good thing. I can absolutely believe that a majority of people would accept a negative change to the tax code due to an inability to understand it, choosing to just accept whatever they're being told to make it all go away until next year.
Most tax payers can't multiply two fractions. It could be as simple as filling in 3 fields on a form, they'll still march down to Jackson Hewitt and pay someone hundreds of dollars to do it for them.
Either make it so stupid easy a nearly illiterate child could do it, make it unnecessary (just have the IRS file for us), or massively improve the terrible state of the education system in the USA.
> I don't think we exist in a world where this is possible.
The majority of people are pretty ignorant. Look at all the news articles from early in 2019 talking about the size of tax refunds, and people thinking they didn’t get a tax cut because their refund this year was smaller than the one they got last year. In reality, almost everyone got a tax cut (>90% of taxpayers) but that doesn’t necessarily mean a larger refund.
Theoretically, filling out the tax forms would help people understand their tax liability. In practice I think a lot of people just tune out numbers beyond the size of their refund.
Not everyone got a tax cut and the cuts went primarily to businesses and the ultra wealthy. The President also tried to make the cuts look bigger by changing withholding requirements. It doesn't invalidate that most people are ignorant, most people don't even pay any taxes, but if you're moderately well off, have more than one home, and live in a state that actually has a functional state government that provides services to their people, there's a larger possibility that you saw an increase in taxes. No other first world country does taxes the way we do because the IRS already knows how much most people owe.
> Not everyone got a tax cut and the cuts went primarily to businesses and the ultra wealthy. The President also tried to make the cuts look bigger by changing withholding requirements.
I don't think the first claim is representative, and I don't think the second claim is true? Most people did get tax cuts; even if the bulk of the value went to businesses that's not in dispute. And despite concerns in 2017 that it could happen, there's no evidence that withholdings were artificially over-reduced. People who were already withholding the right amount were basically unaffected, while the people shifted from overpaying to underpaying constitute more symmetrical error. (Which does have some downsides for collection.) Even the Government Accountability Office views this as a purely logistical event.
More cynically, conventional wisdom says that popular perception of tax cuts is based almost entirely on the fact/size of the return received. Increased take home pay was talked up, but reducing the number of people receiving rebates is hardly a productive trick to score votes.
>almost everyone got a tax cut (>90% of taxpayers)
>>Not everyone got a tax cut
>>but if you're moderately well off, have more than one home, and live in a state that actually has a functional state government that provides services to their people
Would you say the percent of the population that fits that criteria is maybe ... 10%? I dont see why you would rebut "90% of people got a tax cut" with "well people who own multiple homes didnt."
I've often read headlines noting that the tax-prep lobby spends huge sums to preserve the status quo. But the numbers quoted in the article as evidence don't appear to support that claim. $6.6m seems low relative to these figures https://www.opensecrets.org/lobby/top.php?showYear=2018&inde... *
*I can't vouch for this site or its data
Relevant quote from the Tech Crunch article:
"One reason why folks Congress could be pushing this through is all of the money that H&R Block and Intuit spent to lobby Senators and Representatives. ProPublica estimates that the tax prep industry has spent $6.6 million to advocate for the IRS filing deal. The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."
The perrenial misunderstanding about lobbying in the US is that it's about money. It's not. It's about access. The money spent by lobbying firms is almost always in pursuit of that access. AKA buying a $10,000 plate at this donor dinner gets you a sit down with the Senator.
Not only do lobbyists get more accessible they get more credibility. The lobbyists are high paid lawyers at respected firms. They have degrees from respected schools. They have worked on the issue at discussion at lemgth. So when citizens are stacked up against these people they seem comparatively crankish.
This provision isn't in the bill because Intuit bribed someone. It's because that 6.6 million bought a lot of sit downs with committee members. Sit downs in which lobbyists told a convincing story of how it would actually be better for everyone of the IRS couldn't do this. Honestly they probably made some process argument for this. Something like it would get challenged in court anyway and be a big waste of money. Or about how you should make it illegal so the Executive Branch won't do it on their own and they'll have to take congressional input. And the lobbyist almost certainly believes whatever line their feeding the politicians.
It's like most broken things in life. No one is evil stuff just breaks.
I think this is a very level-headed view of lobbying and I want to say that I appreciate your comment. It’s enticing to imagine that Intuit is building a new pool on Chuck Schumer’s vacation property, and in a dark room somewhere a bunch of fat white guys are lighting this bill in fire with the ends of their cigars.
One other factor is that in “government time” we’re not far removed from the Healthcare.gov fiasco and in the middle of a debate over the technical debt of our easily hacked voting machines. Along with that, Premera and Equifax have suffered attacks.
I imagine there is nobody inside the actual government that is willing to try and “outdo” Turbotax.
Paying for access is a bribe. What confuses people is that yes it really is incredibly cheap to bribe Congress and get crazy high ROI, because Intuit can get organized (it's already a corporation with management) afford $6Million in bribes but Americans for sane tax policy can't.
This is what "moneyed special interests" refers to.
Just to clarify something: if you pay $10,000 for a plate at a campaign fundraiser, that is not reported as lobbying expenditure. It would not be included in that $6 million number.
Only direct spending on lobbying gets reported as lobbying expenditure--not campaign donations. Direct spending on lobbying includes the salaries of registered lobbyists and their support staff, contractors and vendors to create reports and ads and websites, law firms to give advice, etc.
When you see "X company spend $6 million on lobbying," not one cent of that money went to the politician being lobbied, either directly or indirectly. At the federal level, a lobbyist cannot even buy a Subway sandwich for a member of Congress. It's a felony.
Campaign donations are reported separately. Those donations are sometimes done to enable lobbying, as the post higher in this thread correctly states. My point is just to clarify how the numbers get reported.
When I say it's not a bribe I mean in the classic "quid pro quo" sense. I certainly think it's not a great way to run a republic. My point is exactly that it's cheap because the representatives aren't looking to get rich off that money. It's cheap because they're just buying 20 minutes of time.
Politicians don’t put the bribes in their pockets. They put them in their re-election campaigns because without those bribes they will get voted out of office by The People in favor of an opponent with a larger, bribe-based ad budget. They don’t want the bribes, they need them just to stay in power. In return, the real goal of “access” is to hear what the bribing company wants written into law or else the bribes will cease and the politician will be booted out.
Competition for this ad budget is so fierce that Congresspeople spend more than half of their working hours reaching out to groups they need bribes from. This skews the laws not always in favor of the groups, but really in favor of whatever motivates the groups to bribe harder. Ex: if simplifying the laws would make everything easier for everyone, we can’t have it. We need the existing complexity to fight and have bidding wars over.
No matter what you want Congress to do, they can’t do it until we fix campaign finance. Doesn’t matter what issues you care about. They’ll only be worked on incidentally if they don’t get in the way of the bribes.
You don’t like it. Congress doesn’t like it. They’re trapped and can’t move against it without getting cut off and booted out. We’re all fucked until we find a catch-22-escape for them.
> Politicians don’t put the bribes in their pockets.
Yes, they do. All the time.
> They put them in their re-election campaigns because without those bribes they will get voted out of office by The People in favor of an opponent with a larger, bribe-based ad budget.
You kind of fail at corruption if you are getting bribes many times the annual salary of a job per year and are feeding them into nothing more than keeping that job.
Most corrupt politicians do not fail at corruption that badly.
Most of them don't need to do something as explicitly criminal as taking money from a lobbyist and using it for personal expenses.
There are far better ways for members of congress to make money--passing laws that benefit companies they or their family members are invested in and taking lucracitive industry jobs after they leave office for example.
> Politicians don’t put the bribes in their pockets.
That is also my understating. That is where the revolving door comes in. Many a career Senator or House member has capped off a career with a lobbying job. It's also good to note that most people who ever sit in the House or Senate were quite wealthy before running. You kind of have to be.
Seconding this. I wish more people understood that "lobbying" is largely making a case to congressional staff, not another word for bribery.
And half the problem is that we need more lobbying, not less.
Donor access is an issue, but I think the larger problem that no one knows how to address with campaign finance laws of any kind is that someone with enough money can simply use that money to hire an army of persuasive people, much as you described.
At the end of the day, if money buys access and money tends to accumulate in a power law distribution it means that access - and thus influence or even speech are not equally distributed. So, while it may not be a bribe, it’s hard to see it as fair.
Moreover, if paid access is required and that payment goes to the politician - or their campaign which is just an extension of the process to keep them in power, I’m not sure how you can see it as anything other than a bribe that is legitimized by a few layers of well educated lawyers or other experts who do some work to make a case that is inevitably aligned with the best interests of the “donor”. That still sure sounds like pay to play politics to me.
I don't think anyone here is arguing that it isn't deeply problematic, just that thinking of it as paying for a bill to get passed misses the point.
It's an important distinction to make, because almost all reporting and outrage about bribery is about quid-pro-quo: newspaper reports about politicians spending time at five star resorts etc. etc.
If we enact laws (or social pressure) to stop this, but the lobbyists remain in the ear of politicians by unpaid means (going to the right schools, having the right friends) then all that outrage has accomplished nothing.
I definitely don't believe it's fair. Just that it's important to appreciate the problem that wealth can hire genuine persuasion, and that problem is distinct from bribery.
Reported donations also don't capture that lobbyists can threaten to contribute to an opposing campaign. A candidate receiving a $10k donation may also have received a $70k threat (in the form of a donation to an opponent) had they decided otherwise on an issue.
I'm sure it's just coincidental that senators and their family/friends frequently get lucrative positions on the boards of various companies, investment sweeteners, and actual positions in these companies for family. For example Joe Biden, a leading Democrat, has been in bed with the credit card industry for most of his career and supported/written legislation in their interest. MBNA was one of his biggest donors and hired one of his sons at an executive level, no doubt with very high pay.
The campaign contributions are just window dressing for the rest of it. It absolutely is bribery.
There's no coincidence about the revolving door and corporate nepotism. But it's not as simple as I give you money, you employ my kid.
I kind of wish it were because that would be much easier to do something about. Those things are just the long term effects of paying for access. The frequent close work between lobbyists, politicians and career servants lead to friendships and strong network effects. I'm not defending the system. I'm pointing out why $6.6 million is more than enough to influence a bill. It's because they're not buying a vote. They're buying time to discuss an issue that will probably never get argued any other way to the representative.
Sorry, but it is that simple. We live in a second gilded age with near total regulatory and legislative capture and trying to soft pedal it by using euphemisms like 'strong networks' does not obfuscate the fact that this is a commercial relationship between bought politicians and the corporations that buy them.
In the face of overwhelming pieces of evidence, year after year after year like the article being discussed here, doing so is just pointless sophistry and contrarianism for the sake of it.
I absolutely disagree. There is a difference between quid-pro-quo corruption and what we have now. And there are important differences in the way you architect a system to prevent one vs. the other.
I think it's because you're are defending your point from a deontological point of view, while the person you're responding to is arguing from a consequentialist point of view.
For a consequentialist, arguing on the ethics of the acts leading to the consequence is moot (and I think he's quite right that from a consequences point of view, the situation is hard to distinguish from quid pro quo corruption).
Of course, I'd love to see you too reconcile Kant and Machiavel, but you're fighting bad odds here ^^
Another way to think about it is that if people were actually straight up buying votes on a regular basis the prices would likely be much higher. If politicians were admitting to themselves they were selling their vote, a large proportion of them would likely think about the value their vote have in a particular setting and price it accordingly.
