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How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) (propublica.org)
462 points by danso 36 days ago | hide | past | web | favorite | 253 comments

What's puzzling is that the IRS seems to calculate your taxes anyway; if there's a disparity, then they send you a correction a few weeks later.

Why can't they do this beforehand so you have the option of just clicking "OK" and being done with it?

Usually people on HN don't read the article, but in this case the title literally answers your question.

Actually, the title answers the question "Why don't they just do that?"

The question to "Why can't they do that" is simply "they could and it would save tons of money and headaches, but it goes the American Dream (21st century edition) that once you have a profitable business, nobody is to take it away from you.

The title doesn't say why would the government care about the opinion of TurboTax maker at all

Due to the designed complexity of our tax code the IRS cannot compute it both correctly and efficiently across the taxpayer base. Instead, they put the burden on the taxpayers, with stochastic validation and penalties (aka audits).

For my part, I hope someone out there is managing to claim those Ottoman Turkish Empire Settlement payments. All I know is that the Empire hasn't existed in 100 years but is something my tax code asks me about every year.

That's a California thing. (Did you know the Ottoman Empire contained substances known to cause cancer?) It is, apparently, a mechanism for survivors of the Armenian genocide to deduct any reparations they may potentially receive from their California state income taxes.

That’s the way it works in Denmark. You get an email saying basically: “here’s a draft of you filling where we have filled out everything for you” you can then go and make any needed corrections and hit submit. Super simple straight forward system.

In Mexico it works more or less the same: All payments are invoiced and signed with a Private/Public keypair unique for the person/company and provided by the government.

At the end of the year, you go into SAT (Mex IRS) page to file your taxes and they provide you with a list of your money Input and Output, and they tell you how much you owe in Taxes or how much you are owed by them.

You still can add other things that were missed by the system.

The Danish system is only super simple if you are a salaried employee. Once you run your own business it’s generally as difficult as the American system.

Considering majority of people are employed it’s already a huge step forward. Can’t we at least get there first before we criticize them?

The Swedish system works the same way, but as long as your own business isn’t too complicated it’s still quite simple to file.

You have to have your books in order anyway, and tax filing is usually as simple as copying over some numbers from the bookkeeping software and then Skatteverket (Swedish IRS) will suggest what is probably the best deductions and periodizations available for you. For my one man consulting business it takes less than an hour, and requires nothing more than having my accounting in order.

Same thing in France. Filling taxes for employees is essentially just clicking a button.

But if you are self employed, you have to hire an accountant. It is not a legal obligation but there are so many things that can go wrong that you are putting your business at risk if you don't.

I once simply forgot to put some income on my taxes. I only leaned about it a year or two later. I not only owed about a thousand dollars, but also I owed back interest. I wish they informed me after 2 weeks.

That wouldn’t work for most people. If you are married, have kids, or own a house, the IRS cannot calculate your taxes correctly.

(Single young people downvoting me. The IRS doesn’t know how many kids live with you, what you pay in mortgage interest, and whether you’re still married to your spouse, all of which are necessary to calculate even simple tax situations.)

The article explains how return-free filing already works in many countries and how it could work in the US. I know it's against the HN guidelines to comment on whether someone has read the article, but you clearly haven't read the article.

From a British perspective, the US tax system seems utterly bizarre, because most people here have never filed a tax return. Taxes for regular employees are deducted at source by the employer. Everyone has a tax code that reflects what allowances they are entitled to; if your circumstances change, you just call the tax helpline, inform them of the change and they update your tax code. Self-employed people do have to submit a tax return, but you can do it all online and the tax agency offers free training on how to do it.

There is literally no reason why salaried employees should have to do their own taxes.


The UK abolished its tax deduction for mortgage interest a couple of decades ago and marriage allowance still requires contacting HMRC, which many people never get around to.

> The article explains how return-free filing already works in many countries and how it could work in the US. I know it's against the HN guidelines to comment on whether someone has read the article, but you clearly haven't read the article.

This article (or something similar) pops up on HN every six months, and it’s stupid every time. It’s shocking to me that people find the idea credible because it doesn’t even pass the smell test. Even if this was about lobbying, there is no way Intuit and H&R Block can outspend all the people who have an interest in simpler tax filing. Seriously, Intuit spends $2.5 million per year on lobbying—there are dozens of things that raise more on crowdfunding each year, such as the “Opal Nugget Ice Maker.” Last year, a board game raised more money on Kickstarter than Intuit and H&R Block spent lobbying.

The UK is a very different country than the US, and much more comfortable with both central government control and taxes. Switzerland also has manual tax filing, and the US is much more similar to Switzerland in terms of taxes as a fraction of GDP, guns per capita, federalism, etc.

Why don't you make paying tax easier? It wouldn't work here. Why don't you reduce your carbon emissions? It wouldn't work here. Why don't you make healthcare affordable? It wouldn't work here. Why don't you make it harder for psychologically disturbed adolescents to access semi-automatic weapons? It wouldn't work here.

It's the same argument ad nauseum about every political issue since before the civil war. The US is unique, the US electorate have strong and immutable views, the US cannot learn from anyone else. Time and time again, educated people dismiss the possibility of change, dismiss the possibility of persuasion and compromise and reconciliation, dismiss the possibility of shifting the Overton window and changing the zeitgeist. That isn't common sense, it's political nihilism. The consequences of that nihilistic ideology are writ large on the American political landscape and they are proving to be disastrous.

Whether or not American culture can be changed is besides the point. My point is that the article misidentifies the reason we don't have automatic tax filing. It's not the $5 million in Intuit/H&R Block lobbying, which is not a large amount of money. Intuit/H&R Block are simply riding much more powerful political forces that exist for other reasons.

(For the same reason, the $5 million in NRA lobbying each year is not why we don't pass laws limiting access to semi-automatic weapons for "disturbed adolescents." It's voters like me who are morally opposed to the government keeping a list of who can and cannot exercise their 2nd amendment rights. The lobbying is just so the NRA can remind politicians how many of us there are.)

Sounds like you'd be surprised how cheaply politicians are bought.

BTW--"sensible gun reform" has majority support.

That’s a self-refuting assertion. If lobbying works, why would it be so cheap? The economy has tons of competing interests—if they could get their way through lobbying, that should bid up the cost of “buying” politicians.

For example, Grover Norquist has no personal stake in keeping tax filing complicated (he doesn’t own stock in Intuit or H&R Block as far as I know). But he spends a lot of time on the issue for ideological reasons. You’re telling me that there’s not a billionaire Democrat who could throw $5 million a year at the tax issue for funsies? Or public unions who would benefit from simpler tax filing allowing taxes to be raised more easily? If it was just a matter of outspending Intuit and H&R Block, someone would do it. But I could give you $10 million a year (double what the tax companies spend) for this issue, and you would not be able to lobby tax simplification into law.

Why would people spend money on something like this “for funsies”? You don’t even take your own idea seriously or provide a credible reason other than “why not”. Intuit and H&R Block have a specific goal and target it with specific dollars each year. Over time that builds influence and control.

Grover Norquist absolutely has an interest in keeping taxes complex, it’s his entire basis for influence and power. His fight is about lowering taxes anyways, not complexity.

Here’s the flip side to your stance. If lobbying has no influence, why do privately held businesses spend so much on it each year? Wouldn’t these rational actors stop wasting money if there was no ROI?

You can’t build influence and control with $5 million a year in lobbying. It’s just not very much money. There are a lot of public interest organizations and concerned individuals who could spend that kind of money (and do). They spend it on other issues instead because they know this tax filing issue won’t go anywhere.

You’re missing the point of the Grover Norquist example. Why is tax filing something Grover Norquist cares about? He’s rich—this doesn’t affect him directly. And he doesn’t make any money off tax preparation. He campaigns against tax filing simplification because it taps into a very large anti-tax movement that he’s part of. It is that movement that keeps tax filing complicated. Intuit and H&R Block don’t create that movement through lobbying; they lobby to tie their issue into the larger movement.

