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Congress Is About to Ban the US Government from Offering Free Online Tax Filing (propublica.org)
1034 points by el_duderino 14 days ago | hide | past | web | favorite | 695 comments



NPR's Planet Money just re-ran an episode[1] related to this. In 2005, California ran a pilot program where they sent simple, pre-filled tax forms[2] to a sample of the population. 98% of people liked them and would use them again. In 2006 it would have become standard for California, but failed in the legislature by a single vote. Opposition was from two factions: lobbying by Intuit, and Grover Norquist claiming that it violated a pledge for no new taxes. Fascinating stuff.

Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.

1. https://www.npr.org/templates/transcript/transcript.php?stor...

2. https://en.wikipedia.org/wiki/ReadyReturn

3. https://www.ftb.ca.gov/online/calfile/index.asp


I will say, vote with your dollars. If you don't like Intuit's lobbying, please don't feed the beast and use their services.


I might be getting old, but more and more I see “vote with your XXXXX” to be the litmus test for situations there is no decent solution left anymore.

It’s not even an advice in the end, just a reminder the customer lost the battle, and the only alternative is to leave the field with what’s left on their posession to go roam the desert.


You are completely correct, it's an admission of defeat, of helplessness.

This is beautifully written.


you'll still need to file!

Where government is concerned, you’re completely correct. However, voting with your dollars does work well for markets, e.g. grocery stores and the like.

This is something I hear a lot of (overwhelmingly) American people say, after which I am inevitably reminded of poor healthcare, food deserts and exploitative corporate practices. At this point those are all so entrenched in the "american experience", I don't understand how you can say unironically that "the market" is a fix for anything or does in any situation "work well".

It's a superpower, and it is in it's entirety an example that disproves that this is the case.


Virtually all markets lead to an equilibrium of very few businesses that try their hardest not to compete where possible

"Voting with your dollars" is a fools argument designed to impart the feeling that the reader somehow has sway over a monopoly


I don't know, do you think General Mills has the chokehold on breakfast cereal in Paraguay?

Pretty sure there's always an option. Nihilism is the worst one.


Vote with your votes. And with direct action and protest. Your dollars are small and easily ignored. Political organizing works when it's political, because it forces change rather than pitting the minnows against the shark one on one.

What are suitable alternatives? Aren't they the best in class, regardless of how shitty that class is?


I have used Credit Karma Tax since it came out (I think this year was 3 years) and it has been a great product and is free for both federal and state filings. Doesn't support some more complex scenarios, notably partial year and multi-state returns (you can still file your Federal return with it, though).

Edited to add additional details as to what isn't supported.


Have you compared to TurboTax? Is one better than the other at finding deductions?


I have not done taxes on both for the same year and compared the two. I have used TurboTax, as well as a variety of other online tax filing solutions, in the past. TurboTax might be better polished and provides better explanations, Credit Karma tax gets better every year, and I find the downsides to be a good trade off for not supporting Intuit.


I did my taxes in both last year (started in TurboTax and learned about their abuses - a coworker suggested Credit karma) and found the numbers to be identical. My taxes are relatively complex, more than most people. I'm very happy with the service for the second year in a row.

I admit that they don't have quite the community links that TurboTax does, and there are some situations they won't handle (for instance, income from 2+ states)


I have a friend who works there, and still didn't know they did tax stuff. I'll have to give it a try this weekend!


I was going to use Credit Karma this year, but their definition of "too complicated" includes "moved from one state to another" (cf. my profile).

Right, I plan to move to another state in the next year or three, so I am hoping they add that ability next year- they have added new features every year, and it seems like multi-state filing would be the next biggest need on the list. You can still file your federal taxes with them, but filing state taxes separately is a pain!

So rather than feed Intuit, you'll feed Google?

EDIT: Ignore this comment, poster threw ID-10T exception


Huh, what does Credit Karma have to do with Google?


I heard that Google owns them, and only just checked and found out they don't. Oof.



I have worked with an independent tax preparer for the last few years. In January, I walk over to a nearby restaurant where we meet, I hand over tax documents, she makes sure it's all there and asks some brief questions. A week or two later, she sends the completed state & federal forms along with the appropriate authorizations which will allow her to file on my behalf. I pay $200 for this service and consider it far more pleasant than dealing with TurboTax's incessant questioning.