Part of the reason it's cheap is because most of the time the politicians in question likely tell themselves they're not being bought, because they're taking donations for access etc. or other things that are sufficiently separate from a direct transfer of money that they too are pricing it based on access rather than on the value of a changed vote, as you suggest.
> Another way to think about it is that if people were actually straight up buying votes on a regular basis the prices would likely be much higher
And as I said earlier, the campaign contributions are window dressing for the rest of it and I gave a concrete example. Families like the Clintons have made massive amounts of money cashing out after office, and secured lucrative sinecures for their daughter while in it.
These people and their families are insanely well off as a result of their work in government, and its not because they legislated or governed in the public interest.
But while I'm sure some of them had that in mind, I think very of them went around thinking "how I vote on this specific piece of legislation will make a difference in how much I make afterwards".
The Clintons is a good example of why that would no sense: Their revenue is effectively diversified enough that it would make very little difference. They're trading off their perceived status and recognition - if they'd pushed policy in a different direction, their revenues would just have come from being popular as speakers etc. with different sets of people, it wouldn't have evaporated. It might have been different, and it is possible they'll have thought about that at times, but it is unlikely that they kept thinking "this will increase/lower our income later" because it's way too abstract how it would influence things.
Yes, I'm sure outright vote-buying happens, but I don't think most lobbying is outright vote buying. That doesn't mean it isn't wrong, but that trying to paint it as outright vote buying rather than paint it as wrong by making the point that disproportionate access is equally bad is counter-productive. Because if you accuse the average politician of outright selling their vote, they'll consider themselves unjustly victimized and just think you're a crank that's totally off the mark.
I'm not overly concerned with hurting a politician's feelings. I am bemused at the idea that someone can observe the last few decades of the capture of the government and major political parties by corporate and oligarch interests and the increasingly lucrative payoffs to these people, and not come to the transparently obvious conclusion that these are commercial relationships.
This is institutionalized and legalized bribery, not just 'access' or 'networking' or whatever euphemism you want to use to couch this in niceties.
Saying "these are commercial relationships" (that we should try to stop) is different from saying "people are outright buying specific votes".
The problem is that people are too often looking at this as if it is the latter, when it usually is the former. That doesn't mean it's not a problem, but it means that attempts to try to address the latter will be totally ineffective, and addressing the former is far harder in general, because the "payoff" can be very tangentially related and non-obvious.
E.g. it can be as tangential as "look at me giving money to this cause over here that I know that you like (wink, wink)". No direct exchange needs to happen. No direct benefit needs to be had then and there - just the acknowledgement that party X will be very grateful were you to listen more carefully to what they say (not even one on one with you, but say, in a committee, or even in PR releases) and understands your interests.
Direct bribes are "easy" to stop in comparison. And so they're the wrong focus. The consequence of shifting focus to more indirect influence is that the only viable solutions to stop this kind of influence is to disperse power of politicians more by weakening their individual influence, and to reduce the powers of potential beneficiaries of there decisions inherent in accumulation of capital. You draw the conclusions.
Politicians feelings doesn't come into it - nothing you try to do to stop this by regulating their interactions with business will have any real effect.
I'd like to see a readout of these oh-so-convincing arguments.
I think we caught a glimpse of what lobbyists are telling senators when Ted "Series of Tubes" Stevens sloppily repeated the explanation of the internet he was fed.
(To head off the argument: I agree that the "series of tubes" part itself was correct; the problem was the lacking understanding of the relationship between "data transfer has a cost" and "why net neutrality is bad". Also the dubious anecdote about intern emails. "Series of tubes" is just the label for cluster of confusions, not the part he got wrong.)
>> No one is evil stuff just breaks.
>Are you implying here that the problem can't be fixed or ameliorated?
I sure hope we can find a way to fix it.
>> buying a $10,000 plate at this donor dinner gets you a sit down with the Senator
>What if there were no donor dinners because campaigns were limited to a set amount of public funds?
I think that would be a pretty good start. Enough so that I spent several years working on getting my state to join the call for a constitutional convention to overturn Citizens United and establish more fairly funded elections.
> Neal, received $16,000 in contributions from the two companies in the last two election cycles[.]
This statement is false. If you look at Open Secrets, $16,000 lines up exactly with what H&R Block and Intuit employees donated to Neal in 2016 and 2018. H&R Block and Intuit have tens of thousands of employees--it's not surprising that many donated to a Democrat with a high-ranking committee position.
Fun fact: By the article's parlance "Google" gave more to Neal in 2018 than Intuit. Gasp--Google must be in on the tax filing scam too!
What they receive is only part of the calculation.
What your opponent will receive in the next election or primary is a bigger issue. And that implied stick is much cheaper than giving out carrots all the time.
Those numbers sound about right. It is surprisingly cheap to influence our Representatives and Senators.
Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest, like this issue.
Ugh. If only more of our Representatives and Senators actually worked for the people, rather than for whomever promises them the most money...
> Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest
This is what PACs and nonprofits do. If you want to participate, there is probably already at least one for whatever issue you care about.
Big donors are a high return-on-time for busy politicians. I donated the max (2*$2700) to a few candidates during the previous midterm elections, and was (naively) surprised to be invited to have brief 1:1 meetings with each of them. Money speaks depressingly loudly in politics. Corporations have to go through PACs, but many have their own (Intuit has their "21st Century Leadership Fund" PAC, which you can view here:
I don't know what's disheartening about it. Here in D.C., Democrats are in an ideological war with Republicans. Money is necessary to fuel the war machine: https://blog.nationalarchives.gov.uk/wp-content/uploads/2015.... Of course they want to get larger donors more involved.
The problem is exactly what you describe, the "war machine." Elections are in the public interest and should be solely publicly funded. Collect taxes for it, distribute it directly to candidates evenly, via some set model. You can look to Canada's system as a basis, although we do still allow some limited private contributions (which I disapprove of, but ~20% of total funding) [1].
That's all they should be allowed to spend. Then they use that money to make their case to the people on merit. No PACs, no contributions, no lobbyists, and equal access to airtime. This eliminates pay-to-play or at least criminalizes it.
The US is fundamentally more adversarial than other developed countries. Our political system reflects that. The Canadian way is one way to do it, but I don’t see why our way is fundamentally wrong.
Also this focus on the “merits” is misguided. The US is too big and diverse for votes to correspond very well to actual policies. By the time you get all the stakeholders on board with something the final result won’t appear anything like the original proposal. So we place a much higher emphasis on people, personality, and party than policy.
I’ll give you a concrete example of this: immigration. Canada is much less divided on immigration than the US. Here, you have one side calling immigrants criminals, and the other side calling for open accommodation of hundreds of thousands of low-skill immigrants illegally crossing the border each year. By contrast, Canada’s right is less vitriolic, but it’s left is also far less idealistic. Even Trudeau generally seems to support Canada’s point-based immigration system, which puts a heavy emphasis on English skills and education. That system would be m demonized as regressive and racist were Republicans to propose it here.
So what good does it do to vote for policy here in the US? You think anyone will hash out an immigration policy that makes both sides happy? No. So instead we raise money to go to war and try to bury the other side.
Nothing about my proposed model is eliminates the adversarial nature of politics, or specifies whether people should vote along "merit" or on people/personality/party axis.
What it does is eliminate the ability of private individuals and companies to purchase time with a candidate. If you allow that, the candidate then will do what you want so they will get money for the next election cycle. It's just bribery with extra steps.
If they know they're going to get money for the next election regardless, no more or less than their opponent, they can focus on things that will improve the lives of Americans (their only donors now) and not private entities.
To your point, Canadians don't have to deal with much illegal immigration (except 18,000 [0.05% of the Canadian population] annually that cross into Canada from the US to escape the Trump administration with smugglers paid $4000USD+ to bring people up North. Many lose limbs and fingers and toes in the winter [1, 2] -- 1 in every 1000 Canadians is now an illegal immigrant who fled America). That's not really relevant to campaign finance, though, it's just horrifying.
Its disheartening in the same way that many other oligarchic trends in the US are: it creates an easy pathway for those with money to ensure that they retain an (unfair) advantage, even when it comes at the cost of something that would save millions of hours of aggragate work and unnecessary expense.
As of a few years ago, the average cost for a winning campaign for the House of Representatives was about $1.5M. The average cost for a winning Senate campaign was a bit over $10M.
Sure, if you think it's that easy. Problem is that there are lots and lots of examples of people spending ridiculous amounts of money in politics trying to sway an election, and losing anyway.
As noted by the economist Luigi Zingales in his book "A Capitalism for the People", companies that are receiving subsidies (or other favorable treatment from the government) are highly incentivized to keep receiving those subsidies. For example, if the tax preparation industry stands to lose $100 million if e-file becomes free, they will lobby up to that amount to retain the status quo.
The problem is that those who wish to reform the status quo are not as well funded or financially incentivized to create a counter-lobby. Ordinary citizens, who would benefit the most from making e-file free, would have to form a counter-lobby group and put up at least $6 million in order to have the same level of access as the tax preparation companies.
Zingales' proposed solution is to do away with subsidies and special treatment for individual companies, as they inevitably lead to cronyism.
To me (as a Dutchman) this sounds crazy.
Here in Holland the only way to file your taxes as in individual (I don't know about company's) is to login to the government tax website (with my digid (a government issued digital identity)) and then to simply check if all the information that they have collected on me is correct. It usualy is.
All I have to add is my deduction items, and BAM! it's done.
Also, we automatically pre-pay our taxes because it is calculated and payed for by all employers.
The dutch tax service even has a great slogan for this ideology: "Leuker kunnen we het niet maken. Wel makkelijker". Roughly translated, this means: "We can't make it nicer. But we can make it easier.".
Every year, they add some improvements to the entire system. They basically prefill your entire income and capital. Including stocks, dividends and other things. The only things you need to fill in yourself are some of your deductions (there are some which are prefilled as well).
They open the filing of taxes every year on march first. And every year there are lots of people who fill it in on the first day. This year there was even someone who handed their taxes in 18 seconds past midnight.
For those who are concerned about privacy: the banks are required to file your 1st of January balances and only the whole sum, not the specification and only the Social Security number in combination with the balances. You can specify more detailed (e.g. 'green' investments) but that is up to you.
I find the Dutch way (slightly) crazy, as someone from NZ for the most part, you just don't file taxes and it works out. If you have a more complicated situation you might need to, but otherwise there's no point. Everything is withheld correctly.
At least the Dutch ones tend to just be click-click-check-done, so it's not too bad. But it was sad moving to filing annual tax returns from a much simpler system.
> I find the Dutch way (slightly) crazy, as someone from NZ for the most part, you just don't file taxes and it works out.
This is generally the case as long as you do not deviate. In the past I requested to delay having to file taxes and they rejected my request because I did not have to. The 'but' is that as soon as you screw up, or one of your bosses screws up, or you forgot to file something, you have to file from that point onward.
It is always a good thing to do anyways as you might get money back.
