
Stanford Professor Loses Political Battle To Simplify Tax Filing Process - dynofuz
http://www.npr.org/2017/03/29/521954033/stanford-professor-loses-political-battle-to-simplify-tax-filing-process
======
avar
This whole thread is full of comments from people who obviously haven't read
the article / listened to the podcast in question[1].

Joseph Bankman proposed ReadyReturn in California, which is the kind of tax
return pretty much the entirety of the rest of the western world uses. I.e.
instead of an empty return, it's pre-filled in with the details the government
knows anyway. This vastly simplifies things for most people, especially those
whose main income comes from working one job.

This was in no way a change to the tax system, or what taxes people had to
pay. The government would just hand you a filled-in form instead of an empty
one, so you could make corrections instead of filling it in from scratch.

It had north of 99% approval ratings by the people in the test groups for it,
something unheard of when it comes to government programs.

As a parlor trick Bankman would carry around a thick binder with the feedback
the program had received from taxpayers. When he wanted to convince someone
he'd start paging through it and ask the person he was talking to to say
"stop", to ensure he wasn't cherry-picking. He'd then start reading raving
reviews of the program starting at that page, some in all-caps from people who
couldn't contain their excitement.

It didn't make it into law, partly due to lobbying by the likes of Intuit, but
more interestingly, I thought, because Grover Norquist, the well known
promoter of the "Taxpayer Protection Pledge" took the counterintuitive view
that just making the process easier equated to a new tax, since taxpayers
might end up paying taxes _already_ on the books that they might have
previously unintentionally evaded.

That to me is the most bizarre detail about this entire story. It's likely
that it would have passed if not for the strange interpretation of one man to
this not-a-new-tax of it effectively being a new tax, and his ability to sway
the Republicans due to the political power his "Taxpayer Protection Pledge"
holds over Republicans.

1\.
[http://www.npr.org/sections/money/2017/03/22/521132960/episo...](http://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-
hero)

~~~
jkaptur
I think that a major component of Norquist's thinking is that the more painful
people find taxes (including the process of calculating them) the more they'll
support his agenda of "a government so small you could drown it in a bathtub".

~~~
joshuaheard
I think it's also akin to the withholding tax. If people had to write a check
every year, there would be outrage to the amount people are actually paying.
Instead, they are grateful for the government "giving" them a tax refund!

~~~
toomuchtodo
I don't think so. 45% of Americans pay zero income tax, even accounting for
withholding.

~~~
quadrangle
Yeah, zero FEDERAL income tax but most of those pay for SS, Medicare, and
state taxes. Those in a lump sum vs withholdings would still be a different
experience.

~~~
toomuchtodo
That's not withholding though (as the parent referred to; withholding towards
your federal income tax bill); as you mention, that's payroll taxes, which
you're going to get in retirement back as entitlements.

Consider what would happen if the IRS was efficient enough (through these
automated tax accounting systems) to not get an interest free loan from
working America for an entire year (ie dynamically modifying every pay period
how much was collected in federal tax withholding based on estimated total
year tax liability); the federal government would have to be more judicious
about its cash flow.

You'd think that's something Republicans and small government advocates could
get behind. Go figure. "Fiscal conservatives" in name only.

EDIT: For the pedantic: s/IRS/US Treasury/ in my comment.

~~~
quadrangle
"IRS gets a loan" is metaphorically true in a sense but really doesn't hold up
to scrutiny. The IRS doesn't actually get money from taxpayers at all. The IRS
is just the bureaucracy that determines things. The money that you "pay" in
federal taxes is just dollars that are _deleted_ out of existence so that the
dollars _created_ by federal spending don't create inflation.

The federal government's "cash flow" is made up entirely of creating dollars
out of nothing by spending and deleting dollars out of existence by taxing.
The federal government doesn't "have" dollars.

[http://www.moslereconomics.com/wp-
content/powerpoints/7DIF.p...](http://www.moslereconomics.com/wp-
content/powerpoints/7DIF.pdf)

~~~
avmich
> The money that you "pay" in federal taxes is just dollars that are deleted
> out of existence so that the dollars created by federal spending don't
> create inflation.

Does it mean that taxation in another country is different than taxation in
US? Especially in a country where local currency has a fixed exchange rate to
US dollar? They presumably can't create money that easily.

~~~
quadrangle
Yes, it's TOTALLY different. The U.S. power globally is EXTREMELY tied to the
use of the dollar internationally. Everyone else who uses dollars (or has
currency pegged to the dollar) is under major economic control and influence
of the U.S. Oil priced in dollars is huge.