As to the amount of lobbying: private companies don’t spend much money on lobbying every year. Total US lobbying expenditures is $3.5 billion, out of a $20 trillion economy (and a $4 trillion federal budget). (And that’s not just companies, but includes public interest organizations.) If lobbying had direct, non-speculative impacts on legislation, companies would do a lot more of it. Look at the tax filing example. H&R Block makes more than $3 billion in revenue each year. If lobbying had direct results, they wouldn’t be able to protect that cash cow with less than $3 million a year in lobbying. A competitor would come in and outbid them for legislation. (Indeed, corporation versus corporation lobbying is probably the most typical kind. E.g. all the money Google spends on copyright lobbying is best seen as a proxy war with Hollywood over whether copyrights should be weak, which favors distributors like Google, or strong, which favors Hollywood.)

Of course lobbying is important enough that companies do it. But it’s not transactional like people make it out to be. Lobbying involves hiring professionals to make presentations to staffers about specific issues, tying them into general platforms that politicians already believe. Tax filing is a great example. Intuit and H&R Block aren’t going in and spending $5 million to convince people who love taxes to oppose automatic tax filing. They’re using that money to lobby legislators who already want Americans to be outraged each year in April 15. They connect their specific issue to the larger platform the politician already supports. “Simpler tax filing is the first step to Danish style 60% tax rates.” Then, they educate the legislator about relevant pending legislation. “Elizabeth Warren has introduced an automatic tax filing bill.” And they arm the legislator with arguments and white papers they need to oppose the lesilation. “Making deductions opt-in will result in a $45 billion effective tax increase on seniors, who will be to scared to challenge the ‘bill’ sent by the IRS.”

==You can’t build influence and control with $5 million a year in lobbying. It’s just not very much money.==

You still haven’t provided any evidence. Your comments in this thread are mostly ideological arguments.

From the article about them directly lobbying against bills on this issue:

==The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing.==

The article doesn’t establish that the lobbying was the cause of the death of the bill. You did not refute rayiner’s central assertion.

To believe his assertion you must first admit that the market competition is apparently broken and we have numerous profit-seeking companies who invest heavily in lobbying while seeing no benefit.

There will never be a direct link made because no politician will say, “I am voting against this bill because Intuit took me to a nice dinner and contributed $100k to my re-election campaign.” We do have evidence that constituents want taxes simplified, bills have been presented to fix this problem, companies lobbied against the bills, and the bills died. What’s your theory?

He was not saying that lobbying was completely ineffective. He was saying that lobbying rode supported an ideological belief that taxes should not be simplified, and the cost to lobby against the combination of the 5MM in lobbying plus the ideology is a lot more than 5MM. His evidence was that the relatively low value of 5MM hasn’t been outspent by an interested party, there being so many such people who could afford it. I don’t know if that is the case but I would like you to address the central claim. I don’t have a theory of my own.

I would suggest the burden is on proving that there is a legitimate group of people who think taxes should be complicated for ideological (not political) reasons. You readily accepted that premise without any provided evidence. It seems to me that politicians are making a calculation that it is advantageous politically to have complicated tax filing process. Oddly, in the recently passed tax bill the House GOP campaigned heavily on the idea of taxes filing so easy it could be done on a postcard, an admission that people want simplicity. When the law ultimately passed, they didn’t follow through on that promise, maybe due to lobbying maybe for political reasons.

No party has as much direct interest in this issue as tax preparers. That they haven’t been outspent is not itself evidence of anything.

I did not accept the premise. Please don’t mistake my attempt to improve the discussion as agreement with anyone. I just want this discussion to be better. I don’t think demanding burden of proof is a comment worth making; could you at least explain why you think there can’t be such people?

I do agree it is interesting that the GOP campaigned that way, incidentally. Regardless of what degree of support for complicated taxes there may or may not have been, support for simplified taxes in the large, populist wing of the Republican Party plus presumably broad support in the Democratic Party should mean more changes to tax collection soon.

==could you at least explain why you think there can’t be such people?==

It's not that there can't be such people, it's that there hasn't been any credible evidence provided to prove there actually are such people. That both sides of the political spectrum use the same language is pretty strong evidence that there is broad support ideologically for a simpler tax code.

Bringing up Grover Norquist seems like a red herring, as he is himself a lobbyist. His organization, Americans for Tax Reform, describes itself as a group that "believes in a system in which taxes are simpler, flatter, more visible, and lower than they are today." [1] Yet, they are used by rayiner as an example of an organization ideologically opposed to simpler taxes and tax filing. If anything, we should be adding ATR's own $5 million of annual spending to the total lobbying dollars being spent against a simpler system.

==should mean more changes to tax collection soon.==

This is the central point. The tax code was just completely overhauled and it included almost zero simplification, even though it's main proponents used that exact messaging in their sales pitch.

The article suggests that the lack of action is, at least in part, because of lobbying. It provides the evidence of lobby spending related to this topic and the ultimate death of those bills. The also have a quote from Former California Republican legislator Tom Campbell, he says he "never saw as clear a case of lobbying power putting private interests first over public benefit."

[1] https://www.sourcewatch.org/index.php/Americans_for_Tax_Refo...

those with rayiner’s naïveté are part of the problem. glad they are in the minority.

bribery is the only possible explanation for congress refusing to do what their constituents plainly want.

It's rather difficult to determine elligibility to purchase firearms without keeping a list. Unless your statement implies that everyone should be eligible, in which case: reasonable people may disagree on this point.

Very true, but it's not unique to the US. The UK re: Brexit us a great case in point

But it's impossible to move the Overton window because of the massive TurboTax bribes.

There's probably a dozen people on HN reading this thread right now who can throw more cash at politicians than Intuit spends on lobbying each year.

Cheaper to hire an accountant to deal.

But they don't.

Except complex tax law benefits corporations as well, creating emergent properties that can be exploited. You'd have to outspend more than Intuit to change things.

"Seriously, Intuit spends $2.5 million per year on lobbying—there are dozens of things that raise more on crowdfunding each year, such as the “Opal Nugget Ice Maker.” "

The difference is that these companies keep spending the money hooking up with the right people (lobbyists) that get them results. Sure the public, charitable companies, trusts, and so on could compete with them for politicians. They don't, though. So, the lobbyists getting politicians fame, fortune, and re-election are the ones that win since those are what politicians are all about. That's also why the companies lobbyists work for seem to get all this legislation that benefits them at our expense despite so many good reasons to not do that... if they worked for us.

Lobbying, if applied, should be one of first things to consider that might motivate a politician's actions. The evidence favors that it does here in the U.S. a lot. It and votes from popular/hated topics seem to drive most of political, decision making.

Except you’re forgetting public unions, which lobby extensively and would benefit if tax filing were simplified (allowing taxes to be raised more easily). If spending the money would get the result, they’d do it.

It’s also possible that unions have other areas that are more important to them as a group (worker rights, fighting right-to-work, healthcare, etc). In fact, I’m not sure any group has as much interest in this as tax preparers, hence their annual lobbying.

I don't know UK tax law, but there is public healthcare. So one major deduction in the US is completely moot in the UK. The IRS doesn't know what your healthcare expenses were for the year. There are a half dozen similar scenarios. Yes, a lot more could be automated, but it's also the case that too much automation would wrongly automated people out of their money. It would make sense to mail people a prefilled sheet that says, "here's what we know about. Review and make sure you check x, y, z, etc., to see if it's applicable."

Capital gain tax.

Brokerages are required to report sales of securities and cost basis information to the IRS when you sell. The IRS already has information about your capital gains and can fill out that part of the return as well.

If you bought the asset before like 2010 they don't have cost basis info. Believe it or not people sell assets bought in like 1970 and report that on their tax forms. Full automation is a ways away...