Also from NZ. Is 'file taxes' a synonym for a post-facto 'tax return' when the government overcharges, due to charitable donations etc? Otherwise I can't imagine any reason why I as an NZ employee would ever need to consciously think about _paying_ tax :)
Yes, in the US, the default is to have part of your paycheck withheld for taxes. Sometime in January, you get a total of how much you were paid last year and how much federal/state income tax you paid. You fill out a form either using software or paper with that information. There is a standard deduction which is several thousand dollars you can subtract from your pretax income or you can itemize your deductions which is what you may want to do if you have children, just bought a home, made a lot of donations, or have a more complicated tax situation than just a single person renting an apartment with zero major assets. Most people will take the standard deduction because it's more than what they would get from an itemized deduction. You add up all the deduction(s), subtract that from your pre-tax income, then run the numbers again to see how much tax you should have paid. If the number is less than what you paid throughout the year, the govt cuts you a check otherwise you owe them money. If you planned to just take the standard deduction and have a simple tax situation, you could probably get away with not doing anything. You can fine tune your withholding number for your paycheck to minimize the amount they take out or you can increase the withholding if, for example, you know you are going to have a child lose their dependent status that year. I do the standard deduction and withholding. I got about $2000 back from the govt in overpaid taxes this year. I probably woulnd't have saved that money if I had fine tuned my withholding and was getting the extra $77 on each paycheck.
I owe the government $4,600. I received an "underpayment penalty fee of $44" because I did not "pre-pay an estimated tax" each quarter. Something I have never done in the ~25 years I have been paying taxes.
Not only do they want the $4,600 by 4/15 they also want an estimated $1,200 "pre-payment" for 2019 by the same date or I will incur this same fee of $44 next year.Plus 3 more payments of $1,200 each quarter. So they want to hold my money without paying me interest. At least in my bank I earn more than the $44 penalty in interest each year.
This is bizarre. I surely didn't know about this nor did I read anything about new tax laws as I imagine most people don't.
Not your fault. The Republican tax law of 2017 changed how your existing withholding instructions were interpreted, decreasing your withholding more than necessary in order to artificially inflate the perceived benefit of the new law. Now you’re paying for it.
The really annoying thing is that I agree it’s a good thing to have more accurate withholding and smaller refunds. They just screwed it up for political reasons.
All this could have been avoided if they just required employers to get updated W4s instead of defaulting to misinterpreting your existing instructions.
Strictly speaking, you're holding their money for a year without interest.
The estimated payments are not prepayments—they are payments that match what most W2 employees would pay every paycheck, but isn't the case for 1099 (or otherwise self-employed) individuals, since they don't have taxes withheld from their paychecks.
Actually, witholding started in WW II to help fund the war. Prior to that, people made quarterly payments. It was left in after the war, because government never lets an emergency go to waste.
That is fascinating! I wonder what kind of large scale effort it took to start having taxes withheld and sent to the government. So many small town employers that would need to comply and make a process to handle it....
> It's not their money unless I earn the money to pay them, IMHO.
Of course—and in my understanding estimates account for this. If you earnings diverge such that you will not owe that money in the end, you don't have to pay it and won't face a penalty, as long as you've paid a certain percentage of your year-end tax liabilities.
And to be clear, I'm not arguing from principle. They should make it much easier and straightforward to pay and understand taxes regardless employment arrangement. However, in practice, they view estimated taxes (quarterly) or paycheck withholdings as required payments or they will levy penalties. :-)
For several years in grad school I had income that varied significantly in different parts of the year (I got a large scholarship check as a lump sum). So every year, I had to fill out some obnoxious, moderately complicated form detailing my month-by-month income and calculating the estimated tax that I needed to pay each quarter. Upshot: the tax system does allow for changing circumstances and won't penalize you for not foreseeing them in advance, but it does make your taxes a lot more complicated.
Exactly. They want their money immediately or else penalties/interest however they wont front the money to those that routinely get refunds. They need the interest they earn to afford the refund perhaps.
Yep. We got hit with an enormous bill we didn't see coming either. The new tax law crushed us.
But strictly speaking, they don't see it as holding your money, they see it as your money is due when you earn it and if you are witholding "too much" from your paycheck then you are holding their money.
We have got to pass a law saying all lobbying must be done with full transparency- no secret meetings, etc. We have got to limit the access that megabuck gives to our politicians. It's getting insane.
That's weird because there used to be a safe harbor rule where you didn't owe the fine the first time it happened. So either you don't owe that $44 or something changed..
Perhaps you just didn't withhold enough on ordinary income (which requires overriding payroll defaults). There's probably no safe harbor for that.
Estimated tax has to be filed by anyone with non withheld income. This is readily available knowledge on the irs website. Its not your money once uncle Sam taxes it. It is the irs's money the moment you earn it. Out of courtesy, they loan it to you for a quarter but it is certainly not 'your money'. We shouldnt brag about not paying the same tax everyone else pays.
If this makes you mad, perhaps you'd be interested in lobbying for lower taxes
Not saying I don’t commiserate - but it kind of makes sense - you underpaid us during the course of the year by $4,600, assuming you make the same again next year, we need you to pay us quarterly to make up the estimated shortfall - if it turns out you overpaid we’ll true you up (via a refund)
But again, if I am a person who see's a refund each year, why doesn't the government give me a refund up front and trust me to pay it back if my circumstances change?
You see, they expect me to accommodate them, when it is convenient for them, but they would not accommodate the reverse because it doesn't accommodate them.
What's preventing a OSS solution to this? What I can think of off the top of my head:
* Lack of e-file permission
* Lack of any kind of legal recourse or audit protection for the user
* Constantly changing tax system
After a casual search on GitHub I see a few calculator projects but nothing serious.
I'd be down to help make a free competitor to Intuit. I see no reason to use a non-static site unless it's to keep previous years data, but that's iffy and sounds like it requires a whole other legal consideration.
The problem is that the system requires constant maintenance every time some tax law changes in any state, and great maintenance is something that only the most well funded OSS projects get. And you need participation from lawyers and accountants, not just software developers.
As the article notes, there are already free solutions for people with basic income situations (W-2, some bank interest, no stock sales) making under $66k. Personally, I don't mind paying $100 to turbotax for the peace of mind of knowing that at the very least, they have a staff of tax experts looking over the details of their filing process.
Now, if the IRS came along with an official app that showed me what information they already had and I just needed to make some small adjustments from there (assuming my tax situation isn't complicated), then yeah, I'd use that. And it's a bit crazy that we don't have that. But unlike many countries, we are taxed at both the federal and state levels, which makes the process much more complicated. And to complicate things further, the two interact: I can deduct some of my state taxes from my federal taxes (though less than before). And don't even get me started with the complications of a move from state to state.
EDIT: thinking about this a bit more. What really annoys me about the current system isn't necessarily that I pay to file my taxes. It's that it's so easy to miss things. Maybe i have a bank account that earned $12 in interest and I earned $20 from money that I put into lendingclub.com two years ago. It's annoying that the government has this information, but on the other hand, it's very easy for me to not see (or forget about) the email/snail-mail that I got about this income and then forget to declare it on my taxes. Yes, I know that the IRS isn't sending me to jail for forgetting to pay $5 in taxes, but in general, the process would be much less stressful if I had some kind of centralized reminder of all the income I made.
The problem is that these two interact. You get a deduction on your federal return for your state taxes. There are those who want to eliminate this (and the 2018 changes significantly reduced this deduction), but doing so is--IMHO--unfair to those living in high tax states.
I think the biggest reasons are 1) the vast amount of subject matter expertise required, especially with each state having its own rules, and 2) pretty much any risk at all of having an incorrect return because of buggy prep software is enough to deter most people from using it.
Those are the first three. If you want to offer state income taxes, that means you’ll need to also implement those rules. There are also a ton of legal restrictions on handling data, that if done wrong send you to jail.
Even worse -- Since State and Local income taxes are (partially) deductible on your Federal taxes -- you need to implement those rules no matter if you plan on filing State and Local returns.
edit
Actually now that I think about it, since the standard deduction is increased, you could catch the majority of simple returns by just assuming the standard deduction and including a few disclaimers about the option to itemize.
The federal deduction for state and local taxes doesn't require knowledge of local rules, just the amounts paid. If you overpay in tax year X and get a refund in tax year Y when filing your local tax return, that's covered in federal tax year Y.
One of the biggest benefit of government provided returns is they already have a bunch of information on you so it can come pre-filled. And for a lot of people all they need to do is sign and send back.
One thing I don't understand (possibly as a Canadian, possibly just as a conscious person) is how little it costs to bribe your highest-ranking politicians.
The article suggests that tax filing is an $11B industry and that companies spend ~$6M lobbying your corrupt senators. The chair of the Ways and Means committee received ~$16k in donations from Intuit/H&R.
Wait, what?
Never mind how inexcusably transactional this political 69 sesh is... it's obviously table stakes for these people.
What I can't process is that $11B of revenue only spent $6M to bribe these guys. Why not spend $100M? Why not spend X? Are the senators just selling themselves short?
For perspective, $6M is like 10-12 totally normal homes on my totally normal suburban street.
If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.
> If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.
Why, that is classical supply and demand, Economics 101. If you can buy a service for $10, why would you pay $100? If $16,000 is enough to buy the chair of some committee you'd batter not pay her much more than $16,000 or the next time she comes around in some position where she has the power over some piece of legislation which might get in your way you'll have to dig deeper still. Not to mention the fact that your fellow lobbyists wouldn't like you for raising the going price of politicians, senators and committees and you'd be hard pressed to find another lucrative position in this market.
Maybe we can't comprehend it, the same way that I can't comprehend, say prostituting myself for money. If I consider the prospect, it would have to be for ridiculous sums. Yet everyday people are selling themselves for - from my point of view - a pittance.
I guess, if you're in the business of selling your principles (corrupt politician), you're suddenly competing with a wide pool of equally corrupt people, probably with cutthroat tendencies, who are willing to go cheaper than you and take your place?
Could be that driven, principled, smart people are hard to find, but people willing to be corrupt politicians are dime a dozen and replaceable.
There's many different kinds of sex work, but the movie Indecent Proposal taught me that everyone has a price. My first question, if someone solicited me for prostitution, would be to clarify not how much but what would you like me to do? If you want me to sleep with your hot wife, my price is within reach. If you want me to be gangbanged in a public park, you probably can't afford it. All semantics aside, while I don't know anything about you, my gut tells me that most people would turn to prostitution with far less trauma both faster and more consistently than you might expect. In fact, it's really only the culture in the west that gets really uptight about pretending many romantic relationships aren't highly transactional.
Plus, my hope is that good citizens would make money selling sex long before they sell the trust of their electorate. It's only a morally bankrupt crime that could in some cases be treasonous if you get caught, right?
Meanwhile, in my little country (NZ), as a regular salaried worker, I only had to interact with the IRD in the years that I had a few side gigs in addition to my regular employment.
Most years I don't interact with them at all. Don't even have to file.
I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?
In Brazil, our IRS provides the software for free and it gets better every year. There are some talks about not having to declare anything if your revenue situation is simple, in a few years.
I don't trust our government as much as the US population doesn't trust its government but this level of paranoia only leads to inefficiencies. Now instead of a central authority providing codified norms in software, you have countless tax filling vendors providing theirs, lobbying, etc.
Same with right to bear guns against the government. I guess it's the old shovels and gold digging, there's someone profitting from your hopes and dreams, or in this case, fears.
The USA has "deductions", which are convoluted rat races where everyone does a bunch of paperwork so they all get a small discount which is cancelled out by higher overall rates. The IRS can't tell you which deductions to take, since they don't know your whole life situation.
It's the same structure that makes you pay 3% extra for everything you but so you can get 1-2% back as a credit card refund, and makes you get a supermarket loyalty card, and frequent flier miles, etc.
Australia has "deductions" and the filing forms are plenty complicated, doesn't stop them making a nice website with a free e-filing system.