Your tax preparer probably uses Intuit's tax preparation software for professions. I think it is called ProConnect.


Good point! I don't know what she uses :/


I also hired an independent tax preparer, to avoid paying Intuit. They did a good job. I was disappointed when I received their payment form and found it was hosted on Intuit. I had paid Intuit by proxy. :(


If your taxes aren't complicated (i.e. you use the standard deduction), there's a service called "Free Fillable Forms" through the IRS that allows you to fill out your tax forms online and e-file them for free. Many states have an equivalent system as well.

Last year I went to an independent preparer, which cost me around $160 and took an hour. This year I wanted to save some money so I decided to try filing myself and it was pleasantly straightforward, only taking two hours. The only tedious part was copying over the info from the W2 for both federal and state.


Free fillable forms allows more than just simple cases — it will handle all paperwork regarding your personal income tax. Highly, highly recommend using. It’s more manual (follow the 1040i instructions document), but you’ll learn a lot about how deductions work, what you can claim, and what is best for you in following years.

The only case it doesn’t handle for me is Partnership taxes — just the stuff due April 15.


I was waiting to finish my taxes for state and federal before replying to this.

Turbotax was 100% free for both with automatic imports of my forms. As long as you avoid upgrading to unnecessary services beyond their basic service, you can file for free and save PDFs of both returns when you're finished.


I use taxhawk.com and would absolutely recommend it, I think the UI is fantastic (and without a fantastic UI, I'd just continue to do taxes with paper and pen). I've been using it since 2011.

I have heard good things about freetaxusa.com as well.

Both are very reasonably priced, only $15 for state - federal is free. Since I have business income TurboTax wants over $100 to do my taxes.


Thank you, you just saved me $164.98 (turbotax self-employed) - $14.99 (taxhawk)! A lot of money given that it's for my kid's $620 income :) And honestly, the taxhawk experience was better, with less cutesy messages and fewer screens. Not to mention the annoying turbotax upsells.

Just one thing to complain - it didn't discover that I over-contributed to Roth and need to return a bit to prevent a penalty.


Yay! Glad I could help! Doing taxes in subsequent years is where it really shines, it remembers your previous year stuff so it goes much faster. It also shows you a side-by-side summary of this year vs last year which I find really helpful.

Perhaps you can let them know about the IRA thing for next year?


They're the same company; no idea why they have two brands.


So they are!

From their About Us page:

>FreeTaxUSA is an online tax preparation website owned by TaxHawk, Inc.


SEO Benefits. The latter is a keyword domain that might rank well when people search for a generic term.


Tax Act. And as far as "best in class" goes, I find Tax Act to be far less infuriating that that steaming pile of shite Intuit puts out. I would almost go so far as to say it's decent software.

As for the lobbying, I have some vague memory of jumping to Tax Act because of someone pointing out that they don't lobby. A cursory bit of searching didn't raise any red flags at the time.


I file with TaxAct as well, but it's worth noting they're a member of this industry lobbying group:

https://www.americancoalitionfortaxpayerrights.org/

Interestingly while looking this group up I found this entire report prepared by Elizabeth Warren's staff about these types of industry groups:

https://www.warren.senate.gov/files/documents/Tax_Maze_Repor...


The names of these lobbying groups are downright Orwellian. Coalition for Taxpayer Rights. Internet Freedom Coalition. Freedom Online Coalition. All these groups are diametrically opposed to the principles in their own names.

Would be curious if anyone could confirm that Tax Act actually doesn't lobby for this kind of crap.


Read the 1040 instructions, and follow them. This works if you don't have a complicated situation, such as business income or if you need to calculate penalties for shortfalls on quarterly filings. Have a CPA do your taxes periodically, then use last year's taxes as a guide for the current year.

Typically what I do is write a small program that asks the questions in the 1040 form, then gives me a print out of what goes in each field.

For my case, I have one source of income (employer), a couple times I've sold stock, and I have a mortgage, am single, but support my SO and her 4-year old grandkid. I've done my own taxes for the last 20 years, and only a couple times took it to a professional (once to H&R block when I sold stocks, and last year to a CPA). Both times the tax forms were exactly what I figured out on my own.


