
Filing taxes: It shouldn't be so hard - soundsop
http://www.economist.com/blogs/democracyinamerica/2013/04/filing-taxes?fsrc=scn/rd_ec/it_shouldnt_be_so_hard
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caseysoftware
I love how many articles are taking the "it should be easier to file" side
without considering that the complexity of filing is due to the complexity of
the underlying system.

Personally, I _don't_ want filing to be simpler. Every time it gets simpler to
file, it also becomes simpler to add more taxes and people don't notice the
difference. It's only when people have to do their taxes that they realize how
screwy our system is. The 1099 independent contractors understand this one.

When you have a buggy piece of software, it's considered foolish and short-
sighted to just add patch after patch after patch without stopping to consider
that the underlying system itself might be flawed. Then you either scrap the
system or refactor the worst/most complex pieces into something simpler and
more reliable.

The tax code is IE6 circa 2002. It's still "the standard" because we haven't
stopped to consider what might be better.

~~~
rayiner
Here's the basic problem with tax code simplification: the thing you're trying
to compute (income = net change in wealth) is inherently complicated to
compute. Sure, the special giveaways and whatnot don't help, but a lot of the
special giveaways are also related to the theoretical understanding of what
should be taxed.

Consider complications like calculating depreciation for capital equipment.
All the schedules aren't there because of kicks--they're there because
allowing an immediate deduction for an expense that creates a capital asset
usable for years is just a mathematically incorrect way to measure "net change
in wealth" when considering the time value of money. Other complexity comes
from using discrete sampling periods (yearly tax returns) for what is a
continuous phenomenon (changes in wealth). That's where things like net loss
carry-forwards comes from. Other complexity comes from the intricacies of the
"net" (versus gross) part of the equation. You can think of things like
childcare deductions as a sop to the fact that childcare is something people
buy so they can work, and thus not consumption.

The software analogy is really apropos. I'm pretty sure Windows is over 50
million lines of code at this point, and Linux is over 15 million. That's a
million printed pages for Windows, and 300,000 printed pages for Linux. In
comparison, the entire U.S. federal tax code is 73,000 pages:
[http://3.bp.blogspot.com/-3zoNtmhcQmE/T41zkm0VE6I/AAAAAAAAFM...](http://3.bp.blogspot.com/-3zoNtmhcQmE/T41zkm0VE6I/AAAAAAAAFMA/9ZLZXlHcI8M/s1600/2012-tax-
law-keeps-piling-up-cch.PNG).

Are Linux and Windows unnecessarily complex? Or is there just inherent
complexity in creating an operating system that runs on everything from
supercomputers to cell phones (Linux), or is bug-for-bug compatible back to
the 80's (Windows)?

Don't get me wrong, the tax code should be simplified in every way possible.
But when people say stuff like it only exists because "we haven't stopped to
consider what might be better" that sounds a lot to me like the guy on every
engineering team who wants to scrap the big, time-tested system and do a
rewrite. Go to Microsoft, tell them that their system is just "patch after
patch" and then volunteer to rewrite the whole thing. See what they say.

~~~
danielweber
What do you think about setting the corporate tax to 0% and making up for it
by taking capital gains and dividends like normal income?

We could get rid of most of the corporate tax code that way -- and corporate
taxes, as you point out, are always gonna be complex.

~~~
rayiner
I think it's theoretically inelegant but may be what is most practical,
especially in a race to the bottom global economy. More than one company has
reincorporated in high-tax countries like the UK and Switzerland, because of
favorable corporate taxes. The executives pay more, but it gooses earnings
which is what the analysts want to see. We don't get much revenue from them
anyway and it'd be better to keep the companies and the capital here.

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bo1024
I wish we could apply a UNIX approach here. Everything in text format, simple
scripts. 99% of the form-filling-out of taxes is copying and pasting or simple
arithmetic.

Input: Personal information, deductions, W2s, 1099-Rs, and other relevant
forms in standardized ASCII text format.

Script: A python version of form 1040 or whatever you are using.

Output: All relevant columns filled in (amount owed, refund size, etc.)

Time taken each year: < one hour.