When the U.S. left the gold standard it was giant fuck you to all the
countries who held dollars and could no longer exchange them for gold. The
U.S. maintains and exercises military power globally in part to protect the
dominance of the dollar.

Note also that state/local taxes in the U.S. are _completely_ different from
federal because they can't just make dollars and can only spend dollars
received through taxes (which are not deleted in that case) or received from
federal spending (or in some cases through the state itself doing business in
the market).

~~~
pas
No it's not. Don't spread bullshit.

Taxation works pretty much the same way everywhere. The central banks are
separate entities in any modern state/economy/monetary zone. The federal and
state/local taxes are the same. The federal government takes on debts like
states. You might remember the brouhaha about the debt ceiling and the big
sequester in the past few years.

The Bretton Woods system was doomed to fail anyhow, it was a nice try to help
the non-US post-war economies, but obviously as soon as some problem arose in
the US (looming rise in unemployment), the system fell apart.

The petrodollar thing is real, but it's not important. The US import-export is
enormous, the trade with China/India and the EU has a lot more influence on
the dollar than oil interests. (And thus conversely the US power structure
won't use the US central bank to try to exert power, because it'd fuck up its
own economy the fastest - because the US benefits the most from global trade.)

~~~
quadrangle
Are you actually aware of the points in the link I posted?

The import/export issue is real in the sense that Chinese folks holding U.S.
dollars could buy up lobbyists and land and such in the U.S. if we let them.
It's not real in the sense that we could, if we wanted, just give every U.S.
citizen an extra $50,000 to dilute the buying power of foreign holders of
dollars. That would be aggressive for sure, but we have the power to do that.
It's a complex set of arrangements here.

Yes, the U.S. benefits the most from the current arrangement, so we aren't
interested in screwing that up. But we could and would take action if the
foreign-held dollars started getting used in ways that were bad enough for us
to do something about it.

------
gamblor956
Correction: this proposal would not have simplified taxes (i.e., the
California tax code). It would merely have simplified the filing of tax
returns for the most common case, salaried workers receiving all of their
income from a single source.

Very big difference. HRBlock and Intuit are heavily vested in maintaining the
current tax filing system. They are not, however, meaningful players in the
attempts to rewrite the tax code.

~~~
keithnz
In new zealand, we got rid of having to do tax returns for salaried/wage
earners a number of years ago. Makes life easy for a vast majority of people.
You can still do a return if you want to though. For the tax department it
cuts down on how much infrastructure they need.

~~~
hnal943
I think that's optimizing the wrong thing; people should be aware of the
amount they are paying in taxes.

~~~
dingaling
In the UK each pay-as-you-earn taxpayer ( I.e. tax calculated automatically
and deducted from net income ) receives an annual statement of their tax and
figuratively how it was spent e.g. £800 on health, £105 on defence etc

~~~
thomastjeffery
Whereas in the US most people don't pay any attention to where their tax
dollars go. Meanwhile, President Trump raised our already ludicrous defense
budget _another_ $50 billion.

------
wkz
I live in Sweden. Just a few days ago I audited and filed my returns for 2016,
it took me about 2 minutes.

1\. Go to skatteverket.se (IRS), enter your "personnummer" (SSN).

2\. Open the BankID app on my phone, which contains an X509 certificate
identifing me, issued by my bank. Enter my password to decrypt the cert's
private key and sign the authetication ticket from skatteverket.se.

3\. Audit my pre-filled returns. Contains all information about income tax,
captial gains tax and so on.

4\. Press "Sign", enter password in BankID again to sign the returns.

5\. Smell the roses.

~~~
aldanor
I live in Ireland. I don't file any returns since I have a single source of
income, my company/government figure it out for me => 0 time wasted.

~~~
wkz
Interesting. I would think that they at least would want a signature from you.

Seems harder to argue cases of tax evasion if you as an individual have not
officially stated that you have no additional incomes other than the ones your
gov knows about.

------
chiefofgxbxl
Just for thought: suppose the tax system became so simplified that only goods
X, Y,and Z were taxed at rates a,b,c. You pay aX+bY+cZ in taxes per year. It
would be easy for voters to campaign their politicians to lower tax rates and
easily verify.

Obviously in the real world there aren't 3 levers to adjust: there are
probably thousands or tens of thousands. Apart from the lobbying, politicians
may themselves desire this, because it would allow them to lower those 3 very-
public levers to claim they lowered taxes, while at the end of the day
maintaining the same level of spending because they just offset those losses
over thousands of other levers. After all, things have to get paid for.