The parent post was talking about the UK. CGT requires a tax filling (if you have CGT in excess of the tax free allowance).

Not sure what your point is; this is a thread about tax filing in the US, and the parent was comparing it to the UK. You, referencing capital gains tax, were (I assume) referring to the US? So was I.

The first £10k of capital gains is tax free in the UK and that covers virtually everyone. The vast majority of people have no capital anyway (your home does not count, and cars generally do not appreciate).

So the IRS mails you a questionnaire that asks these questions, you send it back, and they calculate your taxes automatically. No need for the $40 TurboTax fee, no need to type your W-2 information.

But if what you say is true and the IRS can't calculate what you owe, that would mean they have absolutely no idea what you should be paying and you could get away with paying basically anything you want as long as you're not randomly selected for audit.

They also can't force you to type truthful numbers into TurboTax, paper forms, or whatnot. Hence the audit in the first place. There's no reason you'd have to file your own taxes with or without TurboTax. The IRS just asking the questions, optionally online, and having their computer crunch the taxes ought to be a no-brainer but I don't know what the real reason is why that is so difficult in the USA (and the article didn't really answer that: I doubt Intuit has more than a squat of real-world influence on the thing).

I live in Scandinavia and that's how it works here: you basically get a proposal based on what the tax office knows (salaries, local capital gains/losses, interest deductions if you have mortgage etc.), and then you submit diffs, if any, and they calculate everything based on that.

I've only ever had to change my tax proposal when I've married/divorced/had kids or had activity in a brokerage firm abroad (who wouldn't report my gains directly to my local authorities). Buying and selling property also shows up automatically as the registration process goes through the government anyway.

Now the tax authorities have even stopped sending any papers with a return envelope. They just point to the online service where you can easily augment whatever fields that might be missing input.

As a fellow Scandinavian, I find this kind of American distrust of government quite amusing. “We don’t like it when the government controls us, so let’s have it bury us in paperwork and complicated bureaucracy whenever we want to do anything whatsoever so we remember that the government still exists”.

Also, in many cases, there could be other, existing records that could optionally be sent to the IRS about changes in tax filings -- for example, the hospital could choose to forward to the IRS birth/death notices, same for marriage certificates and courts that approve divorces.

Isn't that why there is an audit process? Audits are a tool to ensure compliance with a stochastic threat due to high cost of research and enforcement. For things they can check automatically they already do, but audits can find more detailed things, at a higher cost to carry out.

TurboTax and Quicken are free for everyone making under $60,000, which would be most people whose taxes are simple enough that it could be done with a questionnaire.

The IRS has some information about what you make obviously, because employers withhold your income. But they have very little information about deductions. Of course the IRS could calculate a maximum tax amount and put the burden on you to apply for deductions, but Republicans would flip their shit because it’d be a huge effective tax increase. They want tax season to be painful every year.

Which gets to the point that is whizzing by everyone’s head. Intuit and Quickin aren’t single handedly lobbying to keep tax filing complicated. You could probably crowd fund an opposition if that was true. Intuit and Quicken are leveraging a political situation that exists for other reasons.

TurboTax is not free if you need to include gains/loss from multiple sources of income. I.e., this year I made far less than $60,000 but as a student with a part time job, internship stipend, and petty stocks, I would have required TurboTax Premium.

Neither the article nor anyone here is saying that Inuit are singlehandedly keeping the law in place, only pointing out that they are lobbying to do so.

> If you are married, have kids, or own a house, the IRS cannot calculate your taxes correctly.

If your marital status changed, or the number of dependents living with you changed, they can't calculate the taxes.

For most people these will not have changed.

The IRS could calculate taxes under the assumption of no changes, then send the taxpayer a report of assumptions made. If any of the assumptions are invalid, the taxpayer would only need to file corrections for those items.

And even if they do change, there's existing government records that issuing authorities could optionally pass along to the IRS -- hospitals generate birth and death records, towns issue marriage certificates, and courts issue divorces. This covers most changes in tax status, with really the only iffy area left is when parents decide to stop claiming their children as dependents.

> The IRS doesn’t know how many kids live with you

They can guess based on the prior year, which generally only changes during two years per kid. If they're wrong, you correct it on the form and send it back.

> what you pay in mortgage interest

Your mortgage lender files form 1098 with the IRS with interest you've paid. The IRS already knows this.

> and whether you’re still married to your spouse

Same as the kid situation. They guess based on the prior year, and if you've gotten married or divorced recently, you correct it on the form and send it back.

All of these issues are either not issues, or are trivially worked around.

If they don't know automatically, it's only a failure of automation or lack of interfacing with credit agencies and state records. They certainly have the power to know all those things, and they will find all that out, if they choose to audit you.

But forget about the IRS automatically collecting what could possibly be relevant from everyone. If some of that stuff isn't automatically reported, there's no reason to force reporting, The IRS would operate as it already does, choose a percentage to audit and get those records from that percentage (0.6% of total filers or 933k people, including 15% of people who make over $15mil) anyway. (That panopticon you're worried about? Don't worry, it's only watching approximately a million people per year, no big deal, right? I realize 1 million is not 327 million, but I have difficulty getting upset about broader financial surveillance (you could even make it optional, so only people who think they're likely to get audited would opt in) when 1 million people per year already get that treatment, plus harassment (granted some of them brought it on themselves, but many did not and just made stupid errors that a better system would have avoided completely, or didn't make any errors and the IRS is just fishing)

The vast majority of people only end up reporting stuff the IRS already knows about (W-2, 1099, marital status and children that were already reported for the last N years, etc.) What good does it do to have people manually file the same information employers and financial institutions already file? If the IRS is not getting some information, and someone's going to lie and tell them it's all good when they get a summary and tax bill, they're going to lie on their taxes even if they're preparing them manually.

All the current system is, is a hand-out and make work scheme for tax preparation people and companies.

I.e. a failure to implement a surveillance state in which the government knows every move you make, financial or other, so there is no need to claim anything and provide receipts: they have that already, and more.

I’m pretty sure the federal government tracking details about where people live and what they spend in daycare is one of the signs of the antichrist. (No, seriously, the federal government doesn’t track this information about you. It can use its police powers to get that information if necessary, but that’s different.)

> is one of the signs of the antichrist.

Can you cut the fucking hyperbole? In this thread you're being obstinate and snarky about what the IRS can't possibly know about you. You're demonstrably wrong about some of them (e.g. mortgage interest), and half a dozen people are suggesting practical ways for the IRS to learn about some of the other things, or for you to correct them.


Indeed, especially as the US legal system gives strong protections in this area. For instance, if you sell illegal narcotics you’re required to buy tax stamps from your local tax office. Due to the illicit nature of the transactions, they have to sell them to you in total anonymity. The IRS only cares about receiving your taxes, not snitching, and there’s no reason for this to change.

By that logic the IRS would never be able to prove that you paid them the wrong amount.

Even if they don't know that in the US they can calculate your regular taxes without those and you would just adjust that in the tax confirmation that they send to you with their calculations.

As someone who has never filled in tax in my life: it's mind-boggling that the people in the US have to do it.

Form 1098 tells them your mortgage interest and is filed by the recipient of that interest.

Neither of those changes often.

IRS can send you pre-filled taxes using status from last year or provide webpage with a checkbox.

They could. As mentioned above in Denmark this is all known to the tax authorities, either by public registry (number of kids, civil status) or by banks, financial institutions, insurance companies and your employer reporting.

Tax agencies do exactly that in many other countries (that also have child credits etc).

If the IRS doesn’t know those things, how could they ever audit someone? The 80/20 rule should absolutely be applied to taxes. In unique situations the citizen can go through the manual process.

The IRS could make a web site where you fill in only those things they don’t know already, and it then makes all the calculations for you, and allows you to approve or change them?