I used to have this idea of a AI chat bot that would ask common questions such as name, address, dependencies, etc... and return a filled 1040 PDF. Turned out I spent more time writing codes to handle the PDF than focusing on the chat bot functionality...

Regardless, I would pay to have such a service.


The pen. Seriously.

I used TurboTax this year, and honestly I was underwhelmed, especially when it came to the state forms. It didn’t really seem like it did much, and the California form experience were full of obvious bugs. Questions with no context. (“Enter city 2”) Questions being given out of order. PDFs being viewed through a mail slot. PDF forms where the entry blanks and the entries would scroll at different t rates, so you couldn’t read the form. It was super frustrating. The whole thing felt like a cheap unskilled body shop of a program, and made me want to just use a pen.


I'm thinking about self-filing this year. Although, I'm really running down to the wire.

It's basically as easy as filing out a W2 if you're a full-time salaried employee with no deductions, right?


It's really not that bad.

I have to file mildly complicated taxes due to getting my income from a partnership, and even that I can do in a couple hours by following the 1040 instructions, and the filling out any ancillary schedules that are required.

If you have straightforward W2 income, taking the standard deduction, and a reasonable number of retirement or investment accounts, it should take you an hour to fill out the form following the instructions. Maybe plan on a couple hours the first year, while you get used to it, but it's no so bad.


It's very easy in that situation.


It is literally 1040-EZ.


1040-EZ went away in 2018, 1040 is now the only form. :(


The new 1040 form is shorter and easier than the old 1040 ez though

We'll have to agree to disagree.

1040: easy

I swore off TurboTax after finding out about the tax lobby stuff and filed with TaxAct this year. I can't say for sure that they don't lobby but if they do they don't do so as loudly as Intuit.


If you’re in Canada simpletax dot ca is great.


I've used free fillable forms for a number of years without any issues.


This. I use this every year and it simply is an online interface of fillable forms provided by the IRS with a “Do the Math” button (actual button text). It works as intended, files for you, and is free.

Do your taxes by hand/with free fillable forms (name of the online service), you’ll learn a lot. Just follow the 1040 instructions (it goes line by line through the form) and any related forms it tells you to do.


Those lobbyists will find ways how to force you into using their services. Not necessarily by eliminating all the different competing companies, but possibly through splitting the rewards through some kind of association, commission, self-regulator etc. If somebody is lobbying against you, fight them, don't just wave your hand, or you might lose your chance to "vote with your dollar" soon


Umm... where do I start? ALL the tax prep companies lobby against free electronic filing. So if I want to vote with my wallet I have to go back to paper forms. Paper forms may be outlawed at some point in the future. Can you solve that issue?

We either need campaign finance reform or we need to accept our government is bought and paid for by big oil, coal, the NRA, the car manufacturers, etc.

sorry for the rant


The problem with voting with your dollars is that people with more dollars get more votes.

That’s how we got to this situation in the first place.


Conservatives always love when people say "vote with your dollars", because that means the people with more dollars get more votes.

Not sure why this is downvoted, but it's exactly right. When you tell someone in the bottom 50% of income earners to "vote with their dollars" you're telling them to piss into the ocean in the hopes of turning it yellow.

Particularly in the case of taxes, where the benefit one gets from having someone else prepare ones taxes is directly proportional to wealth. The people with the most ability to change this situation are the one's who are have the least skin in the game, because they're probably hiring an accountant anyway.

Why not pirate it.

This is pure anecdote, but...

A NOAA employee told me about the time their boss caught holy hell from a Senator because the NWS had the gall to update a particular weather product they offered by adding color to the map. Evidently someone had a business essentially downloading the free NOAA data and improving it by coloring the maps and selling that as a product. When NOAA made it free, they called their Senator in anger. And said Senator slapped NOAA's wrist.

Seems like the same school of thought in a much bigger market.


Michael Lewis wrote about the NOAA and this exact type of thing in his last book. In essence the NOAA spends lots of tax payer money to collect weather data but can’t do much with it other than give it away exclusively to a handful of entities that can repackage and sell it.

The eventual dystopian end state could be where the NOAA can’t alert people to tornados and only those subscribing to a weather service would be alerted to get to safety.