For pretty much everything is prefilled, and you just double check from your own records, fill in the various deduction screens for whatever class of deductions you're claiming.
You see, the tax code is incredibly complicated but for the vast majority it’s rather straight forward. Predatory services like tax preparation feed on the fear and insecurities of average Americans by pitching taxes as some difficult task. In reality, one only needs a handful of pages to get their taxes completed and sent in. This process would be even easier if the IRS did it for you, but politics is not a career of public service, but one to reap maximum personal benefit. We have no laws barring public servants working for the same industries that put them into office so there is a massive conflict of interest, and nobody to do anything about it. The power is not in people’s hands and never has been.
It's not the form that's complicated. It's knowing that there is some form that exists that will get you money back. Plus knowing what to do next year.
The software is actually bad for you because you forget that reading every IRS booklet and form is about the only way to learn the logic of the tax system if you wish to exploit it correctly.
That's how it works in the UK too. By default taxes are taken from your paycheck, and that's the most interaction the majority of people have with the tax organisation. If for some reason you pay too much tax (e.g. you start/quit in the middle of the year) they will automatically send you a cheque with the refund.
Even if you are self employed or run your own company you can do most things online, with a nice easy to use form. Last few years when I've done it, it takes around 30 minutes to get everything done (including finding all the numbers I need to enter from banks, my accountant, etc).
> I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?
What we're worried about in the U.S. is that making deductions "opt in" will lead to an effective tax increase from people not claiming them (or being afraid to contest the "bill" sent to them by the IRS). You know the studies showing how organ donation rates shot up when it was made "opt out" instead of "opt in"? Same thing.
I'm self employed and had to explain to my kids why taxes in the US were so complicated and took hours to do over the weekend.
There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it.
It's truly an abysmal system and I hope my kids don't have to do a giant math problem every year when they're adults.
> There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it
They don't actually try to pass a flat tax because it is not feasible to actually do a flat tax in a country like they US with such a wide range of incomes. Even with a low rate, there will be people poor enough that paying the tax is a major hardship. So every even remotely serious "flat" tax proposal has some cutoff and only applies to income above that cutoff.
But then it is not actually a flat tax. It is a progressive tax with two brackets. Once you get there, it is really hard to come up with a convincing argument that two brackets is better than more brackets.
If the calculation wouldn't mystify most taxpayers, what would probably be the most sound theoretically would be a continuous bracket structure.
The other reason they don't do it is that the flatness of the rate structure has pretty much nothing whatsoever to do with the complexity of a tax return. If you changed the rate structure from a progressive rate with several brackets to an actual flat rate, or a more realistic two bracket progressive system, that would shave about 1/4 of a page off the several thousand pages of the tax code and tax regulations.
The complexity of it is all in figuring out which income is taxable. Once you've got all the income classified into the various relevant tax categories, the actual calculations where you use the rate structure is trivial.
Every flat tax proposal comes with a Negative Income Tax portion to counter regressitivity. People misunderstand what flat tax proposals are all about.
With a tiered tax system, individuals need to be the ones who pay taxes because people who combine income from multiple sources need to pay differing amounts of taxes. With a flat tax system, all income is treated exactly the same so governments can switch to collecting income taxes from corporations. Corporations basically report the amount they spend on payroll every year and pay some percentage of that as a tax to the government. Then the government takes some portion of that money and remits it back to individuals as a negative income tax (essentially a UBI).
Flat tax changes the way money flows, instead of company -> individual -> government, it goes company -> government -> individual. It's both easier to tax corporations than individuals and easier to give money to citizens than take money from citizens. These two powerful benefits alone are meant to make up for the severe rigidity and lack of flexibility that flat tax systems intrinsically have. It's an open question whether these two things are enough to make up for all the flat tax flaws but I don't think there's an obvious right or wrong answer that we've discovered yet.
It's an open question whether anything would change between a company giving you $12/hr and a company giving you $8/hr and the government giving you (the equivalent of) $4/hr as a monthly lump sum.
Income from non-salary sources aren't generally covered by flat tax proposals because they're so complex and the existing tax system would still exist to deal with them. However, for the vast majority of citizens, salary is their only source of income and their experience with the government becomes "how much can I convince the government to give to me" rather than "how do I try to avoid the government from taking from me".
The republicans haven't bragged about it, but I'm guessing limiting SALT deductions to way below the standard deduction will drastically reduce the number of filers itemizing deductions. That leaves you with form 1040 which is roughly half a page front and back, not much bigger than a postcard. Certainly, if you have capital gains or other things, you'll need extra schedules, and maybe you need to send w-2s, so it's not necessarily their ideal, but it's actually a large change.
Not as of tax year 2018. SALT deduction is capped at $10k, standard deduction for married filing joint is $24k. I don't think you can get $14k worth of deductible mortgage interest, but I guess maybe. If you're filing single with a mortgage, it seems more likely to end up with itemized, still.
> I don't think you can get $14k worth of deductible mortgage interest
Sure you can. Even with the new $750k cap, and if you assume a (very low; chances are it's higher by a factor of 1.5 or 2) rate of 2%, you can get to $15k.
If you assume a 4% rate, then you get to $14k with a $350k mortgage. In various coastal-metro markets that's basically an entry-level house.
The other common itemized deduction is charitable contributions. Unfortunately, I see lots of "average" data for those, when what would be most useful here is median data: the average is presumably heavily skewed by wealthier or higher-income taxpayers. But as an anecdote, I know multiple people who drop $20 in the collection plate every week when they go to church; that's ~$1k right there.
Thanks -- I hadn't done the math, and was mostly grumpy about my mortgage interest + SALT not being enough. No significant charitable donations this year, I bunched up with a DAF in tax year 2017 for several reasons.
Yeah, i only deducted housing, and state, ended up with around 18k in deductions, and my mortgage is signifacntly less than even ops numbers. Its people with double or triple the average housing prices who are hurting, because hcol areas are let out.
Do you think that this change will be a precursor to getting rid of the mortgage interest deduction altogether? By making it so that most people no longer benefit from it, there should be little opposition from throwing it out.
Seems like probably it's on the way out; they reduced the eligible mortgage balance from $1m to $750k too. Limiting it while rates are still lowish also reduces the amount of impact. I expect some of this is feeding back into housing prices by now, though; so maybe expect some push back.
They did, technically. The Form 1040 this year is only half a page. However, many people need to attach at least one schedule, which is just the rest of the form broken up into multiple pages. It's less of a dramatic change and more of a weird format shuffling.
A flat tax will never happen: people want the tax code to have a bunch of deductions and rebates, and codifying those will always result in complexity.
This is deeply frustrating. I can not tell you how many people I see paying $200-300 for some random "tax preparer" set up in a corner mall or the front of a WalMart simply because they do not understand there are a number of free resources that would prepare their 1040EZ for them at their income/complexity level.
These same people get back a $1500 "return" so they think they are getting a good deal. Its pure greed and theft from some of the most needy members of our society. Absolute shame on everyone involved in this process.
In a libertarian society, a government using tax money to provide services counts as nation state sanctioned violence, but a private company doing the same for profit is called entrepreneurship.
EDIT: Keep it coming! Every downvote proves I'm right.
What exactly were you trying to say? I mean, you're not wrong. Taxes are nation-state sanctioned violence, and private companies providing services in exchange for voluntary payments is correctly referred to as entrepreneurship. These are qualitatively different situations; one involves force and the other does not.
The debate is not about the services. They may not be needed by everyone, or in the exact form the government provides, but there would still be at least some demand for them in the market if they weren't provided by the government. The question is whether these services are funded voluntarily or by force, by those who want them or by others who just happen to have the necessary resources.
I just filed my taxes in 10 seconds using the tax authority's smartphone app. It had pre-filled all my deductions such as interest using info reported from my employer and banks.
Apart from bribes from those who make tax software (which should be pretty easy to expose) I can't understand why congress wouldn't want to make paying taxes simple and efficient?
There is a podcast episode of "Planet Money" that goes into the history of this [1]. Pretty much it goes: If taxes were easy, people would hate them less, and not fight to abolish them - Grover Norquist.
Tax prep lobbyist make a lot of campaign contributions and somehow that bribery is 100% legal. Also, there is not a small number of Republicans who think taxes should be hard and confusing to make people hate taxes. They think it would them pass they're super low-tax/no-tax agenda.
I'm not affiliated but I've been using freetaxusa.com for several years now and their system does everything I need, including contract based income, capital gains, etc in the free version. State tax costs < $7 ($15 now, must have been an early file deal) if you are feeling lazy.
The copy on their product pages is also incredibly deceptive. Buying "Intuit TurboTax Deluxe 2018, Federal with State + Efile" means only the Federal Efile is included, and additional charges are involved with a state E-file. People should be filing complaints with the FTC
Credit Karma's "free" tax return service has been a surprising lack of unpleasantness. Other than having to a bit of manual copy/paste for certain income, it's a breeze for my relatively uncomplex return.
I'm not exactly certain what they are getting by providing this info except advertising for more CC and loans. One of which I used and reduced my auto loan rate(this was also to get it out of Wells Fargo's books).
For the vast majority of people, filing your taxes by hand is so easy, I'm not sure why more people do not do it. It also has the side benefit of making the government pay more to collect your taxes.
The IRS is also extremely wonderful to deal with, and is happy to answer your questions. I've had questions about procedures before (even made a mistake), and you just call (or they call you) and you fix them.
+1 to getting an accountant. TurboTax is great if you just have regular income and common deductions. I've never felt satisfied with TurboTax any time I've had a question about anything. Every year I pay an accountant twice what I paid TurboTax, I spend less time going through the process (I literally save a folder of documents and dump it on her desk) and get far more. At the beginning of the year she does my return, hands me a stack of 4 ready-to-mail envelopes with all my estimated tax vouchers filled out, reviews my withholdings mid-year with me, and works with my investment guy to make sure they're both giving me good recommendations. I have so much less mental load to deal with - I love it.
Can you pay an accountant to do your taxes instead? I do that in the UK and they cost less than the prices I see online for US tax software. I just give him a pile of pay slips and receipts and he does whatever he needs to do to fill things in.
The website price is rarely what someone pays in reality. Typically you buy it one year, at a store for some special price, and every year they mail you a CD with special reduced pricing to renew.
I paid $39 this year for H&R Block Deluxe, which took care of everything you listed above. Includes 5 e-files too, so you can share it with friends/family.
> The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.
During the years I was eligible for this program, I used TurboTax for free through it and it worked fine. It was a basic version that didn’t support complex transactions such as capital gains but for most people making under 66k it would have worked fine.
Very interesting to see only 3% use it. It would probably work well for a lot more of those 70%.
The paper forms are also easy enough to do manually, but can’t be e-filed and so the refund comes slower.
This statistic is misleading. Throughout the filing process consumers are bombarded with opportunities to upgrade to a paid tier. They make paying more the default option and demote the controls to continue using the free version to have secondary or cancel-like styling. I had to constantly back out and go back to the free version, because I accidentally opted into a paid tier.
Another reason might be that "automatically" filling in your details from uploaded / linked documents is often a paid feature. I uploaded a doc it asked for, it showed me the info, then when I opted for the free tier it cleared the data and made me type it in myself.
Not quite true! I was planning to complain that Free File Fillable Forms, the only way to e-file for free regardless of income, had been taken away a couple years ago.
It's very basic -- it's literally just a way to fill out and submit the paper forms electronically (though it does the "add lines 35 and 36"-type arithmetic for you.) But it's an option for you procrastinators who earned more than $66K last year.