Why don’t they already just know that stuff? I Denmark all of that is just filled out automatically.

The bank I pay mortgage interest to definitely reports that to the IRS.

I think you are begging the question. Years where child custody or marital status changes are probably not simple if you look at it statistically.

And killing the mortgage interest deduction would be great, so we can make it work for those people too.

Killing the MID for owner-occupied property puts landlords at a relative advantage in purchasing property, which seems like an undesirable public policy to me.

The MID can be thought of as a tax subsidy that renters (who tend to be poorer) pay to land holders (who tend to be wealthier). Either the tax code needs to change to subsidize renters, or just leave everyone on their own...

Renters also receive the benefit of the subsidy on landlord mortgages (that would otherwise increase costs to landlords which would tend to constrain supply).

The poor pay less in taxes. It would not surprise me to find that if you could trace the entire effects perfectly that poor renters are net beneficiaries of the policies particularly now that the owner-occupied MID has effectively been eliminated for houses on the low end and it was previously capped on the high end already.

Now, it mostly directly benefits landlords, which I’m sure is entirely a coincidence... (Our income tax system is based on taxing income/profits, meaning that eliminating business interest, including commercial mortgages, as a deduction is incongruous and a non-starter.)

Renters also receive the benefit of the subsidy on landlord mortgages (that would otherwise increase costs to landlords which would tend to constrain supply).

False, by the same logic of land value taxes.

The supply of land is fixed and cannot respond to changes in supply or demand. Or to changes in cost structure, including both taxes and subsidies on the land itself (excluding improvements).

Landlords eat LVT. And they pocket the mortgage subsidy. Tax codes pick and choose among taxable and exemt income and costs all the time. Your objection is patently absurd.

Is it your position that increasing the annual expenses on properties available for rent by 1-2% or so of market value will have absolutely zero effect on rents?

That seems to mismatch with fairly well-established economic doctrine, possibly to the extent of being Nobel Prize worthy if proven.

It's entirely congruent with economic theory dating to Smith, Ricardo, and George, and finds agreement from economits across the political spectrum, to an extent that's remarkable in a frequently divided discipline.

Its lack of Nobel-worthiness is based on its obviousness, not novelty.



The main sticking point is that the wealthy enjoy teir free money.


By and large, renters don't rent unimproved land. They typically rent dwellings. Those dwellings are typically funded by loans taken out for the purpose of a profit-making endeavor, meaning they are tax-deductible loans (just like when an airline buys an airliner or an automaker builds a factory).

It's the provisioning of those structures that LVT dirctly inentivises.

I've provided you seveal refeences, please do read them. The Wikipedia article explains and diagrams the dynamic very clearly.

I've read a fair amount about land value taxes. I have no objection to them as a means to efficiently raise property tax revenue.

This thread is about the deductibility of mortgage interest for owner-occupied vs rented properties.

God forbid landlords be at an advantage over rich people.

(current policy is that they already have that advantage over poor people)

Seems like the obvious answer is that the IRS should just require you to report those things yearly, then do the math themselves and tell you how much you owe.

Not even that. Like many countries, they can simply send you a card with how much you owe with some very basic info (e.g. number of dependents and income), along with a URL to download the full pre-filled 1040-EZ. If you agree, you sign the card, mail it back. If you don’t agree, you can file your life wn taxes as usual. For instance, you had a kid, or got married, or don’t want to take the standard deduction.

This is completely doable, and in fact is done in many advanced countries today. Even better, it fits in the the GOP rhetoric about wanting to make the same tax form “fit on a postcard” [0]

[0] https://www.msn.com/en-us/news/other/everything-you-need-to-...

It is like this in my country, although the form is electronic and 5 pages of A4 paper (if it was printed) but rest is true. I log in to tax office web site, confirm my identity via bank or e-signature, review the form and submit for approval, correct if necessary. Usually takes 10 minutes.

They could make it work like how most of us use "enterprise" software:

1. Fill in the obvious things like your name.

2. Click "submit" and let it highlight what's missing. Fill in those things.

3. Repeat until it stops throwing exceptions.

They calculate the taxes on the information you have to supply, right?

(I'm not in the USA, but Canada.)

You could lie on the tax return by not reporting income, or claiming some false deductions and credits; the difference could be thousands of dollars.

They will only be checking the false version for arithmetic or logic errors.

The result might be, say, having to pay $50 more due to some mistake, even when actually it should be $5000 more due to lying.

What this story is about is that the government could provide some service, like a website, where you can just put in your info and have it do the detailed calculations and form filling for you: essentially a government-run version of the software that Intuit and other vendors sell.

The government can't just do this without any input from you, though. They can't just send you a bill for you to agree with or dispute.

Also in Canada. Yeah i know people that work under the table that do this. They'll report traceable sources of income while leaving untraceable income out. It's fairly illegal. It's actually one of the ways they get small time drug dealers, they'll go after them for tax fraud.

Personally, my taxes are simple enough that I could do them with the book if I wanted. I've found suitable tax software that doesn't cost me and is fairly easy to use. I'm not sure what it's like in America, but if you don't have a family, own property, run a business, or make a bunch of income from investments, doing taxes with a calculator really isn't that difficult.

They could use the information that others (banks and employers) report to them about your finances to pre-fill all the forms. That way you only need to add things that are missing and double check what’s there.

Sure! And they could know about all your doctor's visits, so they could do your medical expense credits for you and similarly track every move you make in society. Oh, you paid for $257.35 on your VISA credit card ending in 1295 for prescription drugs this year: that's deductible!

Is that what we want?

1) I specifically meant "the information they already have", so you would only have to add that which is additional (e.g. medical expenses).

2) There are probably less bureaucratic ways to deal with subsidising medical expenses. Single payer is the nuclear option, but also applying the tax credit in-store and letting the business apply could be a thing?

That's not what anyone is proposing.

It's a way to check errors. Mismatches trigger audits.

If you owe lots of taxes, and the IRS sends you their calculations, you might discover that they are unaware of some of your income. Well... guess they don't need to know!

because the IRS benefits from people basically overpaying their taxes out of fear of being prosecuted for underpaying their taxes.

The IRS has changed over the years.

I knew a guy who didn't pay taxes for nearly 10 years, this is a kid that was doing minimum wage work so he didn't think he needed to. IRS sends a letter going 'we think we owe you about 3,000. call us'

That's the entire point of the article.

Think about it this way.

They make money from people who don't optimise their taxes

Canada more-or-less has this.

More or less has what?

Here it is copy paste from the CRA website:

There are several ways to send your tax return to the CRA. Ultimately, this may be dependent on how you decided to complete your return.

- By software (electronically) If you selected a NETFILE certified software, it will communicate directly with the NETFILE application servers and transmit all required information on your behalf directly to the CRA via the web service.

- By paper: Mail your completed income tax package to your tax centre.

- By phone: Follow the instructions in the invitation letter for File my Return that you received from the CRA.

"By software" means using certified software, like Intuit's TurboTax. This is the very racket they seek to protect.

So I use simpletax.ca. (It's free, but will ask for a donation after you file.) (Also, I don't work for them.)

In it, there's an option to login to the CRA via your bank account (oauth?) and it will populate a bunch of data for you.

Simpletax is a free service, but it's proprietary software, as far as I can tell. It's in the same category as TurboTax.

Okay, but I was responding to the question of "why can't the tax agency do the work for me?"

And some European countries (Finland I believe, for example).

More than 32 countries do this: All of Scandinavia, Finland, Spain, Estonia, Macedonia, Australia, India, the Netherlands, Japan, the U.K. and a bunch of others.

Belgium as well. Your employer reports your income to the tax administration, your bank reports your house mortgage for tax deduction and so on. For me it’s pretty much just a bunch of checkboxes check. The hardest part is getting my electronic id to work to log in to the bloody site.

It's a breeze in the Netherlands.