You can get an emergency radio capable of receiving VHF NOAA weather alerts. There is typically at least one of the frequencies within range where ever you are. You can subscribe to weather alerts through RSS on their site as well.

https://alerts.weather.gov/

You can even pass lat/long points to the forecast page and it will pull up the closest weather station, even points in the ocean work.

https://forecast.weather.gov/MapClick.php?lat=43.4802&lon=-1...


> You can get an emergency radio capable of receiving VHF NOAA weather alerts.

Apparently this was grandfathered in a long time ago. NOAA is only allowed to send weather reports by radio and on specific frequencies. Doing the same with the internet, why that would be communism!


And for the record, NOAA Weather Radio is pretty cool -- I like to get my weather from it when I'm at home.

I'm right in Boston, and I can pickup transmissions from the Blue Hill Observatory with my cheap Baofeng.


I imagine they'll lose that eventually, so that the radio band can be privatized


That is nowhere near the breadth or detail of actual noaa data, more of a few legacy services. Its a travesty this is all we get.


Yes! The Michael Lewis book is called _The Fifth Risk_, and it's an amazing read. It's a series of contrasting stories: earnest government workers who have dedicated their careers to protecting all of us from threats like nuclear proliferation, on the one hand, and on the other politicians and narrowly interested lobbyists who view government as either a threat to their self-interest or an opportunity to tilt the economic playing field.

https://www.amazon.com/Fifth-Risk-Michael-Lewis/dp/132400264...

From the NPR review of the book:

> Take Trump's choice to head National Oceanic and Atmospheric Administration, the Commerce Department agency that, among other responsibilities, oversees the National Weather Service. For that critical position, Trump has chosen Barry Myers, who is CEO of the private forecasting service AccuWeather. As Lewis points out, AccuWeather repackages the weather service's own data and sells it to private concerns for a profit. Myers at one time argued that "the government should get out of the forecasting business." In other words, you want to know if it's going to rain tomorrow? Or which way that hurricane is tracking? Well, buy our app, or subscribe to our forecasts. Myers has yet to be confirmed.

https://www.npr.org/2018/10/02/652563904/the-fifth-risk-pain...


Have you seen weather.gov? They do provide free products.


For now. The NOAA is headed now by a man who spent 30 years trying to hobble the NWS.


Yes. Accuweather has long lobbied to prevent the services the people pay for from providing them with information.

In 2017, the current administration named the lobbyist and co-owner of Accuweather, who's fought the NWS as the head of the NOAA, the parent organization of the NWS: https://www.bloomberg.com/news/features/2018-06-14/trump-s-p...

The fox watches the henhouse when it comes to your weather. Your taxes will pay for Accuweather's profit at your expense.


By what power vested in the senator can they slap NOAA's wrist?

Is it just the importance and influence by being a senator? Or is there some direct control? Or via a threat to cut funding?


this is stupid. shouldn't free market competition include government services?


Free market dogma is a scam: an intellectual framework invented to rationalize a position.

There's a long history of people doing these things such as with monarchist theory or eugenics for colonialism and slavery. People have theories and frameworks to justify misogyny, child abuse and being harsh to homeless people.

In this case it's an ability to do whatever you want to make money without any oversight, laws, restrictions, or limitations. Being against unethical things such as sweatshops, lying to consumers, or vulture capitalism is itself unethical because it "interferes with the market" oh dear!

It's a symmetrical theoretical framework with beautiful equations to rationalize an otherwise indefensible power structure and insulate reprehensible criminal behavior as essentially the Unquestionable Divine Will.

When anyone justifies things through purity or perfection arguments they're likely pulling a fast one on you. In fact it's this fast one. This exact technique.


I definitely agree that the intentions of the ruling elite will be formalized into nice-sounding theories, irrespective of their faithfulness to reality or their utility outside of supporting the system of rule. Marxism for example

and you can replace ruling elite, with people who want to be that. Then you get notions like identity politics, feminism, cultural Marxism, misandry, racism.

There's an interesting second order effect here as well, that drives the narrative aggression and dissent shaming today. Democracies need to create as many of these competing theories as they can to keep people locked in constant conflict and division.


How can it be that ideologies such as 'racism' and 'identity politics' are only born from people who want to be the elite? (If this is indeed what you are saying) Was not America's founding based on identity politics and racism by white Christian people? How is the genocide of indigenous people and enslavement of black people not racism and identity politics?