Relatedly, Massachusetts used to run a free online "TurboTax" program for all. To file your taxes you went to a government website and answered the questions. Unfortunately, that program was canceled a year ago when they upgraded systems, and now the only way to e-file is via a paid preparer.
If I read this right, you can still use the free service the IRS provides if you make less than $66,000.
Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.
I also know many cities offer services to help people file simple taxes for free.
I believe this bill also states the IRS cannot send debt collectors after people making less than $66,000.
This bill may not be as bad as it looks. I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge. I question if it's necessary to bar it, but I'm guessing that was to keep their deal with the Free File software.
Either way it would be nice to see representatives state their position & reasoning behind this bill. It seems it has wide support across the aisle which is rare these days.
> If I read this right, you can still use the free service the IRS provides if you make less than $66,000.
You did not. You can contact the private companies such as H&R Block and request Their free service if you make less than 66k - and subject yourself to their upselling and scam artistry, to try and get you to pay anything more than "free."
> I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge
The vast majority of people file extremely simple taxes, as they're salaried workers with minimal assets. Most first-world countries provide a pre-populated tax form with the relevant data (since your employer already submits it), for you to peruse, edit, and hit the submit button on. If other countries do it without a problem, I don't see why it's too technically difficult for us to do the same.
Exactly. W-2 and 1099 income is really straight-forward. If anything the IRS should provide ways for you to submit all your non-W2/non-1099 income to them and roll them up into a new form so that no matter what your situation you can "fetch" your current returns, sign them, and submit them. No need for third-parties at all. Any additional complexity is a symptom of rent-seeking IMO.
It would be incredibly easy to set up a step by step flow to intake basic info or to confirm the numbers and hit send.(if not doing alway with you doing the taxes)
I can only suspect that this hasn’t happened because of strong lobbying.
Honestly if a company exists solely to solve an inefficiency they lobby to create, that’s not something I care to defend. Taxes are in the public interest and as such profit is just not a concern of mine. There’s plenty of other ways to make money than regulatory capture and rent seeking. I want the IRS to do what’s best for Americans and that is either providing a way to file free of charge or eliminating the complexities of the tax code. I don’t care which.
> You did not. You can contact the private companies such as H&R Block and request Their free service if you make less than 66k - and subject yourself to their upselling and scam artistry, to try and get you to pay anything more than "free."
I went back to school full-time for most of last year to get some helicopter ratings and didn't have much taxable income, so I used the free H&R Block service.
There was exactly 1 attempt at an upsell, and it was at the very beginning of the process where I was told if I used the free service I would have to enter all of my information but if I used the paid service they could pull my information from prior filings to save me some time.
Was your experience with one of the free programs different?
I 100% agree with you that simple taxes should be easier to submit. The IRS could & should send you a pre-filled simple tax form that you have the option to sign & send back or agree to online. No "competing" software solution required.
I don't think the IRS should build software for complex taxes & strategies is all I'm saying. That's what accountants are for.
I do understand the argument that a simple pre-done tax solution would mean some people would miss out on deductions. But if you calculate the time & cost it currently takes to submit your taxes, it probably equals out.
> I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge.
The IRS already has this software. They are literally the best placed people in the world to make this software.
How do you think they check taxes for 300,000,000 people + businesses? And their software is already pre-populated with data from employers, banks, brokerages, and all the other places that automatically file data with the IRS.
To my (very limited) understanding, I'm under the impression their main way of verifying taxes is by comparing what you reported vs what everyone else who reported a tax form on you sent in.
I 100% agree that the IRS should handle the majority of simple taxes. I just don't think it's reasonable to expect them to find all the possible deductions or suggest complex strategies for you. They could offer common suggestions & try to remind you of common deductions though.
> I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge.
Well, I do expect them to:
1. Verify 99% of taxes automatically anyway, and that's a very difficult challenge. There's no way IRS can use a human to verify every single tax filing.
2. Make a public service off it for those 99%.
3. I suppose that even for complex cases it's probably even _easier_ to make a software for that. There's no human that can remember thousands of pages of tax code.
Humans are still needed, but for correcting/adjusting/verifying the software itself.
> Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.
Yeah, I've used H&R's free filing for 4 years or so now. When I lived in a state with state income tax, they charged me for that, and offered to charge me to remember my data for next year (I declined). their website indicates that state tax filing is now free, I wonder if it depends on the state, or if things just changed since 2015 tax year filing.
unfortunately I don't have any other tax experiences to compare to, but it was very easy. as a student, I don't have complex deductions or income, but as long as I can use the American Opportunity Tax Credit, and it doesn't take too long, I'm happy.
This is definitely a nuanced issue, and some people in this thread are being alarmist. Another legitimate issue that many people cite is that by creating a system whereby people can just click a button to pay their taxes is that it can cause people to pay more taxes in general by not fighting for every deduction that they can. People are complacent, and if they are told by the government that they owe some dollar figure, the great majority of people will just click the button and put in their bank account info to make the problem go away.
Say what you will about the greed of tax companies, there absolutely is merit in those arguments. However, there is also something to be said for the effect of large numbers of people being lazy and not fighting to keep every dollar they are entitled to.
So wait. Your defense of being forced to pay $$$ to a third party company to data mine your info in a convoluted, frustrating and expensive process rather than using a free, simple, fast service is that maybe possibly it will be SO convenient and friendly that some people will elect not to bother "fighting for every deduction that they can"?
Lazy, really? The average person has enough crap to worry about to figure out tax forms. We shouldn’t require effort when much of the process can be automated.
One rather insidious thing about H&R Block's online tax filing website is that, once the hapless user has chosen to have a real human "tax pro" review their tax return (for an additional fee), the user cannot un-choose it! The website does not offer you that choice.
Even worse, when the user calls the H&R Block help number, a computerized voice does offer the user the option to downgrade, but notes that it will have to delete all of the data the user entered!!!
No. It really is sleazy. I'm talking about a situation where the user is paying for the H&R service. This is a paying customer, not a free user.
This user then adds a tax pro review service but decides later that they do not want that add-on service. But now the user cannot remove that added-on service on the H&R website. The user calls in to an automated phone line which tells the user that, in order to downgrade, the system must clear out all of their data.
If you follow down the original on ProPublica and find comments there, you will see that there was no such provision. And the one that actually referencing IRS is says that IRS should continue to cooperate with private sector to make free tax filing and must maintain free portal. I would like to see actual provision to which this website referencing, otherwise it is click bait.
When a highly-respected group of reporters like ProPublica run a story, it’s reasonable to assume they’ve done more research than the average commenter. In this case:
> The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.
That statute states IRS should continue the program (67 Fed. Reg. 67247), "including any subsequent agreements and governing rules established pursuant thereto."
In 67 Fed. Reg. 67247: "During the term of this Agreement, the IRS will not compete with the Consortium in providing free, on-line tax return preparation and filing services to taxpayers."
Yeah, and unless the IRS has imminent plans to implement free tax filing this new clause has no real effect. It's not a constitutional amendment, if the IRS wants to offer this service in 5 years they'll probably need a huge multi-year appropriation and this clause to be revoked. Adding it in to this bill costs nothing and probably made the GOP reps willing to sign on.
The bill has dozens of provisions around taxpayer protections. One of them is to affirm the Free File program. That's not the only thing in the bill at all.
Headline is a bit misleading: The IRS does not currently offer free online tax filing, and bipartisan Congressional leaders are seeking to codify this status quo.
> Sec. 1102. IRS Free File Program. The IRS currently works with electronic tax preparation services to provide free tax preparation software and electronically fillable forms. This program is known as the IRS Free File program. Generally, there is no fee for taxpayers using the Free File program provided they meet certain income thresholds. This provision codifies the existing Free File program and requires the IRS to continue to work with private stakeholders to maintain, improve, and expand the program. The provision also requires Free File program members to continue to provide basic fillable forms to all taxpayers. This provision is estimated to have no revenue impact over the 10-year budget window.
There's an income requirements and, at least in practice, you cannot be file 1099-MISCs which means you cannot be 'self employed' which is becoming more and more common (insert buzzphrase here) independent of actual income.
Unfortunately, the people most effected by this bill are likely too busy working to afford the time to contact their representatives.
I am very confused - last night I filed my taxes in an hour flat on freefillableforms or whatever that terribly named piece of software is. I thought this was a service provided by the IRS?
I think freefillableforms.com -- maintained by the Free File Alliance -- is an example of what the article complains about:
> The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.
I've never used it so I wouldn't know if it's chockful of upsell adverts. It's certainly very hard (I couldn't do it, at least not in the past 5 minutes) to find a reference to the Free File Alliance on freefillableforms.com. But this is what is buried on IRS.gov:
> Free File offers a multi-year agreement between IRS and the Free File Alliance to provide free service(s) to more taxpayers. Previously, free offerings were not consistently available and were subject to modification or discontinuation from year-to-year. With Free File, taxpayers have easy access to IRS.gov, which offers a list of all free offerings on a single web page. Under our agreement, Free File Alliance companies offer both free preparation and free e-filing services. There is no cost to qualifying taxpayers.
> Note: We do not endorse any individual Free File Alliance company. While the IRS manages the content of the Free File pages accessible on IRS.gov, it does not retain any taxpayer information entered on the Free File site.
Free File Fillable Forms are pretty easy to use for anyone, regardless of income. It doesn't hold your hand and walk you through it, but assuming you can read English at a 4th grade level, I feel like you should be able to do it. Not that I think it should be even this complicated to do taxes, but it's not a terrible option.
It's still maintained by the Free File Alliance. So you're giving your data to a third party that's not the government. I use it, but I would rather I didn't have to share my financial information with third parties to do so.
No matter what, you will always be using software and systems controlled by other entities. From you web browser, to the operating system, the data transport links, routers and switches in between, and when the data gets to the destination the software is typically written and maintained by commercial contractors hired by the government.
Right, but I would argue that this is more explicitly "putting my data on someone else's server." If it was a government server, well, it's there already anyway.
I used CreditKarma and it took 10-15 minutes... afaik they didn't charge a fee either. This is the second year I have used them. I would prefer a Government solution if it was good, but there are plenty of very low cost/free alternatives out there already so oh well.
Ideally the government solution doesn't take any time at all. The IRS knows about the w2, 1099, whatever forms you are going to get, you will be audited if you don't file because they see that you didn't do anything about that form, so why do we even have to file? The IRS could do this in the background and either mail you a check or ask for a bill. Done. Filing yourself is completely unnecessary and only serves to prop up a useless parasitic industry.
You are not, you just have constant propaganda to that effect and you believe it because most of you never leave your country. And that is not just me personal opinion. Going over a (incomplete) sample of freedom indices listed on https://en.wikipedia.org/wiki/List_of_freedom_indices we have:
Not saying “US NUMBAH ONE” but those indexes are just biased to whatever the index creators prefer. I could make one that heavily indexes gun rights, lack of hate speech laws, gross income per capita, or even military strength and suddenly we’re number one if not close to it. It would be just as valid a ranking. In other words those lists are largely rubbish. Never mind they rarely break things down by demographics, preferring to look the other way.
The problem with what you choose and how you weigh it is exactly why I listed more than one index. And btw: I did not skip over any index because it lists the US as number one, I only skipped indices that require registration to get the PDF and such. Literally NONE of the indices I found has the US as number one.