Then at least they can tell the public: "Hey, I lowered tax rates." And when
the public's wallet doesn't feel the savings, the politician still wins votes
because as far as the public can see, they lowered those tax rate levers.
Compare that to a politician under the 3-lever system. Either they lowered
taxes or they didn't.

What I'm suggesting is that a complex tax system allows politicians to take
the heat off themselves when the public demands lowered taxes, while still
maintaining the amount of money the government takes in to cover the budget.

~~~
rayiner
That's exactly why we have a proliferation of taxes and tax breaks instead of
a simple tax system. Perform a thought experiment. Say we just have a straight
35% income tax. Now, say you need to raise additional revenues. Do you (1)
raise the single tax; or (2) impose a new tax on some specific part of the
economy? Option (1) gets _everybody_ mad at you. Option (2) gets only a tiny
number of people mad at you.

Same thing for tax breaks. Say you want to cut taxes. Do you cut the marginal
rate, which helps everyone (even non-voters), or do you target cuts in a way
that helps people who are likely to vote (homeowners, people with employer-
paid health insurance, old people, etc.)? Same thing with business tax breaks.
Do you cut rates for all businesses, or do you target them for businesses that
are big employers in your state/district?

~~~
kenning
Yeah but a flat tax would be extremely regressive. If you had a simple
equation like tax% = x/4 + 10, where x is your tax percentile, politicians
could loudly say that they wish to increase or decrease the slope of the line
and people would know that increasing slope would mean a more progressive tax.

~~~
jrs95
If it had a standard deduction and all investment income was counted the same
as wages, it might actually be more progressive than the current system,
depending on the exact numbers. Payroll taxes are mainly what affects people
at the lowest income levels.

~~~
laughfactory
I like this. I think our democracy (or whatever we've got now) will continue
to crumble until and unless "we, the people" get a sense, individually, of the
cost of paying for what we pay for, and our share of the cost. Until that
happens there will be no honest discussions about what we really value and
prioritize.

Your proposal would do that neatly. The system is way out of whack, lends
itself to corruption, crony capitalism, rent seeking, and entitlement. We all
have our favorite tax breaks (which is why it's been so hard to change), but
we really need to get back to basics: every dollar you get is income taxed at
some level, and everyone gets some standard deduction, and that's it. No weird
industry tax breaks (because, arbitrarily, politicians decided we wanted more,
or less, of a certain thing: cars, homes, solar, coal, etc...), just clear
numbers we can grapple with.

------
danso
The currently posted link doesn't have the audio/transcript, but here's a few
relevant links from last week:

[http://www.npr.org/sections/money/2017/03/22/521132960/episo...](http://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-
hero)

[https://priceonomics.com/the-stanford-professor-who-
fought-t...](https://priceonomics.com/the-stanford-professor-who-fought-the-
tax-lobby/)

------
bmajz
I was pretty surprised to see Zoe Lofgren's name pop up as an anti tax filing
simplification advocate. She's the rep from CA's 19th District which covers
San Jose (but not the rest of Silicon Valley) and generally a straight down
the line liberal. This is not even Intuit's core district -- that would Anna
Eshoo's 17th (previously 14th) district which covers Mountain View and Palo
Alto. As a resident of this district, I guess I have something to write in
about.

~~~
undersuit
According to open data[1] the largest contributor to her campaign is Intuit
and it's employees.

[1]
[https://www.opensecrets.org/politicians/summary.php?cid=N000...](https://www.opensecrets.org/politicians/summary.php?cid=N00007479)

~~~
rsync
"According to open data[1] the largest contributor to her campaign is Intuit
and it's employees."

And without even looking, I am going to guess it's some _shockingly low
number_ ... let's take a look ...

Ding!

$30k. That's all it took.

Should we have some fun and see if $31k is enough for (whoever this lady is
that nobody has ever heard of) to tattoo "rsync.net" on her forearm ?

$32k ? What should our offer be ?

Maybe she can help councilman Ben Kallos pull the rickshaw.[1]

[1]
[https://news.ycombinator.com/item?id=13972360](https://news.ycombinator.com/item?id=13972360)

------
noobermin
I'm going to say this until I'm blue in the face: fix money in politics, and
half of these issues will no longer be intractable.

~~~
KZeillmann
How do we "fix money in politics" without chilling free speech?