I finished filing my taxes two weeks ago, a day after the pre-filled form became available online on the revenue service's website (works in all modern browsers, on all operating systems).

It took five minutes (two incomes, mortgage, bank accounts, all filled in correctly by employers and banks). Most of that time was spent authenticating myself and my partner.

Anyone fighting this in the US should make a bunch of videos showing average people from these countries filing their taxes in the blink of an eye.

For employed people the Dutch system is indeed awesome. When you run a business, it's still quite archaic.

Then it’s not that different than the US (absent the automatic form generation).

If you’re single, one job, no house or investments, filing taxes in the US is a breeze.

Beyond that it gets messy.

Not really comparable though. Tax filing in the Netherlands is simple for almost anyone who doesn't own a business. That's the vast majority of people. If you do own a business, it's still manageable, just not as automated.

I own a house in a household with two incomes: taxes took five minutes for both of us.

India doesn't do this yet, but it is set to be launched in a couple of years.

A system like this was launched this year in Poland, this year limited to employees and contract workers, but it's planned to expand to self-employed / business owners as well. If one doesn't log in / doesn't do anything, the form will be submitted Apr 30. If you log in you can update the form (e.g. add deductions or declare extra income), or just accept it as is - then it's submitted right away.

There were some minor kinks, but in my opinion it was a success. Being self-employed I didn't get to use it, but saw how it works. I filed taxes on-line directly from my book keeping software and it took me ~20min, including getting my wife's pre-filled taxes from the govt service to combine with mine.

Many other European countries do things like require you to register with the government within a week whenever you move to a new place. They track much more information about you.

Even in the US you eventually need to basically 'register with the government' (usually in the form of getting your ID/drivers license updated, and notifying USPS of mail service change).

You only need to update your drivers license when you change states, not when you change residences. (And if you don’t drive you don’t need to do that either.) And you don’t neee to notify USPS of your mailing address.

In every state, you must notify the DMV of a change in residence, typically within 30 days.

Have you ever heard of someone getting ticketed for not doing this? I have never once notified the DMV of anything, and have driven for years with old addresses on my license.

And, of course, if you don't drive, none of this applies.

I've actually gotten ticketed for this in Texas outside of Austin on the way back from Round Rock. It wasn't very expensive but was thrown onto a ticket for speeding.

I think it was a speed trap(I got a ticket for going 64 in a 55) and he knew he could get an extra infraction if my address was out of date which probably happened a lot with college students because they move a lot, don't update their address, and are dumb enough to admit it to a cop.

> Have you ever heard of someone getting ticketed for not doing this?


> I have never once notified the DMV of anything, and have driven for years with old addresses on my license.

You might want to fix that. In some states it's a misdemeanor rather than an infraction.

> And, of course, if you don't drive, none of this applies.

True, but I was only addressing the inaccurate information, because it could have consequences for people who believe it is true.

That's interesting. I'm not sure I see how it could be anything worse than the penalty for driving without your drivers license (which will always get you ticketed, but rarely anything worse). I can always just not present my license at all.

> I can always just not present my license at all.

Sure, that might work.

But a likely scenario is the officer will ask your name and DOB and look you up on his MDT and now you've got three tickets (including whatever you were pulled over for because now it is definitely not going to be a warning) instead of just one.

Another scenario is the officer discovers you have your license and are just refusing to show your license. In California, and other states, you've now escalated a simple ticket to a misdemeanor with large fine and possible jail time.

Another scenario is you just update your address with the DMV and don't risk compounding your problems during a traffic stop.

Right, I'm not suggesting you can't get a ticket for it (though that's never happened to me; the police always asked "is this your current address" and I'd say "nope" and give them my actual address and that'd be the end of it --- it is handy that I'm a middle-aged white dude, though). I'm just surprised by the idea you could get worse than a ticket.

I don't at all see how you could get in trouble for "refusing" to show your license. You'd just say you didn't realize you had it. (This is relevant to my interests; in Chicago, your DL is also your bond on tickets, and also, when you get a new license, you get a paper temp license day-of, good for several months, and the real license in the mail; I'm holding on to the paper temp and denying possession of the real one if I'm ever pulled over, because getting bonded DL's back is a giant pain.)

I'd be interested in knowing whether you could point me to a state that explicitly says not updating your address is a misdemeanor.

> I'd be interested in knowing whether you could point me to a state that explicitly says not updating your address is a misdemeanor.

Sure. It's a misdemeanor in Minnesota (171.11): http://mncourts.gov/mncourtsgov/media/scao_library/Statewide...

I was also going to say North Carolina, but it appears they've changed it: http://www.theeastcarolinian.com/news/article_5137386e-2256-...

Interesting. It's a cheap fix-it ticket (much cheaper than a speeding ticket) in MN, but (apparently) it's annoying because it requires an actual court appearance (I haven't cracked the code on which offenses require court appearances in Chicago; I've only had to go once or twice. I wonder if those were misdemeanors as well.)

I have, but it was in Montana and many years ago.

Turns out if you want to appeal your cook county tax, you need a current drivers license

Change of address within Illinois is required within ten days after moving. I remember in Montana it was required on the day you started a job and in that case people were getting tickets

For almost 70% of US taxpayers this is the case. Free of charge tax payment. You literally type in your address and other info along with your w2(these days many w2s have codes where you only have to type in a number and it fills the whole thing in).


Otherwise we're just talking about state taxes which the federal government has no control over.

I expect to see this on some Facebook/reddit post, but on HN it is depressing to see how many people don't realize that what this comment describes has existed for decades.

On the contrary. Free-file does not let you "literally type in your address and other into along with your w2." You have to first choose a third-party tax preparer based on your qualifications (it's not the same across the board). Then you have to remember your password, or create an account. Then you have to hope the preparer's service puts you in the free package, while navigating through a site designed to get you to pay more for things you don't need. Often, you'll have to decline to upgrade multiple times, and it is downright annoying, if not confusing, as to how to do that. And if you do choose the free option, the preparer will not pull in your wages automatically, despite Intuit and others building systems that could (but don't) do this. No, the proposed system has not existed for decades. It has never existed. And as long as we keep listening to Intuit and the like, it will never exist.

This year for my taxes I used a little DSL I hacked up in TXR Lisp, where I you can declare each line on a tax form, along with its description and its value (or else how it is calculated from other lines). A bit like cells in a spreadsheet: reactive programming, basically.

There is a function to produces a report of all the lines and their values, grouped by form, sorted by line.

If I change a value, as in (set (line 42) 123.32), then re-run the report, it will indicate all the lines that have changed, showing the old and new value side by side.

I have some nice things in there, like handling groups of conditional lines that vary by tax bracket and such.

All of the data is in a nice text file that is just (load ...)-ed, together with the module that provides the logic, and that file is checked into git.

If the government did these calculations, I'd still want the option to do it myself; I wouldn't want to be forced into dealing with entering numbers into some web crap.

> I'd still want the option to do it myself

"Taxpayers would have three options when they receive a pre-filled return: accept it as is; make adjustments, say to filing status or income; or reject it and file a return by other means."

This sounds incredibly useful! Care to share? I could see building off of this to find optimal deduction paths, zeroing out liabilities, etc.

Any business that has a captive or semi-captive market is going to do all is can to dissuade others from participating in the market. It's the basis for most licensure laws.

Does anyone know the true cost of lobbying? Salaries + whatever other expenses are involved. It would be interesting to see a kickstarter style company for hiring lobbyists for more public interest causes.

These exist. They're called nonprofit organizations.

Would they matter? If representatives ignore the good of their citizens (in preference of lobbyists providing campaign contributions), you might have to find alternative methods to bring about positive change.

There's a strong argument that lobbying is more of a "legislative subsidy" than it is vote buying or persuasion.

The idea is that most of the information governments need to craft policy is only provided by lobbyists and that government staffers are typically less informed about a given field than expert lobbyists.