Clearly, it can vary a lot what people consider free. And therefore, this statement isn't true in general. The US does indeed have a lot of things I would consider freedoms, yes. But in Germany, for instance, I feel it is a great freedom to not have to worry about most healthcare issues, regardless of their income. A freedom (in my perspective) I wouldn't have in the US. There are other issues that fall into that category as well (free to not really have to worry about school shootings, free to not have to worry about people (including kids) to find a gun in the fields, free to not have to worry about insurance of people when having an accident, etc.).
That's a commonly made point, but to be a little pedantic you are definitely twisting the definition of the word 'freedom'. Those are benefits to be sure, and they may certainly be better than the US's, but not really 'freedoms'.
Why aren’t they “freedoms”? Increased financial security due to eliminating the possibility of medical bankruptcy increases an individuals’ options/choices in life, does it not?
Freedom doesn't mean the same thing as "convenient for me". In fact freedom can often be difficult. Each item listed has an opposition position, most notably freedom to own a gun.
Germany also has some of the most draconian anti-free speech laws of all first world nations, so I really don't think they're a good example to use as a pillar of freedom.
I think no one has a problem with "elimination of medical bankruptcy for them". The problem seems to be that it also eliminates it for others. With "my money", which "the corrupt and inept government is going to misspend anyway".
I know I am exaggerating and misrepresenting a lot of people with this characterization.
To me the solution seems obvious: you don't need private companies to do the job of the government. You need a less corrupt government, capable of doing its job. With the middlemen you just move the corruption around.
Yes, obviously anytime you get something for free that's a convenience. Someone has to pay for that though and that person is not experiencing freedom.
I don't know much about the German healthcare system but it's quite possible that you also don't have as many choices for healthcare as in the US due to increased governmental regulation.
I'd also add that healthcare is one of the least free aspects of US culture especially post-ACA. We are now mandated to have insurance, even if we don't want it.
> I don't know much about the German healthcare system but it's quite possible that you also don't have as many choices for healthcare as in the US due to increased governmental regulation.
You have strictly more choices. In the USA, chances are you cant afford healthcare and have none.
You can keep moving the goal posts but the fact is there is a lot of choice in the US. Not everyone can afford all choices but that’s an entirely different conversation.
Ah the popular "the US is too large and too diverse to function" excuse. Not that long ago the size and diversity was seen as a unique strength of the US. When did "Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!" become "societies only work when they are homogeneous"?
He didn't say that the US doesn't "work". Note that he put "freedoms" in quotes in reference to the parent comment that twisted the definition of freedom to include socialist programs. It's true those won't work in the US but as the original poster commented:
You know, I get the uproar about this, but I'd like to put one thought into your heads before you respond:
Imagine, as complicated as tax forms are, and as obtuse as the IRS instructions are compared to TurboTax.
Now imagine the government puts up a website for you to file your taxes.
Do you really want to use that? Do you think it will be as easy to use? Do you think you'll have a nice wizard to walk you through it? Will it be faster than TurboTax?
Now, a year or two after their site has come out, and TurboTax has seen a huge drop in revenue (they don't know it, but it's only temporary), they decide to shut it down because they can't compete with both free and "government guaranteed" even if the site sucks.
Will you be happy then?
Seriously - I get the frustration of the current situation, but if you've ever done it on paper and have anything other than the 1040EZ form, this should give you pause.
Because the free-priced government option will drive out the non-free commercial providers. Even if this only lasted a few years, it would put some of them out of business.
In other words, for the same reason we have laws against unfair competition.
The U.S. used to primarily have for-profit firefighting. Switching to a state-run system drove out the commercial providers. And that's by all accounts, a wonderful thing.
Business for the sake of business is not necessarily good. If the business does not provide real value any longer, it shouldn't exist.
Who are you arguing against? I never suggested anything of the sort.
Some things lend themselves very well to for-profit businesses. Others do not. Firefighting and filing your taxes to the government strike me as two things the government can probably handle better than capitalists.
So, while doing some more research (trying to get my job done, too, but...HN calls..) I found this:
If you make under $66,000 a year, filing your taxes online is probably free.
Every year only about three million people — of the nearly 100 million eligible — take advantage of the private partnership the Internal Revenue Service has set up with tax giants such as Intuit Inc and H&R Block Inc. to provide free tax preparation online, according to Tim Hugo, director of the Free File Alliance, which is made up of major tax preparers that manage the Free File program.
> Seriously - I get the frustration of the current situation, but if you've ever done it on paper and have anything other than the 1040EZ form, this should give you pause.
Imagine if back when we had paper forms H&R Bloch had managed to lobby Congress to prohibit the IRS from providing free forms and mail in processing directly to taxpayers, and instead required them to work with private vendors to provide proprietary forms and postal tax filing solutions? Would this really be better? How does “with a computer” change this?
And, yes, I've done 1040 and 1040A filing by paper in the past
For what it's worth, we've been able to file individual income tax returns in Australia for as long as I can remember (15+ years). For the vast majority of taxpayers (i.e. salaried workers), it's completely painless and MUCH better than the paper-based alternative.
I can actually make this comparison, because corporate tax returns still require paper forms.
Now I know the US tax system is much more complex, so take this with a grain of salt. But "free and government provided" doesn't necessarily mean "bad".
And if it were successful enough to drive TurboTax out of business, that would be a massive indicator of popularity and a net win.
I find it utterly absurd that the USA is beholden to this kind of regulatory capture. Forcibly preventing the government from delivering better services to protect an entrenched player? That's an absolute perversion of capitalism - I'd actually say it's reminiscent of communism more than anything.
This is one of the best examples of the perverse incentives that lobbying from some industries can turn into. Regardless of the arguments, government not competing with business, etc.. this is stupid. It requires a twisted viewpoint to think that making it hard to file taxes is a good thing.
This is one of the more explicit examples where complexity is stealth-deliberately is promoted.
Tyler Cowen (and in his own way, david graeber) made a point that really stuck with me. Badly paraphrased:
The introduction of PCs & software to the office, has not increased office worker productivity at all. It's very hard to define or measure white collar productivity, but to the extent that it can be measured... it hasn't improved. From another angle, university administrations, tax collectors, accountants, legal departments, international customs agencies, etc. have as many or more people and don't seem to be producing a whole lot more.
To paraphrase Graeber's more beligerent take on it: Getting more efficient at paperwork just produces more & more complicated paperwork.
I'm confused because I can't tell what this actually refers to. It says:
> Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.
But the IRS already has one. I used it yesterday to fill out and e-file my taxes. It's "Free File Fillable Forms" (freefilefillableforms.com) that is basically an online replica of the tax forms, some fields get automatically calculated, but you have to manually calculate the actual level of tax you owe, and it's submitted electronically.
And all income levels can use it, unlike the free tier of commerical tax prep programs which are limited to below a certain income level.
I use it out of principle -- it's harder to use, closer to filling out tax forms by hand (unlike the "wizard"-type interfaces of commercial tax prep software), but I don't want to support the commercial solutions exactly because of lobbying like this.
So I can't tell what this bill aims to do specifically. Is it trying to get rid of Free File Fillable Forms, or is it preventing the IRS from building something better?
EDIT: Free File Fillable Forms is apparently a private organization that the IRS website links to. In my years of using it, I'd always assumed it was provided by the government. Wikipedia clarifies:
"Another component of Free File is Free File Fillable Forms, which is available to all taxpayers, including taxpayers whose incomes are greater than $66,000. It is an alternative to Free File Software, although both are free. Free File Fillable Forms is operated by a private organization, the Free File Alliance and not the IRS. Though IRS links to it, they do not endorse it or any product... There are no income restrictions for using Free File Fillable Forms... It provides free electronic filing. Free File Fillable Forms is managed by the Free File Alliance." [1]
I'm still unclear, however, if there's pressure to get rid of this option that is free for everyone. I sure hope not.
Why? The more equitable the tax code the more complex it becomes. And assuming you're aiming for the most fair system I don't understand only applying our computational resources to rendering superheroes and recommendation engines, when we could scale the tax code complexity (and fairness) relative to our compute resources.
> The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report.
When companies make contributions like this, why don't politicians just take the money and then do whatever they want anyway? The companies have no recourse to complain or get the money back do they? How does this work?
House Representatives have 2 year terms. If you'd like to hold onto that job for longer than 2 years, you have to campaign again, which means raising money again. Do you think TurboTax is going to keep investing in a congressperson who isn't doing what they want?
This is why congress should be a conscripted service.
With a limit of two terms.... should only be able to vote to keep a certain person in office, but all persons in office should be selected just like jury duty.
Want to know how fucking retarded the world is. Do this. but at least it will diminish corruption from the likes of Pelosy and others who spend DECADES in their positions...
The definition of an honest politician is one who stays bought.
Nobody in politics receives a single "campaign contribution" aka "bribe". Instead, it's an ongoing revenue stream.
Lobbyists frequently lobby on behalf of a number of companies, on a number of issues. The lobbyists know which politicians can be trusted. The politicians know which lobbyists can be trusted.
That does seem somewhat cynical, and the whole business does seem a bit seedy if not sordid. But what is the alternative? Our republic seems bad, but it functions better than most other countries out there.
"The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."
It's embarrassing and absurd how cheap it is to buy off congress from making everyone's lives easier. Can't a gofundme raise more than 16k to counter them?
Well that’s quite a slippery slope... it’s going to be corporations vs citizens in a bidding war making all politicians multi millionaires?
How about we go back to when politician wasn’t a full time job, and you barely got paid for it? Make it illegal to pay politicians for any public services apart from a set nominal salary.
What if a fixed/low salary only attracts the already-rich whose interests will never be well aligned with the general public?
If you want superstar government that is the very best at what it is supposed to do, you need a superstar salary structure, something more like professional athletics. Our president should be paid millions (with complex incentive structures for measurable achievements), but under “at will” employment terms and accountable to the people.
Our presidents are alreay paid millions, typically billions. They just don't get it until after they leave office. Just look at the Obama's net worth. And of course Bill & Hillary pulling down 6 figures for giving a speech (that somebody else writes for them). I'd say they are paid pretty well already
Not sure what you mean. Politicians routinely do things while in office expecting a payoff later after leaving office. It's not always cash (in fact usually not), but certainly lucrative speaking engagements, often times board positions or "consultant" fees paid for very little work, professorships at prestigious universities (with 6 figure salaries despite teaching little or no courses), etc. The options are only limited by people's imagination.
Citizen overheads for essential services are as high or higher in the US as in mainstream developed nations, but laws dictated by corporations mandating (or making essential-in-practise) private provision clumsily hide them behind a fake 'low tax' banner.
Here in Aus our ATO makes the (dead simple) etax directly available to end users. Its popularity speaks for itself, and there'd be hell to pay if the ATO ever removed the service. Cf public healthcare etc - corporations are rightly scared of public provision. People like it & it's very sticky.
While doing some research (trying to get my job done, too, but HN calls...) I found this:
If you make under $66,000 a year, filing your taxes online is probably free.
Every year only about three million people — of the nearly 100 million eligible — take advantage of the private partnership the Internal Revenue Service has set up with tax giants such as Intuit Inc and H&R Block Inc. to provide free tax preparation online, according to Tim Hugo, director of the Free File Alliance, which is made up of major tax preparers that manage the Free File program.
In my country (Denmark) all companies reports everything to the IRS. Most people just have to review their numbers (on IRS website). Most people rarely has to alter that info or add to it. It is rare that a private person needs to hire an accountant to help with the tax filling.
Aside from the free file program, which is a partnership with private companies, the IRS does offer a bare bones free fillable forms tax filing application.