~~~
javajosh
We put all candidates online, for free. They are not allowed to spend money on
getting elected - although they can spend their time (generally speaking,
sometimes studying, a particular problem, history, how other countries do it,
etc).

Citizens subscribe to individuals, and groups of individuals, that best
reflect their views. Additionally, citizens will be exposed to views that are
slightly or significantly different based on an algorithm.

On voting day they can print out their vote and either mail it or bring it to
the polling place with their ID.

While I like the idea of short races (1 or 2 months) this system could easily
be a constant presence in people's lives; and a constant presence in the
elected official's life, as their decisions are recorded and weighed against
their stated principles. This would force pols to be explicit about any horse-
trading.

Ultimately such a thing is a specialization of social media in the same way
the liver is a specialization of muscle. Note that there is no place for
"party" in this system, except insofar as it defines a grouping.

~~~
javajosh
Right speech is independent of its volume. Money can only increase volume, so
get rid of it. Money isn't speech, it's amplification of speech, and as such
should not be protected.

~~~
icebraining
If a candidate makes a speech in the woods...

You proposal is a recipe for electing only celebrities, who don't need money
to be amplified.

~~~
javajosh
Perhaps. But my hope is that such a system would help individuals discover and
articulate their own personal principles, and then connect them with others
with similar views. I suspect that with a little help everyday voters would
far prefer to vote for the candidate that does the right thing than the
candidate that they merely recognize. (I might be wrong about that but it's a
worthy experiment).

------
basseq
I did some work for the IRS several years ago to explore the same idea. There
are many benefits, including simplicity and accuracy of filing (closing the
$500B tax gap), as well as better fraud protection (another $25B).

Protectionism of the tax return industry is common, but not the primary
reason. Instead, the biggest pushback is from taxpayer advocacy groups. The
issue is this: for many Americans, particularly _low income_ Americans, their
tax refund is the largest check they receive all year. _Delaying_ that refund
in order to receive all tax information (e.g., from banks and employers) and
pre-populate a tax return would push back initial refund checks by 1-2 months.
This is tantamount to political suicide.

~~~
antisthenes
If you receive a huge tax refund from the IRS, that means you set up your
initial deductions improperly.

If your sole income is 1 main full time job, it's really not hard to estimate
your taxes to the point of having a refund under $500. That way you don't
government use you as a bank for 0% interest and have more money throughout
the year.

To preempt some of the responses - no, let's not denigrate poor people for
their spending habits and pretend like somehow getting the refund is better
than having that money during the year.

~~~
basseq
You're not wrong, but we're leaving the world of "logic" here and moving into
"politics and optics". Most people can't wrap their heads around, "What do you
mean I won't be getting $1,200 in March!? $100 per month? Who wants that!"

------
nullnilvoid
I am not surprised at all. Intuit, H&R Block etc. spend much money in D.C.
just to keep tax codes complex so that they can sell more copies of tax filing
software, at the cost of all tax payers.

------
tedunangst
Would it have killed them to at least mention his name is Joseph Bankman in
the summary?

~~~
javajosh
Good point. I wonder if the omission was an oversight or intentional (his name
would make finding an alternative source trivial).

------
justabystander
Honestly, I think it'd be better to start a non-profit that releases tax
software, first. It could compete with tax software, like from Intuit & H&R
Block, as most of the needed services are rather simple. It would either
charge just enough to cover costs, or be completely free, if donations for the
year was sufficient. The tax software support could be done on a contract
basis, where people certified people could login and handle queries on an
hourly rate. The work from home crowd would love it.

Build it out enough, and then push a few legislative mandates:

1\. All taxes have to be easily payable in tax software.

2\. All taxes have to be payable online.

3\. Every tax jurisdiction has to offer a tax estimation service, where they
can download pre-calculated data to use in tax software.