Congressional staffers don't make a ton of money and typically aren't PhDs. One way to reduce the impact of lobbying would be to offer very high salaries to staffers so that we could attract world experts to our side of the table.


My partner runs an advocacy non-profit and they definitely influence policy. Lobbying isn't just greasing palms. Most of the work is showing up at public hearings, meeting regularly with politicians, and organizing people to support your position.

Cost of lobbying? What the heck is this? There is something called democracy. What is wrong with you USA?

I funded both major party candidates in your area to be anti-darkhorn. Other people in your seat agree that anti-darkhorn is a bad thing but they fear their vote won't be counted if they support any third party. So, all your friends, family and educated voters still vote for one of the major parties.

In other countries (other than Canada/UK), you would have the support of your friends, family and other voters, even if their vote didn't count initially, the vote is counted in other ways to give representation.

Welcome to FPTP where people don't have much representation. Allowing people like me to lobby for anti-darkhorn policies.

The costs are similar to hiring a lawyer at a large law firm, on a per hour basis. Total costs tend to be lower than litigation because it’s not as hours/manpower heavy.

I have never looked into why the US hasn't moved towards government prepared taxes like many other countries. I just want to say fuck Intuit! Wasting thousands of hours of time for corporate profit. Absolutely disgusting.

That majority of people could fill out the 1040EZ in 10 minutes and call it done.

There's no way for the government to know what your work expenses were, what you donated to charity, and so on and so forth through many of the deductions. If you don't want to maximize your return, you can be done in less than 15 minutes.

Even making more than 100k, with stocks through multiple brokers, a 401k, interest from multiple accounts, a house, student loans, and probably a few others I forgot to mention, it took me an hour and a half to do my taxes and cost me under $20 on freetaxusa (whatever the price for the state taxes they charged was low enough where I didn't care to figure it out on my own).

The tax code is one of those boogeymen items that everyone attacks, but in reality isn't nearly as bad as people make it out to be.

Let's start with an MVP then.

For federal taxes, the government takes your W2 and 1099s, and prepares a tax return, with the standard deduction. If you either know you have a complicated federal situation (and people know if they do), or think you can do better with itemizing your deductions, then you have the option to do it differently.

Then, iterate every year to make it a little better, until 96% of people don't have to think about it.

> That majority of people could fill out the 1040EZ in 10 minutes and call it done.

How long does it take to understand that it's all you have to do?

> There's no way for the government to know what your work expenses were

What? That makes no sense.

> what you donated to charity

Same. This makes no sense.

> it took me an hour and a half to do my taxes and cost me under $20 on freetaxusa

wow. I guess you are used to filling your taxes so you're fast.

I've used h&r block, some irs.gov-recommended online fillable forms, and some other free tax software in the last 5 years (I've only had to file taxes for 5 years now). On average it takes me about 30 minutes, and one year i did pay $20, not realizing i could've done it for free.

Maybe you're not American? Or haven't done taxes?

In the US, you can deduct your work expenses if you so choose (such as required clothes, for instance). Since you did this on your personal card, how would the government have any idea that you bought that suit for work? And the same goes for donations to non profits.

Work clothes are only deductible if required and not suitable for ordinary wear and only for tax years prior to 2018. A suit does not qualify.

> how would the government have any idea that you bought that suit for work?

Because your work tells the IRS. I have expensed a shit ton of stuff and I don't say anything about that to the IRS when I file my taxes. I'm hopping that the W2 says enough.

I have never spent more than 90 minutes doing my taxes, and I have done them myself (on paper or with software) for 20 years.

Okay, sure. But wouldn’t it be great if for some portion of the population, they really don’t have to do a thing (because they think the government got it right)? Isn’t that better than everyone having to spend at least 10-15 minutes?

How much taxpayer money will be spent compiling taxes for all working adults in the U.S.? I'm guessing this is more work than it's worth. I don't think filling out a simple form once a year is that much to ask, even if it takes as long as a few hours to do.

Edit: Not sure why I have negative points here, I was just saying that the process of implementing a system to actually get people their taxes and accommodating all the edge cases and ensuring everything is perfect enough that people literally don't have to do anything is probably not worth it compared to doing a check of submissions against the IRS own findings. Feel free to tell me why I'm wrong, I'm all ears and not super knowledgeable on the system (obviously)

EDIT2: Also, not implying that it can't be done, just that it's not worth it to the IRS to do something like that. Seems like otherwise it already would have been done?

The same amount of work that goes into verification systems to cross check your manual entry against all of your financial data they’re ingesting from payroll, investment firms, and other data providers.

It’s asinine to think the IRS should not be in the business of calculating your tax liability and providing you a friendly way to square up, free of charge, when they’re already doing most of the effort required (and have spent the government funds to do so).

Isn't the whole idea that it's a sort of verification? We propose what we made and what we owe, and another entity has their own proposal of what you made and what you you owe.

I'm just spit balling here, I don't have a strong opinion on it either way.

The IRS is friendly enough to accept your proposal and then confirm if you’re right or not (to their standards). It’s not a negotiation. That’s why this is annoying. There is no value in the majority of filers going through the process so Intuit can profit.

The IRS already does most of this work, lest you be tempted to claim that you made $7 last year and nevertheless fed your 118 dependents. It’s just not being shared with you....

150 million filings (not counting retired and children), on a 3Ghz CPU core? Not terrible long. Maybe they get fancier with a dual core box.

How much does it already cost the tax payers by paying these third parties like TurboTax to do it? It would be cheaper for the public to have the IRS do it since they are doing it already anyway.

> 1040EZ

There is no 1040EZ anymore, with the change to the postcard^W (at least one) full 8x11 sheet of paper that's similar to the EZ but that everyone begins by filling out.

There are also anti-tax activists who want to make tax filing as onerous as possible so people hate taxes.

I'm largely in the anti-tax camp and I don't want that. Perhaps I'm just not in that martyrdom mindset enough to want such a thing... but even so it would be more of a gimmick than an argument. I don't like these kinds of stupid made up controversies when they come from people and groups I oppose and like them even less from my side of whatever political point is at stake.

As others have mentioned, I do think there should be transparency. So, for example, the employer portions of payroll taxes (in the U.S.) is not usually visible to the employee on who's behalf it is paid; an employee doesn't see the full weight of taxes that ultimately derives from their labor... that to me is hiding, in a fashion, what my real gross pay is and what amount of my earnings is being taken.

> I'm largely in the anti-tax camp and I don't want that.

I’m in the pro tax camp and I kind of like it. I enjoy paying my taxes, but I don’t think the government should take half of peoples’ paychecks without people having to think consciously about it every year.

As someone that is self-employed, and gets to pay that otherwise invisible bit I mentioned earlier myself... do I know about it? yes (I did as a hiring manager back in the day, too); do I think about it? yes... but there's an extra "implied" tax here because my time doing tax prep related work is also a cost in addition to the taxes.

So I now get to spend hours that I could otherwise be productive with, or spend on leisure activities, on the problem of understanding what is being taken from me. As I said, I agree with you that people should be conscious of what is taken from them. People should make conscious informed decisions in many, many areas of their life. But to take that half their earnings and then insist that they spend hours of their own time (true even if they hire tax preparation services) just to be sure they don't lose more than they're legally required to is kinda rubbing salt in the wound isn't it? Of course you could hire accountants to deal with those issues, but now you're just changing that cost in time to cost in money.

I don't see how requiring tax filings changes anything here though. Filing taxes isn't where you pay taxes; that already happens silently and automatically whenever you get paid. Hell, the fact that it's so common for people to celebrate large refunds implies to me that, if anything, for most people tax filing is seen as something lucrative rather than a cost center.

To put it another way, I'm not sure how much tax filing achieves your stated goal that wouldn't be achieved by an annual letter sent to taxpayers, accompanied by their refund.

