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 don't think we exist in a world where this is possible.