Besides that, I don't think racism and feminism stems from 'wanting' to be elite. People who experience racism just don't want to be killed and threatened, women just want the same opportunities and to be able to feel safe and not be harassed randomly.


Racism can also stem from the elite, as a rationalization for why they are in power. Racism can then, in turn, show up in the underpriveleged woeking / subservient class, as another manifestation of their hate for the elite. It's not a one-way street- the pain just keeps on giving.

I'm glad you're curious to know more. The situations you refer to seem very threatening so I'm going to try to cover all bases.

The intentions of the ruling elite are formalized into nice-sounding theories that people get easily addicted to.

Racism is a bit more subtle than feminism, in that, "racism", as in discriminating against people of a different race, is a real thing, and it's wired in all of us. It should probably be better called "groupism" or "majorityism". All of us, in whatever sized group, have some mental concept of group identity, us vs them, insider vs outsider. That's just human nature. It's not evil, it's even adaptive. But it is NOT the driver of things like genocide and slavery.

These things are always driven by resources seeking, powerful players competing for resources. Black people sold black people to white people to be slave labor to farm tobacco and sugar.

America wasn't founded by White Christian supremacists, on a crusade against black people. It was founded by economic subjects of the British empire mad about money, and rebelling the attempts by the Empire elites to manipulate them. The civil war wasn't about our built in racism, or about how whites had gotten used to black slaves, it was about the power of a unified country, and preventing secession. Narratives had to be spun to mobilize people's passions to get them to kill for the elites who wanted to get power.

African genocidal wars are not racial. Hitler was not a racist. All of these mobilizations of injustice need a way to rationalize the economic or political driver. So narratives are promoted that hack our wired-in, benign biases and exploit them. Just like social media giants hack our reward systems to fill their pockets, robber-barons and warlords of previous eras hacked our adaptive, genetic heritage of reward and fear circuitry to mobilize large numbers of us to go kill other large numbers of us, by spinning narratives of bogeymen, evil outsiders, etc.

Then, with the narrative created, "Racism" (capital R), is blamed, rather than the actual elite-driven cause. Thus empowered, "Racism" can become a term of abuse, and people are convinced their inherent nature is at fault, when actually these massive injustices were driven by power seeking elites, and enabled by the clever abuse and exploitation of their human nature by these powerful bad actors.

Identity politics is getting more mileage out of the same outsiders bias, by defining legions of new groups, convincing people that membership of that group is tied to self, splashing in some extra strong circuitry if needed (sexuality), and getting groups to fight each other.

It's the same old trick of codifying intentions into nice-sounding theories to get people to go do stuff. It's propaganda, advertising. It's cattle herding with humans.

Wanting to be elite is just making the point how many of these new narratives are adopted by people as substitute "paths to power". These narratives actively substitute people's intentions to build a better life, and hijack their reward circuitry to get them addicted to fake payoffs such as blaming others, not taking responsibility for creating what they want, fake self-righteousness, and cargo-cult like belief that the "movement" will bring them the results. Obviously, if you want to stop people advancing in your society, you want to them be doing things that will never get them anywhere. It's an ingenious and insidious way to disempower people, by directing their actions toward useless, zero result ends, rather than having them try to actually create change or results themselves.

Elites promote these narratives for two reasons: economics and control. The more afraid, angry and triggered we are, the more we consume, and the more easily manipulated and controlled we are. The flip side is, if people actually got happy, and became aware of their personal power, they would definitely organize, rise up and create a better situation. The system preserves its own homeostatic equilibrium by keeping people triggered into their ape-brain as much as possible.

We're all a lot more powerful and good (minus the resource scarcity / resource seeking that leads to war) that these divisive fake narratives would have us think. More important than what "opportunities" someone is given, is what they do with what they have, and what they create for themselves.

The biggest thing stopping people achieving is not "structural inequality", is getting away from this idea that it's about what you "get", rather than what you "make". Nothing will stop a woman being rich, healthy, and happy, if she makes the right choices. Women can stand up for themselves, say what they want and don't want, they don't need a "movement" to get what they want, they can figure out how to get what they want themselves just like anyone else, unless they believe they're a helpless victim by virtue of their sex who has to be saved by some movement and given the success they feel privileged to, but don't want to earn.