Should make predatory companies like Intuit disappear in less than a decade.

~~~
GauntletWizard
Absolutely. But don't think that you'll have an easy time of it. Expect that
501c(3) status won't come, because ultimately it's the IRS that makes that
call, and they've already been suborned or cowed to the pressure of the tax
preparers.

Expect your credentials to be challenged. You need a license to prepare taxes
for other people - And I expect they'll try to say every developer who touches
a line of code must have one. Expect character assasination, and every mistake
to be amplified. Buzzfeed will run "10 dangers of using open source software
to do your taxes". The forms will become even more of a moving target than
they are now, and APIs will absolutely not be public.

But it's a fight that should be fought. This is the kind of thing that makes
better government, kicking and screaming.

------
kwoff
I'm an American working in the Netherlands. Filing US taxes has improved, a
lot last year in my opinion, since it got easier to file electronically for
free... But compare: I got a letter from the Dutch government a few weeks ago
saying I don't need to do anything since as far as they can tell my situation
hasn't changed since last year. In the US, some people believe that the tax
return that they get every year is some kind of bonus. Here, my employer
withholds the correct amount. Why is that so hard?

------
riemannzeta
I wish there were more information about what, specifically, the pilot program
included. The main detail I got from the story is that the tax returns were
pre-filled with income information.

I think that's useful, but I see no reason to expect a priori that the
government would end up doing a better job with that than the private
companies (like Intuit and H&R Block) whose revenue depends on doing that
well.

The comments that suggest that Intuit and H&R Block were lobbying to keep the
tax code complex don't make sense to me. Maybe they are, but that's not what
they were lobbying for in lobbying to defeat this particular, reform is it?
Rather, they were lobbying to keep the pre-filling process private.

Or did I miss something important?

~~~
albinofrenchy
Intuit and HR block are a bunch of crooks.

They have lobbied for a variety of anti-tax payer causes. Namely stuff like:
[https://psmag.com/h-r-block-and-intuit-are-still-lobbying-
to...](https://psmag.com/h-r-block-and-intuit-are-still-lobbying-to-make-
filing-taxes-harder-b94a0f41ffa1).

There is a really good reason to think that the government would do a better
job -- most peoples tax situation is dead simple. Even if H&R block found
deductions every once and a while that the IRS didn't -- which I doubt would
happen realistically -- H&R block charges something like 200 dollars. It seems
incredibly unlikely that they would save more than 200 dollars on average.

And if that was the case, let the market sort it. H&R block could say bring in
the returns, and if the IRS messed up we'll find it and split it with you in
some fashion.

~~~
riemannzeta
I don't have a strong feeling about the statistics here. But I guess a $1,000
mistake on 1 in 5 of all returns does a little unlikely. Bigger mistakes on
fewer returns also seems unlikely since the higher the bracket, the less
likely you're relying on any default or software.

But I take the point that H&R Block and Intuit could simply start from the
filled out returns provided by the gov't. Harder to understand their
objections given that.

------
whyenot
California has the initiative system that means ultimately the voters _can_
make changes to the system without involving a recalcitrant or corrupt
legislature. For better or worse, many of the big changes in government in the
state were enacted through this process. For example, proposition 13, which
drastically changed property taxes, proposition 14, which moved the state to a
"top two" primary system, proposition 11 and 20, which changed redistricting
and made it less partisan. etc. etc. Moreover the side with more money for
advertising doesn't always win these proposition elections.

~~~
CogitoCogito
I'm pretty sure the problem would be that the second someone like Grover
Norquist came out against it, you'd lose a huge amount of support. The fact
that those very same people would love the system if they tried it (as the 99%
approval of the system attests) is irrelevant.

That said, it would be interesting to see it put to a vote.

~~~
dragonwriter
California passes ballot propositions all the time that Norquist (and the
often more relevant in California, similarly aligned Howard Jarvis Taxpayers
Association) oppose.

------
lend000
I find it troubling how many commenters here are so passive to automatic,
mandatory payroll tax deductions, that they overlook how effective those
payroll tax deductions actually are (and how Norquist is right, if for the
wrong reasons).

Yes, government payroll deductions are convenient. Yes, all other things being
the same, they make your average salaried worker's life easier. And yes, they
absolutely mask how much you are paying in taxes, by softening the
psychological impact of making an annual tax payment with money _you earned_ ,
instead slowly pilfering the money from each paycheck. Most importantly, it
ensures you never get to see that portion of the money you earned in the first
place -- it doesn't hurt as bad to lose something you never really had.

I personally think this should have passed -- if nothing else, to force the
IRS to reveal all the information it really has on you. However, the opposing
argument has a point that shouldn't be dismissed as completely ridiculous,
because a pretty indisputable side effect would be more apathy regarding
taxes, which is not a good thing.

------
lazyant
Sending taxes in the US by mail was unnerving for me, I don't know if things
have changed but basically you put the envelope in the mail box and then ..
you don't know, no receipt from the IRS, nothing. What happens if the envelope
is lost? In all the countries I've lived you submit your taxes and you get and
instant receipt or acknowledgement.

------
koliber
I am impressed that it only took $35,000 to get lobbyist help to get this law
proposal that far.

There's a lot of talk here about efficiency and many efforts to strive for it.
What would it take to raise 10x that much and provide Prof. Bankman with a war
chest that stands a good chance of succeeding?

------
arikr
Seems like a good opportunity for a crowdfunding campaign.

------
JDiculous
This is infuriating because the simplified tax system is objectively superior.
Any Congressperson who voted against this was either 1. stupid or misinformed
2. bought out by Intuit.

It seems to me that the only way to mitigate the effect of lobbying, aka
legalized bribery, is to publicly call out the politicians who sell out.

Is there a list of representatives who voted against this bill?

------
thebrettd
I love this idea in theory, and basically revisit it every year during tax
season.

The tax/tax prep lobby is strong, and perhaps needfully so, as a whole bunch
of people have their livelihoods wrapped up in it, but I often wonder if that
whole industry is not actually a net negative for the economy.

edit: How do we help this idea take flight?