~~~
cdjk
Take a look at OpenTaxSolver:

<http://opentaxsolver.sourceforge.net/>

~~~
bo1024
That looks awesome!

What I would really like (in my vision of a perfect world) is that companies
would be required to issue W-2s and similar forms already in this text format.
But anyway OpenTaxSolver looks really cool and thanks for the link!

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arkitaip
In Sweden the most basic variant of doing your taxes - i.e. you have no
business, stocks, properties, etc - only requires that you send a SMS (SSN +
auth code) verifying the pre-filled data that the tax authority has filled out
for you.

~~~
nawitus
It's even easier in Finland, you don't need to do anything, it's all
automatic. If you want changes to be done to the prefilled form, you can do it
online.

~~~
arkitaip
That actually makes more sense as a default.

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cpursley
Here's how it should work: <http://en.wikipedia.org/wiki/Taxation_in_Estonia>

~~~
codegeek
or like this <http://en.wikipedia.org/wiki/Salaries_tax>

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mixmastamyk
To those who prefer manual filing, or think online filing is not practical,
for at least second year California now promotes filing online. It's 2013 and
only about 15 years late. Yes, they already have the information or will get
it, so the privacy complaints are moot.

You log in to the website, and go through a 20 (or so) step wizard where you
confirm or add a missing item, etc. Next, next, finish. Done, and entered into
their system. No studying instructions, licking envelopes, buying stamps, or
writing checks, waiting months for a refund, or any of that bs.

Meanwhile it's the Dark Ages over in IRS-land. Unless you want to type all
your financial information into an unknown third-party site (I don't), you
better get out your pencil and calculator, and/or enter it into a PDF for
printing.

Not to mention wading thru 70 pages of useless instructions for the blind,
disabled, parents, pensions, veterans, itemizing, AMT, self-employed, health
savings accounts, paying alimony, etc, etc. You may be one of those, but
likely not more than one or two. The rest are wasted time, energy, and
cognitive load. Worksheets, schedules, forms++ that could be automated.

If it's not obvious I find the IRS process disgusting. To those that say it is
the tax-code that is the problem, while partially true, doesn't take into
account the wizard process. The wizard simply doesn't ask you for information
that doesn't apply, e.g. if you have no kids it doesn't ask about child care
credits. It makes the process _much_ easier.

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deelowe
Perhaps we could just get rid of income taxes altogether? No forms, no fuss.
Instead, just have a sales tax. Income credits could be used for any social
welfare issues.

~~~
ckluis
Fairtax.org

~~~
akavi
dramatically-reduce-taxes-on-the-wealthiest-while-raising-them-brutally-on-
the-middle-class.org

~~~
gyardley
Sounds pretty fair to me. I'm not using an order of magnitude more government
services, so why should I pay an order of magnitude more taxes?

Yes, yes, I get that a graduated income tax might be necessary to pay for the
things our society has decided to pay for, but calling the current situation
fair is Orwellian.

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protomyth
Given the current tax code, I really don't want the IRS to have enough
information to properly fill out my taxes for me.

Ideally, we get past the lobbyists and create a simple tax system. I do wonder
what the revenue neutral standard deduction + flat tax rate would have to be.

~~~
kamjam
I only skimmed over the article... but being from the UK, I've never
understood the tax system in the US. In the UK I work for an employer, so I
have a single source of income like the vast majority of people. The employer
must pay their portion of the tax and at the same time they pay my portion of
the tax. At the end of the year I get a P60 which states my income for the
year, how much tax I have paid and under which tax code I paid. Assuming I
only have the single job, there is nothing else for me to do.

If I have a secondary income (and I was inclined to declare it) then I would
have to file a return with this info, I think it is all done online now.

I guess it just has always been the norm over here in the UK and so no one
complains about it...

~~~
hp50g
It's hell in the UK if your tax affairs are more than simple. I have three
incomes, two with benefits and own a limited company. Tax return is hell as
I'm on PAYE with two companies (yes this is legal). Usually end up owing HMRC
a grand or two and have to spend 5 days a year working it all out (I won't
hire an accountant as they're shysters and I've been screwed by two so far -
bring on RDR).

~~~
kamjam
I think it's hell everywhere, the UK is not alone in this... tax law is
complex, hence the reason big corporations take advantage of it!

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mustefaj
Simpletax.ca

I used it this year. Make an account and try it out, let's you dig into the
original tax forms themselves too. Only in Canada though :)

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elf25
household income less than $100k/yr

I work, wife works, own a (very) small business, rent two houses = 40+ PAGE
1040

Tax code = INSANE

