Wouldn't American employers also be spending a fair bit of money figuring out taxes for their employees prior to handing off the data and money to the IRS? And wouldn't financial institutions be doing something similar for their clients?
The systems described by the article seem to be using the data submitted by employers and financial institutions to generate a tax return, which the tax payer verifies or adds to (in the case of self-reported income). For the majority, filing taxes would either be a simple confirmation that the government has complete data or vastly simplified because a great deal of the work has already been done for them.
American employers only have to do withholding, which is extremely easy to calculate. Employees submit a W-4 listing the number of exemptions and any additional withholding. They plug it into a simple formula to calculate your withholding.
The withholding is not a calculation of actual taxes owed. E.g. it doesn't even have a way to account for spousal income for married couples.
Some places I've worked allow the withholding to be a bit more accurate by specifying conditions like spousal income. The end goal is to make the refund as small as possible.
Not really. I don't have first hand experience but my understanding is that if you're employed as a salaryman in Japan then your employer will file your taxes for you. That is very different from your employer sending a form saying how much they paid you and what was already deducted for taxes.
I don't know how it's in Japan but in Austria neither the company nor the employee file taxes. There is a general tax withholding that you do as an employer for your employees but the taxes are filed automatically by the state.
You can then retroactively go in and modify that by doing a "Arbeitnehmerveranlagung" where you can claim modifications to your automatic tax filings.
This is a different process for when you are self employed and you actually file taxes from "scratch" which however is also a significantly simplified process.
This is effectively not very different than how it works for most people in the US. Yhe employer sends the government forms and funds for your estimated taxes, and at the end of the year the taxpayer files a return and gets a refund based on varying deductions.
How do you think the IRS checks your return? They already have everything they need for the vast majority of people (which includes tax payers, those who don't need to pay tax, those who don't need to even file, etc).
People with various sorts of cash businesses that don't appear at any of the classic touch points are few and far between, and probably don't report anyway.
And for the remaining people who, say, want to record an expense to offset a capital gain (like a remodel that increases the sale price of their home): they have an incentive to let the tax authorities know, since it reduces taxes. I doubt many people would do this more than once or twice in their lives unless they ran a real estate business.
Since the sale of your primary residence rarely involves capital gain tax liability anymore, there's not even that much incentive to keep track of improvement expenses.
The systems described by the article seem to be using the data submitted by employers and financial institutions to generate a tax return, which the tax payer verifies or adds to (in the case of self-reported income). For the majority, filing taxes would either be a simple confirmation that the government has complete data or vastly simplified because a great deal of the work has already been done for them.