~~~
fattire
Remember that every dollar spent on intuit, and every hour wasted struggling
with bullshit tax forms (deliberately the status quo because of Intuit) means
Americans can afford less time and money using _your_ product and buying
_your_ services. That is, these billions of dollars and incaculable
frustrations wasted by Americans to line Intuits' pockets are a drag on the
overall economic activity-- less money circulating in the economy, less
ability to buy from each other.

Fuck Intuit. They exist to make everyone's lives worse. But don't forget, the
government forces them them to offer their software free for certain lower-
income Americans:

[https://www.irs.gov/uac/free-file-do-your-federal-taxes-
for-...](https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free)

No idea how much longer this will exist. I'm guessing it will soon quietly go
away or be marginalized even more than it was in GWB's adminstration (when the
income minimum was reduced significantly).

------
shmerl
I can't see the article, but I suppose it mentions, that Intuit and Co. bribed
officials to oppose this idea.

~~~
DiffEq
It does becasue they did; well in a lobby sort of way so it is legal.

------
ryandrake
The problem I have with the popular "simplify" US tax proposals is that they
mostly do it by repealing whole sections of the tax code, ending up super
regressive and/or hurting the poor and middle class and helping the already
rich.

Flat tax @ a high rate: Neutral or slightly helpful to the rich, crushing to
the poor and middle class

Flat tax @ a low rate: Windfall to the rich, the resulting gutting of
government programs hurt the poor and middle class

Eliminate taxes on dividends: Windfall to the rich, neutral to the poor and
middle class who don't benefit from dividends

Eliminate many deductions and loopholes and reduce top tax rate (one of
Trump's proposals): Rich are likely better off, no help to the poor and middle
class

Reform AMT: Helpful to the rich and people with stock options, no effect for
the poor and middle class

Eliminate income phaseouts: Helpful to the rich, no help to the poor and
middle class

Eliminate estate or gift taxes: Helpful to the rich, no help to the poor and
middle class

Eliminate income tax in favor of sales tax or VAT: Windfall to the rich,
crushing to the poor, probably negative for the middle class

The ability to file your taxes on a postcard isn't worth it if it means
advantaging the already advantaged.

~~~
Aloha
Have you considered that the tax system shouldnt /help/ anyone? Trying to
further social policy via taxation is about the least efficient way to do it.

Treat all income the same, do not allow deductions, charge a medium rate
(10-25%), exempt the first 35-50k a year - no special rates for married filers
(everyone files single), no deductions for dependents.

Eliminate corporate income tax entirely, replace with a VAT and a financial
transactions tax (.25% of any transaction).

~~~
ryandrake
Any tax system will have winners and losers, including no tax system at all,
including one where the treasury burned the collected money rather than used
it to pay for social programs. Who ever designs the tax system directly
chooses the winners and losers--it cannot be avoided.

------
dhimes
Trump promised to make taxes much simpler. Let's see if he keeps his promise.

------
thinkloop
It would be nice to know each legislator's reasoning. Maybe there's something
real in the againsts, or at least makes it more difficult to take a flakey
position. Statements should have to come with votes.

------
Y_Y
I wonder if it would be ok for the IRS to charge for this service. Maybe then
it would be justifiable to the Republicans who oppose on the basis that it
would make raising takes easier.

~~~
hnal943
You think it would be more palatable to Republicans if more money went to the
government for the privilege of making taxes less transparent?