"if anything, for most people tax filing is seen as something lucrative rather than a cost center."

Be careful with this line of reasoning... you might give someone the idea that there should be 100% withholding of earnings and that filing tax returns should be more an application for the privilege receive some of the money you've earned. Then it would look more like it was the government paying all your wages!

...with socialism being all the rage these days, I wouldn't be so surprised to see this sort of thing endorsed....

There's a wide gulf between "think consciously about it" and "fill out a ton of forms that are nearly useless because the IRS knows that information already, and now has to employ people to record hundreds of millions of handwritten scribblings of what they already know".

Who exactly pays an average income tax rate of 50% in the United States? You'd have to be making hundreds of millions of dollars a year, at which point you don't get it as a check, you get it as a wire transfer from your investment bank, because with the exception of certain athletes, nobody makes that much money in salary.

If you're only looking at federal income taxes, sure. But now add in state income taxes, local taxes, property taxes, sales and use taxes, special fees and assessments, and other mandatory charges and that bar starts to move down the great chain of being rather rapidly. I assure you, I'm not making hundreds of millions of dollars and I'm pretty sure that I'm in that 50% range of dollars consumed by government takings per dollar earned.

mcny 35 days ago [flagged]

Good! And I want it to be even higher. Specifically, I want to make federal income tax considerably steeper.

I want to tax income above 100x the federal minimum wage (per hour minimum wage * 2000 or about $3M at $15 an hour) at 90%.

I also want an absolute end to all tax credits and deductions besides the standard deduction. Say no to charitable deductions. No to first time home buyer credit. No to everything. Cut it all out. Yes, no credit or deductions for saving money toward your child's college or toward your retirement. Get rid of it all. That is my platform.

Edit: I think it is incredibly Lazy to try to effect change in public behavior through taxes.

A 90% federal bracket, combined with 10+% State tax (ex: 12.3% top bracket in CA), combined with no deduction for State and local taxes (because only standard deduction right?), would mean you’d literally lose money by making more money.

Don't forget an extra 3.8% Medicare tax.

Why you’d quit?

I couldn’t afford not to!

» “I couldn’t afford not to!”

States will adjust their income tax brackets if we make taxes at the federal level reasonable. Perhaps, reasonable people will prevail and it well end state and local income taxes (and increase property taxes to a reasonable level instead).

Our income taxes are already progressive. Wealth gets a free pass: https://www.nytimes.com/2012/11/19/opinion/to-reduce-inequal...

What we really need are land taxes and progressive consumption taxes.

I disagree with you on this. While I support higher land taxes, the reason is to prevent land and homes from sitting vacant. I'm not trying to reduce inequality. I'm just trying to fund essential services.

As for taxing wealth, I think the best bet is a Paris Hilton tax of 90% for inheritance exceeding a certain value (I propose 100x yearly minimum wage or $3M at $15/hour). So if you inherit more than $3M over your life time, all additional inheritance will be subject to 90% inheritance tax.

> property taxes, sales and use taxes, special fees and assessments

These are not "income taxes".

The same happens in Spain. My take is that by hiding those taxes to employees (voters), governments have a much smaller accountability perception than they would have if their voters (i.e. their customers) saw how much they are really paying to them.

I would like to popularize a term for this kind of behavior: Political Terrorism.

All terrorism is political.

Also, I tire of the constant politically motivated attempts to inflate the usage of words to try to attach awful connotations to relatively innocuous things. Please stop.

What other term would you use for holding the country hostage through flagarant, unapologetic cronyism and regulatory capture?

Edit: None of these replies really captures of the gravity of the situation IMHO.


Economic water boarding, obviously.


Plutocratic oligarchy.


Goddamn Grover Norquist.

You'd think, if they were powerful enough to affect tax law, they'd lobby for getting taxes included in prices, the way they are in most of Europe. That'd make a lot of people hate taxes—especially the people who have to constantly re-tag merchandise.

It's actually the opposite. The groups against taxes want taxes visible and not embedded into the price of a product. That means consumers are aware how much of what they're paying is the sales tax portion. Not saying I personally agree, just pointing out what the thinking is.

Actually, it works the other way around: when I'm in Europe the price on display is the gross price (including VAT), so I kind of get used to it.

In US when I go shopping the price on display is net price, and then, when I get to register, they add sales tax to it, which is irritating, but it makes it painfully obvious who's to blame for that difference (i.e. government).

One thing that would make people hate taxes even more is if we got rid of tax witholding by employers. Let every employee receive full, gross salary to their bank account, and then make wire transfer to IRS by themselves.

Another funny thing: here in California, when I go to arestaurant there's often a disclaimer at the bottom of the menu: "To support minimum wage increase we add 3% surcharge to each bill"

I've lived in California my entire life and have never seen "minimum wage surcharge" on a menu or receipt.

I've only seen it in cities that have a higher minimum wage than state.

In San Diego it only seems to be at the more expensive end of the restaurant business. They put a sob-story on the menu explaining how they are going to add 3% to my check or else the minimum wage law will drive them out of business. Unfortunately it has the opposite effect for me and makes me think twice about supporting a business who will charge me $40+ for an entree but admit to not paying their staff a living wage.

Yeah I can't imagine taking that kind of bullshit argument seriously. Did the owner complain about finding nearby parking for his Bugatti, too?

Maybe some companies should add a disclaimer "Our CEO needs a new yacht surcharge" to achieve full disclosure :-)

It’s not all of California. It’s just in the places with their own higher minimum wage like SF or LA. I’ve seen it a bunch of times, mostly at small family owned restaurants.

>It’s not all of California. It’s just in the places with their own higher minimum wage like SF or LA. I’ve seen it a bunch of times, mostly at small family owned restaurants.

if the menu lists a price for a dish, how is it legal to tack on an extra 3% because the owner doesn't like the minimum wage in SF?

Yea I've always wondered that. It's supposed to be included in prices (unlike sales taxes) like any other cost, so how are they able to legally get away with advertising a lower cost than they charge? Would it be similar (from a legal perspective) if they added an electricity surcharge or a dishwashing surcharge and lowered their menu prices accordingly?

I'm all for more transparency of taxes for the end-payer, but I'm curious about this from a legal perspective.

Someone replied with an article that they were legal, but that article mentioned the surcharge must be disclosed prior to ordering. I suspect there's wiggle room for a good lawyer if they're using mouseprint or not making sure ordering services like Grubhub accurately disclose the charge.

In San Diego the surcharges were deemed legal: https://www.sandiegouniontribune.com/business/restaurants/sd...

It's pretty common, and not just in California. Here are some examples from WA.


It's becoming more and more common, at least in the Bay Area. I know several places in downtown Palo Alto that do this.

I'm European. What this does is that it hides the tax and people complain about price increases when the tax increases. Every single EU libertarian would prefer the US way. BTW what the heck are you doing with your tax rates that you'd have to constantly re-tag? That's completely a non-problem over here.

Yeah if merchandise is sitting on a retail shelf long enough that the tax changes multiple times before it's sold, you need to rethink your stocking choices.

I don’t see why we can’t have both. Have one price that is the grand total, and in a smaller font, display how much of that grand total is the tax. That way people know how much the thing will cost upfront, and also know the tax amount.

In the USA, I have no idea. In the EU, politicians don't want that because that'd surely lead to a revolution, especially in the east.

Sales tax in the USA differs across states, and even across counties. So it could change fairly regularly.

VAT differs wildly across EU countries, including whole different schemas of the tax. And not only that, we also speak two dozens of languages. What you're saying is simply not a problem - come and see. I've never even thought that it could be seen as a problem because the solution (don't move tags, just the product) is so obvious.

Are you referring to VAT? If so, how does this necessitate "constantly re-tag merchandise"? In Denmark the VAT is the same for all goods, and was last changed in 1992 [0].