For most filers with W2 income, there’s nothing to it and they could easily do that. It’s fairly simple and you just need to read the directions and do maybe a half dozen additions and subtractions.
Where the real return has come in is the millions, if not billions, of dollars that the industry has spent convincing consumers that taxes are super hard and complicated and open to tons of interpretation, that their tax filing experts know this ONE WEIRD TRICK to get you thousands back, and if you screw up even once the IRS is going to come after you hard and put a lien on your house and put you in jail. The reality is not like that at all - if you do screw up they are happy to help and it’s actually pretty simple for most people. But this has engendered an incredibly deep mistrust of the IRS - most people would still taking their taxes to one of these firms or their local accountant because they’d be convinced they could get more back.
I’m not saying the system couldn’t be even better for these filers, but it does require the federal government and the IRS to start collecting data they they don’t right now, and the actual gain is pretty minimal in real terms - taxes for most filers is already incredibly easy and free. And the you’ve only solved half the problem - what about state taxes?
Ah yes I forgot the US has a separate state tax system. In Aus the federal government distributes taxes to the states (which of course is highly controversial amongst the state governments but the average person couldn't care less)
You can also claim back the cost of filing here I believe, so if you need to use a third party they are essentially paid by the government. Maybe that's why they make it so easy here?
The number of people propsing a 3rd party take my data and advertise to me for the privlidge of paying money to the state need to rethink their position. No 3rd party sould even be useful, much less needed to satisfy your state and federal debts.
It's ironic that the 'postal mail' version is free but the online version costs money. Mindnumbingly aweful method of handling resources. Its much more convenient for the government and the tax payer to file electronically
This is totally backwards. Here the local gov't is encouraging people to use their electronic services so that they don't have to deal with endless stacks of paper forms.
It's a little bizarre to me that the very act of paying an independent CPA to run through my taxes feels like a deliberate anti-regulatory capture decision, but there it is.
This is pointless obstruction and ironically a waste of my tax money. You could easily have the government automatically complete your taxes for the simple cases and have software like TurboTax for the difficult ones.
To the people complaining about the possibility of a government run site being poor have you used TurboTax? I've used it twice now and will never use it again. The dark patterns, upselling and fake loading screens really obscured how simple my taxes actually were to do.
This IMHO is the biggest issue the U.S. faces today, simply due to the fact that so many secondary issues stem from how conflicted lawmaking is in this country.
I don't know if it's the same way elsewhere. Maybe it is, and it just isn't as widely reported. But the fact remains that we know this to be an issue and we're not campaigning enough to solve it.
The only other issue that I feel is as pervasive is the end of the Fairness Doctrine and the spiral into chaos that ensued.
'Everywhere else' is usually < 30M people which is a totally different ballgame.
Can you imagine an EU level healthcare mandate? It'd be out of control impossible, and yet it works well enough a 'the state level'.
It'd be nice to see some really forward thinking states lead the way and forge a path, if a few caught on and there were material examples of 'how it could be done' then maybe there'd be hope.
Where's the teeth in getting companies to offer a decent Free File option if you removed the threat that got them to create said programs in the first place?
This is so infuriating and needs to change. Ultimately the problem is our Congress who votes for this nonsense. It's a uniquely American problem, in most of the rest of the developed world tax filing doesn't require manual data entry, is quick (< 5 minutes), and free.
Made a video to help raise awareness of the problem and solution
The government developing software to better interact directly with its agencies should be a mission of 18F and the individual agencies. Our Congress is thinking of doing the opposite.
Companies have no natural right to continue making money without competition from the government.
EDIT: Where does this ban the IRS from creating their own portal? It requires the IRS to continue the Free File Program, but does that explicitly bar the IRS from its own system?
Missing option #1: just don't collect income tax on 80% of people, since its not worth it. In this case, IRS would do automatic calculation, and if they say you owe nothing, you don't have to do anything.
Missing option #2: it is just foolish to trust the tax collector to tell you how much you owe. The only way this would possibly work would be radical simplification of the tax code. Since that is not going to happen...
First of all this whole movement to keep taxes a pain in the ass to file is extraordinarily infuriating and uniquely American in its idiocy. I'm in South Korea now and filing taxes is as simple as logging into a website, entering your SSN, and verifying that the information is correct. Completely free and takes 5 minutes.
Second, I'm tired of people blaming TurboTax. The headline says "Thanks TurboTax". No, TurboTax does not vote on laws, our Congressmen do. If any Congressman is taking bribes and voting for this bullsh!t, then the Congressmen are at fault and need to be voted out of office.
I decided to take a quick look at the bill to see if it's really as outrageous as the article makes it, but I can't even understand what the bill says. It's like a 30 page document of legalese. Where in the document does it say that the U.S. would be banned from offering free tax filings? Why the hell do laws have to be written like this to be so overly verbose and indecipherable to anyone without a law degree? There should at least be a succinct summary at the top.
This blows my mind. Here in AU, I can lodge mine online through a web portal. It's pre-filled with a variety of information including my reported taxable earnings (through company reporting), my superannuation information, my private health insurance (reported by those companies), any dividend payments made to me, etc. If any of the pre-filling is wrong (in my experience, it never is unless there's info it doesn't know about), I can correct it manually.
I basically only have to enter the deductions I wish to claim. Of course, if I earned money on the side that wasn't reported, I can self-report it too.
The only reason you'd pay for an accountant here is if you have complex tax affairs, or wish to save yourself time. Even when using one, you're ultimately responsible for the accuracy of your tax filing, and you're supposed to review the submission they draft.
I certainly believe that tax law should be understandable by the layman if all they're doing is a simple salaried employment, and by extension in all cases a person should be able to complete their tax requirements entirely on their own (even if that involves learning a large amount of tax law knowledge). There's something deeply unsettling to me about the concept of tax law being too obscure for the everyman to file themselves even in simple situations. Tax is a contract between the government and its citizens. The idea that a third-party private entity must be involved by law seems, to me, very opposed to the libertarian concepts that the US apparently holds dear.
I'm surprised more people aren't skeptical of the IRS themselves. Inverting the way the US does their taxes would disrupt a lot of careers of a lot of of IRS employees. I would imagine there is considerable pressure to keep the status quo from within the IRS itself.
It's really a problem for other businesses even more so than consumers. Productivity is probably halved while everyone is thinking and talking about taxes for several weeks. It's all I hear at work. I am surprised there is no business SuperPAC to fight against this.
Disappointed by the overwhelmingly negative commentary here.
There are multiple private companies providing this service for low amount, as many have mentioned; for free for incomes below a threshold.
1) Why would you want the IRS to duplicate this effort and compete with these companies? Remember 'Free' in this context means paid for by tax dollars. Do you think the IRS is going to spend less to implement a filing system than one of the existing vendors has? If they do it in-house, do they even have the expertise? If they contract it out, is that much different from what we have now?
2) Everyone needs to file state taxes anyway. Seems unlikely the IRS is going to handle this, as it adds a great deal of complexity and isn't really part of their mandate. So if you create a free IRS filing system, then people still need to go to one of the existing vendors and import their info and pay to file state taxes anyway.
There are good reasons to think the IRS creating a system is a bad idea. Blaming passage on a few $K in lobbying is lazy.
1) Because the IRS can provide it to taxpayers for free. Of course they have the expertise. They are the ones who review the damn filings.
The IRS should really just prepare everyone's tax return for free automatically using your submitted documents, then provide you the opportunity to approve or correct your filing. This would save everyone a huge amount of money and time (aka money). It would be a, you know, "public service", the thing governments are supposed to do.
Pretty sure these arguments wouldn't change if the IRS provided a free service to submit federal taxes.
1) They could still provide free federal tax submissions
2) State taxes could still be submitted through the companies
If the companies do in fact provide a service that is valuable the IRS should not be competition for them.
Now with that said. Intuit loads up their service with tons of dark patterns, and they spend money lobbying... why would they be doing that if they provide a valuable service?
How is it on a site full of highly intelligent and educated individuals, there is one single comment about Free File and how simple it is. And it has been around for many years.
There are tons of comments in this thread about how income tax is not automated and free in the US, when it is actually almost automated(fill out name and address and income and the software does the rest) and free for 70% of people in the US. How? How are this many people commenting and no one appears to be aware that almost all of the comments in this thread are incorrect?
On the state level, the federal government, for obvious reasons, cannot control that, but you will be happy to know that many states also support forms of Free File, although are often more restrictive. But with that said, many state taxes are just percentages of what your federal tax liability is so they are often half a page long forms for most people.
And regardless of all of that, and regardless of income, if you have a typical 1040ez income, you can go down to the public library, get the form which is literally two pages and fill it out and mail it in. It also takes about 15 minutes and in 100% absolutely free. Well, you have to purchase a stamp.
Seriously, do you not realize this has been the case forever? Are you located in the US?
And if you make over $66k a year? Come on, you can afford $50.
So these (https://apps.irs.gov/app/freeFile/) are all still companies loading their site up with dark UI patterns so that people end up paying money to file their taxes. And sending in the forms via mail has always been free.
...I don't understand what possible value you believe the American public gets by paying companies money to do something that the IRS could/should be offering for free?(not meant to be curt... just trying to understand your perceived value proposition)
What is wrong with an electronic filing system offered by the IRS without a charge?
> Why would you want the IRS to duplicate this effort and compete with these companies?
Is tax collection not a function of the government? I'd rather my taxes fund a free, easy tax filing system than pay fees to rent seeking middle men. Those fees are just an inflated tax by another name. We should be eliminating those kinds of taxes, not entrenching them.
> If they do it in-house, do they even have the expertise?
Government websites and software have a reputation for being ugly, slow, broken and poorly designed. Government is also capable of building good tools. Two organizations that have done good work and could conceivably work with the IRS are:
1) I'd like the IRS to at least have a role, since the IRS is the only one who has a copy of all my tax information provided by employers, banks, brokerages, etc. They have a unique role in that they can pre-fill all the information, where someone like Intuit cannot. However, an opportunity where they simply provided that information to a third party with my permission could also be an interesting model. I haven't seen any exploration of that.
2) California, at least, already provides this service. But few use it because the federal government doesn't. If the federal government stepped up, many states would follow.
I believe that the IRS providing it like most of the rest of the world would be a big step forward, but would be open to a role for private industry too.
You make it sound like that's a bad thing. If federal taxes don't go towards things that _the entire country's population_ could use, then, why are there taxes in the first place again?
If you've got a complex tax situation that TurboTax asks you to file by mail, or even if you just want to file yourself, you have to go to - you guessed it - the IRS' website to get all the forms and instructions. The IRS already has to navigate all that complexity to put out all these forms and instructions for every field, tax table, eligibility flow charts etc and the government certainly employs developers[1] already. The government also has to budget for printing millions of 1040 pamphlets for the entire country, and they somehow are able to come up with budget for things like that Trump wall, so surely coming up with budget to implement electronic filing isn't a question of money waste?
We can thank Grover Norquist and many other conservatives who want to make tax filing as unpleasant as possible so the very concept of paying taxes is vilified and the idea of government services are poisoned by association.
The situation is even worse for foreigners in the US. As a non-resident I have to use websites with horrible UX, it's totally confusing and I have to gather all the documents and print the forms to mail it to the IRS.
So... maybe it's time someone build (or fund others to build) a free, online, tax prep service. Something that handles all but the really challenging cases. Do it just to screw the people behind this sort of idiocy.