------
oDot
I've always wondered, why can't we just pay one tax? Say make income tax 1.5x
what it's now and cancel all other taxes. That way it'll be even easier!

~~~
smt88
Wealthy people are against that. They prefer regressive taxes, like sales tax,
that will be shift much more of the burden to the poor.

In fact, there's a whole batshit-crazy tax plan called FairTax that proposes
changing all taxes to a simple sales tax.

~~~
lsaferite
Honest question, why is it batshit-crazy?

~~~
pilom
The biggest argument against it is that it is incredibly regressive. Poor
people generally spend higher percentages of their income on stuff where rich
people save higher percentages of their incomes. So for example, Joe makes
51k/year but spends 50k/year. At the 23% tax rate that FairTax proposes, he
pays $11.5k - a $2.5k "prebate". This works out to an effective tax rate of
~18% (with today's tax plan Joe's effective rate would likely be about 7.5%
for income taxes and 7.5% for Social Security and Medicare. I.e. a lower tax
burden.)

Compare that to a rich person. Susan makes 250k per year but only spends
150k/year and saves the other 100k. She pays 23% on the 150k = 34.5k minus the
2.5k prebate which makes for an effective tax rate of 12.8%. I.e. Susan makes
more each year but pays a lower rate of taxes. These numbers get even more
insane when you have 10 million in income but only spend 1 million a year. We
basically are subsidizing investing and rich people are the biggest investors.

~~~
aianus
> We basically are subsidizing investing and rich people are the biggest
> investors.

What's wrong with subsidizing investing? Without investment in capital we'd
all be subsistence farmers tending the fields for 12h a day.

If some rich guy wants to make $100 billion and spend 1% on himself and 99% on
improving the world for future generations through investment, that's great,
no?

I guess it comes down to whether you believe the government can invest those
same dollars more productively than rich individuals.

~~~
smt88
It's not that subsidizing investing is bad. It's that we're subsidizing
investing _by shifting the burden to people who pay income tax_.

If someone makes $100M by inventing an amazing product, and someone else makes
$100M by earning interest on the fortune he earned from his mother, which of
those behaviors do we want to encourage?

Earning money from investing is often a passive way of using money.

~~~
aianus
> If someone makes $100M by inventing an amazing product, and someone else
> makes $100M by earning interest on the fortune he earned from his mother,
> which of those behaviors do we want to encourage?

What's the difference between inventing the product himself and investing in a
founder who otherwise would have had to get a regular job? Remember -- he
could have spent the principal on yachts, cars, and jets instead; _that 's_
the behavior we want to disincentivize.

------
rb666
The US oligarchy strikes again, even in California, crazy. It works in almost
all Western countries. Filing my taxes takes about 15mins each year.

------
partycoder
If you are a foreigner, you are most likely not complying with the tax code
unless you hired a competent CPA. TurboTax won't do.

------
hundt
FWIW, here's an email I sent to Prof. Bankman last April:

\---

I read with interest your letter about the Tax Filing Simplification Act of
2016, and your article "Simple Filing for Average Citizens: The California
ReadyReturn." I agree that the tax filing burden on taxpayers is far too high,
and I am encouraged that legislators are trying to do something about it.

But I am concerned about the details of actually accomplishing this given the
complexity of the federal tax code, even for what appear to be "simple"
situations. For the past five years I have volunteered with the IRS's
Volunteer Income Tax Assistance program and helped low-to-moderate income
taxpayers file their taxes. One of the first things I learned was how
frequently a taxpayer's total tax is affected by factors other than what is on
their W-2 or otherwise reported to the IRS. Examples include:

\- complex calculations of "support" to determine whether a live-in relative
is a dependent

\- exact payments, and nature of payments, made to schools (generally not
accurately reported on the 1098-T)

\- business expenses

\- which months the taxpayer had health insurance (often not reported
correctly, or reported to a different person) and, if no insurance, whether an
exception to the penalty applies

\- what portion of the property taxes paid by the mortgage company on behalf
of the taxpayer was for ad valorem taxes (the only kind that is deductible)

\- what gambling losses are there to offset the gain reported on a W-2G?

\- [litany of qualification questions for various education benefits]

\- which exceptions apply to an early distribution from a 401(k)

Although each of these individually sounds like a corner case, my experience
is that in aggregate a large percentage (perhaps more than half?) of the tax
returns involved information that the IRS has no way of knowing.

So for advocates of IRS-prepared returns, of which I understand you to be one,
I wonder what the response to these issues is? I can think of three:

1\. The IRS should assume whatever results in the maximum tax liability, and
it is up to the taxpayer to determine whether they can reduce their liability
further.