[0] https://da.wikipedia.org/wiki/Moms

Canada here... The government pretty much already does your taxes here, and will 'readjust' your taxes if they feel you made a mistake. I've never understood why they still make you go through the process. Such a waste of time.

Even more ridiculous is that you can do any corrections online. So you can pretty much send the Canadian tax agency any gibberish and then fill in any claims or deductions online later after they have fixed it. You just can't initially fill in anything so as to protect the business of the commercial tax preparation agencies.

You know, there was one line in there that gave me pause:

> Intuit argues that allowing the IRS to act as a tax preparer could result in taxpayers paying more money.

Self-serving Intuit aside, I can't help but think this would be true.

It would just continue what was started with automatic withholding, where the general population is psychologically disconnected with how much they actually pay in taxes.

They got used to not having their money and being able to beg some of it back makes them happy when they get some.

Too bad people thought Ron Paul was crazy when he talked about abolishing personal income ta.

At least they're being honest about it. It's not TurboTax's fault if lobbying is legal and cost-effective. The only way they'll stop is if we make that kind of lobbying illegal, and good luck with that.

They're not being honest about it. They're hiding behind disingenuous claims that the government preparing a first-cut tax return for us would be exploitative of the American people.

If people are under-filing their taxes and government calculated ones would basically equal to auditing everyone, those who will have to pay more obviously will start to object to new system whether it is correct or not. It will be labelled exploitative etc.

It 100 percent is their fault. They are manipulating elected members of government intended to respresent the PEOPLES best interest. This is where capitalism fails

Wouldn’t the fault lie with the representatives and the people that keep re-electing them?

Uh, I mean, partly? It's a pretty strange argument to say that no one can be culpable of a bad thing so long as that thing is currently legal.

Imagine that murder was not illegal. Imagine that instead of making it illegal, we complained to murderers that what they are doing is bad and they ought not to. Then, we'd wonder why the crime rate isn't going doing.

The argument isn't about assigning blame. It's about criticizing society for not solving the problem. Complaining about lobbyists doing bad things is not an effective solution. Doing so shifts the dialog away from law implementation (solution-oriented and practical) towards what is "right" and "wrong" (vague, subjective, and doesn't lead to improvement).

There's plenty of blame to go around. We don't need to narrow it down to just one entity.

That's not Inuit's fault, it's the people's fault who don't elect people who legislate against that. Inuit's operating normally within the legal framework that they're subject to.

If you make <doing something> legal, you can't blame an entity for exercising their right to <do something>.

I’ll bookmark this page so I can link to it in 2021 when we’re complaining about the same thing again.

The tax code is complex because of many special interest groups that get their carve-out. Even if you completely ended all lobbying from the tax preparation industry, how much simpler would taxes actually get?

If you want a straight flat tax (or a progressive one), you'd need to get rid of the mortgage interest deduction, charitable deductions, all these things to refine the tax calculation to a very simple formula. And you bet those special interest groups would never let that happen, even if the tax preparation industry didn't lobby.

Don't let the perfect be the enemy of the good. We can and must improve things iteratively. Just because we can't fix everything doesn't mean we shouldn't fix anything.

The issue is that the reason why governments have tax cuts for certain groups is because that's how they win votes. Tax codes are so complicated in almost every democratic country in the world specifically because such complicated tax codes serve a purpose.

The difference between governments is who is getting the tax breaks. Progressive governments give tax breaks and stipends to ordinary workers, while conservative governments give it to corporations and the wealthy.

In order to gain or stay in power you need to make sure your key supporters are looked after. This is as true in dictatorships as it is in democracies.

>The issue is that the reason why governments have tax cuts for certain groups is because that's how they win votes.

Isn't that an oversimplification, though? Governments also use tax cuts to shape behavior.

I would argue that shaping behaviour is another aspect of looking after your key supporters.

If you put taxes on speculative trading, such traders won't vote for you -- but people who are against speculative trading will. If you give speculative traders a tax cut, the inverse happens.

It also obviously will shape behaviour, but if that was the only purpose then the government wouldn't be fulfilling their primary purpose: trying to stay in power as long as possible so they can achieve whatever they set out to do.

If you're a career politician, "Stay in power as long is possible" is the thing you set out to do.

The mortgage interest deduction is all but gone now for most people. Since the new tax code gets rid of dependent exemptions, and replaces it with a larger standard deduction (24K for married filing jointly), combined with the cap on SALT taxes, most people won't have a large enough mortgage interest (plus max 10k property taxes + state income tax) deductions to exceeded the standard deduction.

The net result is that there wasn't much movement up or down in taxes for typical homeowners (married, children, middle class home). Which means that with fewer people benefiting from the mortgage interest deduction, there may be hope that it goes away in the future. Either that, or it will stick around since it is a benefit for wealthier Americans (who have more political control).

The IRS already knows how much you should owe in most cases. They could send you a filled in tax form with spaces for corrections, and if looks right, you’d just send it back. This would require no changes to the tax code.

This is how it works in my country, although it's done through a website. I usually have to make one or two edits for deductions I can claim and I'm done in 5-10 mins.

This is a separate issue. TurboTax like software could still exist for people with more complicated tax returns. For the majority the government can just calculate it.

I could have sworn there was an effort to release the tax laws codified in Python libraries by the IRS or another official government agency. I wonder now if it was a dream, I can’t seem to find the article now.

This comes up on HN basically every year. I'll put a different spin on it than "big bad company ruins America": America was broken before Intuit got to it.

There will always be bad actors in society. Ideally government officials have the temperament, wisdom, and intelligence to act in the public's behalf.

Unfortunately, that seems to be largely not the case in the US.

It isn't just Intuit, and it isn't just their $5 million in legal bribes. If it were simple to do income taxes, it would be tens of thousands of accounting industry jobs that would be cast aside. I suspect the lobbying money comes with that as part of the message.

Leona Helmsley, as quoted by her housekeeper: "We don't pay taxes; only the little people pay taxes." She believed that and I suspect we have no idea the extent of this corruption, and very well could also be why the system is the way that it is. Corruption and tax avoidance is a right for the privileged, secured as a product they can buy. If this is all easy peasy and automated, how do you do clever obfuscation so you're avoiding taxes?

I'm glad that Indian tax system is great. They already do everything & if not, they have Excel document written formulas which you can download & enter amounts and it does calculation

I already hated TurboTax before that story broke because of the horrendous DRM that blocks legitimate use. I had kept DVDs for each of several years I filed, then once when I went back to re-install a previous year to open the file, it wouldn't work. I even found the amazon sales email from that year and TurboTax support said there was still no way to use it, despite having original media and a sales reciept! NEVER AGAIN. I use FreeTaxUSA now.

> horrendous DRM

In case anyone thinks this description is excessively dramatic, you should know that the DRM scheme in question works by writing its activation key to a particular sector of your boot drive that probably didn't contain anything important.

Is distributing free tax filing software illegal? i.e. some web app similar to Intuit that help you fill forms but not filing for you. For general public that do not have many special deduction items I think this would not be very hard to do. For special deductions, I guess the app can just point the user to possible forms they should look at.

You can already file for free if you make under $66k: https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...

Edit: I don't think I addressed your question, sorry!I agree that a simple tool could be a great help if it doesn't already exist!

You can even do it if you make more than that with the free fillable forms option.

Not at all. For example:


I've been using Credit Karma tax this year and so far it's been good

It misses many edge cases and deductions.

Technically may be easy but tax returns have very sensitive private data. Need to do a lot of work to convince people. Its is still possible though.

I'm pretty sure the real reason its complicated is because politicians are all trying to get deductions or special rules for their favorite special case. I thin its simplistic to blame tax preparers.

Actually simplifying tax is one good thing Trump has done. Hopefully will continue.

Is there a non profit out there lobbying and working to make tax filing free and simple? I'd be happy to donate to them. We the people need to build more nonprofits to fight back against corporate greed.

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