Corporations when there's no competition - "we are global leaders in innovation". Corporations (like TurboTax) when there's competition - "(sob, sob, sob), save us. here's some money"
From what I understand, there are a lot of businesses that make money off the system being very complex but what is stopping an open source program being created that does everything for you like the paid tools do?
In Brazil the govt supplies the software for free, runs in all major operating systems, and autofills what the IRS already knows if you have a digital certificate.
I've often lamented a system that makes people feel good about getting back money that was already theirs (without interest) and calling it free money.
that would be so nice, wouldn't it? Millions of people prosecuted for tax fraud, because they had to choose between paying the gov later or paying for food/rent/healthcare NOW.
Why do regular citizens even file their taxes in the first place? The IRS has everything they need, from W2 to financial statements from brokerages. All of this filing is required by law anyways. Do it for me and send me a bill or refund.
I could not think that this would be a bipartisan bill. At least Credit Karma is still around, offering free tax filings (no affiliation, just a super-happy user).
The symptom is tax filing. The cause is wreckless spending and near 0 efficiency. The enabling factor is the force of law to extract your money via tax.
As a vehement proponent of free markets I wholly oppose this sort of crony capitalism. I think this is something everyone in politics can and should agree on.
If the government is going to collect taxes they shouldn't be giving a certain industry a leg up on for charging money for people to pay taxes.
Taxes are complicated to file because taxes are complicated. I’m surprised the source of tax woes is left out of this discussion, and the obvious solution (a simple tax system).
The solution to excessive, complicated rules is less, simpler rules.
I think that the work-around for this problem is an online tax filing service like that offered by Credit Karma, which like their credit score reporting service is supported by ad revenue rather than by charging a fee for the service.
As the article makes clear, this is not a unilateral ban on competing with tax prep software companies, but rather a deal (pre-existing but now codified into law) in which the companies agree to provide free tax prep software to low-income taxpayers and in exchange the federal government agrees not to create a competing product.
To me this sounds like a great deal for taxpayers. In exchange for not spending tons of taxpayer money on a project which may or may not turn out well, makers of existing high-quality products agree to voluntarily give free access to it to the majority of taxpayers.
The bill additionally codifies funding for the VITA program which provides free in-person preparation services for low-income taxpayers.
I think this is about as good as the situation can get without actually simplifying our tax code.
The easier it is the file taxes, the closer you get to a direct link to your bank account where you "don't have to think about it". Affordances and friction can be good. And if you (actually) believe in equality, those affordances should apply to all.
Ugh, I hate this argument so much. It's the argument Grover Norquist goes around making to every Republican in Congress that that (in addition to Intuit's lobbying efforts) to stop this from ever happening. (There's a great episode of Planet Money [1] about it.)
In addition to just about every major country other than the US, California already has this and it's absolutely fantastic. I've literally never heard anyone who's actually used it complain about it and say they'd rather not have the option of filing their taxes in this way.
Imagine if your cell phone bill worked like US federal taxes. They would send you a blank sheet of paper and make you write down your minutes, texts, and megabytes for the month, and any other applicable fees you might owe, calculate the total bill yourself from that, and send a check for that amount. The provider already knows what you owe and calculated it themselves; they just aren't telling you, and you're threatened with additional fines or burdensome audits if your calculations don't match theirs. This causes you weeks of anxiety and dozens of hours of lost productivity every year. (Paraphrased this argument from the subject of the Planet Money episode.)
The cell phone company doesn't have guns or regulate my property rights. Your argument is weak. Turbotax is better than government software will ever be, and it's close enough to free that no one is out in the cold on it.
Citation needed that Turbotax is better than the government software that is used to validate millions of tax returns.
So much of this is just re-running information that other entities like employers, banks, etc. have already furnished to the IRS with a slim bit of additional data on top of it (vast majority of Americans) that there's no reason the IRS can't just compute it directly since that's what they're doing already when they validate a return.
> And if you (actually) believe in equality, those affordances should apply to all.
Assuming one actually believes it’s an affordance, as opposed to a pointless inconvenience and cash grab. I suspect those whose views you’re attempting to impugn generally have the latter viewpoint.
Pointless cash grabs are an affordance. Would you rather have a competent government? That's only useful if you depend on them more than they depend on you.
I think this is a great idea. The risk of the IRS totally screwing up is just too high. And having an outside contractor do it is potentially even worse.
E.g. the State of Oregon contracted with Oracle to create a health insurance marketplace. $200 million dollars later there was nothing but lawsuits. https://en.wikipedia.org/wiki/Cover_Oregon
Let that sink in. Two hundred million dollars and they couldn't get a fucking website working. Two hundred million dollars!
Anyone who has played with TurboTax or H&R Block software knows that the software is at least pretty good. There are plenty of nuances in the tax laws, and the software at least attempts to cover those. Sure, a good tax accountant probably can do a lot better, but for 98% of people the software is good enough.
Does anyone seriously believe that the IRS would do better? Why waste taxpayer money to find out?
> Does anyone seriously believe that the IRS would do better?
It’s interesting to see the same arguments resurface as they do for healthcare.
Most non-Americans here live in countries where salaried employees have almost zero contact with the country’s ex agency. No returns, no filing, it all just magically happens behind the scenes.
So it’s kinda weird to hear Americans say “that’s impossible! How can you trust government?!”.
The worst thing about American exceptionalism is that it blinkers Americans from things that are not only done better by some other countries, but also the things that literally every other rich country in the world manages.
To be fair, American exceptionalism has little to do with the glories of our IRS.
Our tax code is also absurdly complicated- https://www.businessinsider.com/2014-how-many-pages-in-the-u... as an example. As I've said elsewhere, some of the most significant opposition to the IRS pre-filing taxes is trusting that it operates in good faith - or at least competently - and appropriate applies all deductions that a person is eligible for. Simplifying the tax code would go a long, long way to alleviating most people's concerns, I think.
And many people will still go to a private tax service to verify that everything that could be accounted for is accounted for. The concern isn't that people wouldn't be able to make changes, the concern is that people would naively accept whatever they are told they should get back, even if that isn't the case.
To be fair though, I think this is somewhat less of an issue after President Trump's tax reforms; with the doubling of the standard deduction, it's become less fruitful for most people to attempt to itemize their deductions.
American tax is significantly more complex than other countries - I would guess more than any other country - due to challenges such as county + state + federal taxes and interactions between them.
Source: worked on a payroll system that had to be heavily rearchitected when we tried to deploy it in the US.
The IRS already does your taxes based on the information they already have. Ever had the IRS helpfully "correct" your filed taxes and send you more money or send you a bill?
You can dispute it, but in the multiple times it has happened to me, they were right, and refunded or charged me sometimes modest sometimes small amounts.
They could've just done that and saved me the $$ spent on Intuit (do it yourself) or accountant services.
in the multiple times it has happened to me, they were right, and refunded or charged me sometimes modest sometimes small amounts
The one time it happened to me was much more opaque. Basically, some years after filing, the IRS said something like "you owe us an extra $5". Without much explanation as to why.
Okay, easy thing is to pay $5. But what if it was $500? Still not cost effective to pay an accountant to help you understand why. And what if it's $5,000? Is it worth battling a Kafkaesque bureaucracy for that? What if it's $50,000?
The current system sucks but it sure is better than having the starting point for taxes being the government tell you exactly how much you owe them and you having to battle them to prove otherwise.
Yes, but if the US tax code weren't so darn complicated wouldn't that reduce the chances of the IRS totally screwing up?
I just finished my taxes and filing taxes in the US is such a stshow. But where do we start? We want to simplify filing, but that might depend on simplifying the tax code, which might be orders of magnitude more difficult. Sigh!
that might depend on simplifying the tax code, which might be orders of magnitude more difficult
Actually, it would be trivial to simplify the tax code. It couldn't be done overnight, it might take a long weekend. All you have to do is come up with a very simple tax scheme with no complexities and no loopholes. Why couldn't a simple tax system be contained in a 10 page law?
At first make it optional for anyone to switch to the new scheme. After a few years, start a 20 year phaseout of the old system. Tell the holdouts that, first year of phaseout, they must pay 5% of the tax required by the new system and continue to pay 95% of the amount calculated by the old rules. After 10 years it becomes 50%/50%. After 20 years the old system is gone completely. Holdouts can switch completely to new system at any time, but once you switch you can never go back to the old system.
Good point. But I think lobbyists and special interests would throw a wrench into all of that.
If we simplify the tax code, some group somewhere will no longer benefit. I'm sure they and their lobbyists will fight extremely hard to make sure this part of the tax code remains. Multiply this by all the different groups that would be in a similar position and now you might see why I think simplifying the tax code would be extremely difficult.
now you might see why I think simplifying the tax code would be extremely difficult.
Of course. You are 100% right. I was describing a fantasy world, you are describing practical reality.
Edit: just to be clear, I'm not trying to be sarcastic in this post, even though it contradicts what I said earlier about how "trivial" it would be to simplify.
The reality is as you describe. Any serious simplification would be extremely difficult to achieve.
The IRS would basically tell you what they already know. You still could file a return if you chose to do so. You could also buy TurboTax if you wanted to.
I can’t see any downside to the taxpayer, only upside.
E
The downside, allegedly, is that the IRS may not operate in good faith and take all of the appropriate deductions, etc. If the tax code were vastly simplified, I think all of the objections go away.
I don't think the IRS or government hires worse people than, say, TurboTax. However, the procurement process for contracting the work is a byzantine nightmare, of which companies who are management and administrative heavy are the only ones who can possibly compete.
The net result is you have systems being put together using objectively bad processes and whose outcomes are guaranteed to be more expensive and less likely to work as intended.
A former employer of mine was a small startup in the intelligence analysis space, and had a product that generated a lot of interest in various government circles, as it solved some problems better than what they were currently using. The red tape to actually get any sort of contract approved was so tough to get through the owner seriously contemplated hiring a company whose sole purpose was helping other companies negotiate said red tape.
In the end, they pivoted to the commercial space.
To bring this back to the original point: I would love to have a super-simple tax system that didn't require paying third parties to file for me to make sure that I filled everything out correctly, and leveraged the tax code to best fit my circumstances. However, I do not have much faith that such a thing will come about anytime soon... once bitten, twice shy, that sort of thing.
This sort of argument comes up all the time, claiming governments somehow screw everything up but private industry has some sort of amazing track record at producing value.
There’s a continuous stream of evidence to the contrary, particularly if you’ve ever worked for large companies and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.
The difference of course is that one costs tax payers whereas the other costs shareholders, and in one case (government and tax payers) there is some hope of oversight and accountability. If shareholders actually knew about this sort of waste I am not sure they would ultimately care because they may chalk it up to the cost of doing business.
> There’s a continuous stream of evidence to the contrary, particularly if you’ve ever worked for large companies and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.
There's also a continuous stream of evidence not to the contrary, particularly if you've ever worked for the government and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.
The difference of course is that one costs taxpayers whereas the other costs shareholders, and in one case (government and tax payers) the only feedback mechanism is votes every couple of years, which don't really make any difference because incumbent reelection rates are in the high 90s even though Congress's approval ratings often drop into single digits. Whereas shareholders (or their proxies, mutual funds) can simply sell a company's stock if it looks like the company is wasting resources; stocks get traded every day.
Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.
1. https://www.npr.org/templates/transcript/transcript.php?stor...
2. https://en.wikipedia.org/wiki/ReadyReturn
3. https://www.ftb.ca.gov/online/calfile/index.asp