2\. The IRS should guess based on some combination of factors, and the
taxpayer is responsible for verifying the guess (and is assessed penalties if
they don't fix an incorrect guess?).

3\. We should drastically simplify the tax code so these issues go away.

Each response has some obvious problems.

Anyway, this is just something that has been on my mind, so I hope you don't
mind this email out of the blue to try to solicit feedback from someone who
might have given the issue some thought.

\---

He never responded, so I am still left wondering the same questions.

~~~
avar
I've never had to file US taxes so this might be a stupid question, but how
exactly are the people in your example worse off with ReadyReturn?

Isn't ReadyReturn just e.g. summing up their reported wages for the return,
which they'd need to do accurately anyway if they were filling it in from
scratch?

Yes, if you have a pre-filled in tax return nothing that the government
doesn't know about & which might be deductible is going to be on there, but
that's the situation you were in already, wasn't it? Now you'll have more time
to fill that out, instead of doing menial work like manually summing up your
monthly payslips to arrive at a yearly total.

Or is ReadyReturn somehow structurally flawed in allowing you to either file
for a simplified pre-filled in return with no amendments, or having to do an
old-style return from scratch?

When I file my taxes in The Netherlands all the concerns you've raised are
addressed through a system where most of the information is pre-filled in.
I.e. they know how much I make so that number is on there, but they might not
know about a few other deductibles, those are established through a series of
questions you answer.

E.g. "do you own a house" -> "what type of mortgage" -> "do you pay a land use
fee?" -> that's a deductible (to cite one made-up example).

Most importantly it establishes a workflow where if something is a deductible
(unless it's something really obscure, manual returns still exist), it's going
to be on the online tax form.

So even if the initial implementation is bad just establishing that process is
worthwhile, because there'll be political pressure to make it better next
year, and the year after that.

~~~
hundt
It's not a stupid question at all.

In practice the U.S. tax code is not quite as simple as "Here is the tax
burden for your income level; tell us if you have any deductions." Right off
the bat, you need to determine your "filing status" (single, married, head of
household, and some less common options) from a list of five choices, each of
which has different rules for all the calculations that follow. Furthermore,
for a large portion of people making modest incomes, various tax credits, most
notably the "Earned Income Tax Credit" but also education and child-related
credits, cause enormous swings in their taxes, for example perhaps from $1,000
to -$3,000 (many people pay negative income taxes).

None of these things can be determined by information the government has. So
for many people any "provisional" return that the government is likely to
create will be very inaccurate.

Now, you suggest that maybe this would just be some sort of provisional return
that could be adjusted to match your correct situation. That is a fine idea.
But in order to make that convenient, the government would basically need to
develop their own implementation of TurboTax. That has its own issues (is the
government likely to do a good job? will they apply the laws in a biased way?)
but even if they are resolved we are still talking about a vastly greater
effort than "just give people a pre-filled return." So I would ask advocates
for simplifying tax filing to either admit that they are demanding that the
government author its own fully-featured tax preparation software, or explain
how they will otherwise address the complexity of the U.S. tax code.

~~~
avar
What you're saying makes sense, but doesn't at all jive with the reported 99%
satisfaction rate in the pilot program.

Wouldn't more than 1% have noticed an increased tax burden? Or perhaps the
focus group wasn't diverse enough.

~~~
hundt
It sounds like the 99% satisfaction rate was "of the people who filed their
taxes using ReadyReturn" so it presumably excludes those who observed, or
suspected, that the result was not correct and made alternative arrangements.

That said, I will also admit that this article is really about California
state taxes, which are substantially simpler for most people than federal
taxes. I got off on a bit of a tangent because Prof. Bankman seems to claim
that the same approach will work for federal taxes as well, and in general
most people perceive these issues as linked: automatically prepared state
taxes are seen as a step towards automatically prepared federal taxes.

------
mtgx
> Joe, though, discovered that Intuit had been very busy lobbying against
> ReadyReturn - meeting with lawmakers, giving money.

How the hell do Americans not think that this is BRIBERY? Are you kidding me?
It's one thing to "talk" to politicians, it's another to _tell them to vote a
certain way and then giving them money ". For crying out loud. Sometimes the
U.S. can be _really backwards* compared to other modern societies.

------
Akujin
This is why I pirate Turbotax every year.

Fuck Intuit. Fuck H&R Block.

I'll give them money over my dead body.

~~~
doubleplusgood
Why would you need a new version every year? Does the tax code change that
frequently?