People being killed and threatened don't need to fight racism, because our in built racism isn't bad, they need to avoid violence. If you can live in a safe society, that's your best chance. The state probably has a duty to protect its subjects, so pick a state that you like. If you don't want to move, and you live in danger, build yourself a fortress and get good at violence, because fighting the people who are trying to kill you will be your only way to survive.


is there anybody, really anyone, who doesn't want to be the "elite"?

every human wants self-determination, the power shape their own future, to be in control of their fate.

yet not every one of them are or become racist.

furthermore, there are theories (eg feminism) that are built on fairness (as in A Theory of Justice by Rawls), and there are those that are very much not (eg racism).

the others are simply too vague to simply deal with.


I know these notions can be scary, but I don't believe there's any good in pandering to people's weaknesses and wrapping it up in a theory pretending to be good.

Feminism is based on convincing women they are perpetual victims, that everything wrong in a woman's life is men's fault, that their feminine nature and sexual differences are weakness, and the only way to get self determination is to emulate men (who are evil), and play the fake victim by blaming men and demanding they are given benefit's they didn't earn. It's a toxic theory that disempowers females by discouraging them away from the power of choice and personal responsibility and trying to get them hooked on the addictive fake pay-off of blaming others and playing the fake victim. It's also full of contradictions that no doubt drive neurotic and irrational thinking if you try to really "believe" it. It's a variation of the classic "creation of grievances in order to exploit them" trick. It's not about advancing equality, or women's rights. It's a political theory, promoted and propagated by elites, to divide us into groups, weaken us by attacking something very strong (the human relationship bond, the family bond, the polar sexual bond), and make us more easy to control by being locked in a state of constant triggered conflict and division. To turn us into more political animals, less close to and less trusting of each other, and more dependent on and closer to "the state" or "the cause". It's so effectively propagated because the central notion "that you are not responsible for your life, that you can blame someone else, and that's actually a good thing", is so addictively rewarding, it's a very compelling "fake solution" to all sorts of problems, and it's very hard to unhook yourself once you are taking this.

Any theory that actually aimed to advance equality among people, and the rights for one gender, should advance the rights for both, and cherish both, and not be called "fem"- or "masc"- something, but "humanism" (already taken by a philosophy), or "peopleism" or "personism" (my favorite). Personism would promote equality in the ability of people to make choices and take personal responsibility for their situations, would discourage playing the fake victim, would encourage active listening, empathy and communication about emotions, would promote emotional vulnerability as strength, and would valorise gender archetypes from both sexes (the male and female god/goddess energies) as desirable ideals of strength and power. It would empower people, unify them and not divide them or make them useful idiots and pawns more easily controlled by elites.

I think you confuse being "elite" with self-determination, and power. Ordinary people can have that too. We can all grab it for ourselves, we don't need a "movement" to "give" us those things (in fact, having it 'given' would be contradictory).

By elite I mean the people who treat the rest of us like cattle and useful idiots, to control with mass psychology, and who are actively designing and promoting social / cultural divisions to weaken the rest of us.

I expand upon racism in this context in my comment on spinach's.


You can't have a free market competition of government services. It's not free market competition when its companies competing over _providing_ a service mandated by law. That can never happen. Just as private prisons can't be free market (providing a service mandated by government law) you can't provide tax services in a free market environment because it's required by law.

Planet Money covered tax filing a few years ago and visited it again recently: https://www.npr.org/templates/transcript/transcript.php?stor...

My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes.

The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.


It’s not really about making people more or less aware of what they are paying.

The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.


The point is to enrich Intuit and other tax preparers that lobbied for this.

These anti-tax activists seem to be playing the role of Useful Idiots for the much more substantial reason 1, bearing in mind that the very existence of such companies making tax filing easier does indeed destroy point 2 entirely (in addition to the what OP pointed out which also takes away any credit this idea might have had).

From a european perspective, having tax returns that are not pre-filled, and having a tax administration that doesn't strive to make payment as easy and quick as possible is nonsensical. Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?


As a former US student, and paying my student loans.. I also cannot easily _pay_ them while living abroad. It requires I pay fees to transfer money to a bank account, and pay directly from this account. I cannot use an overseas account nor a credit card or paypal etc. So on top of the ridiculous amount they want, I have to pay money to even pay money.

For most people the state gets paid every payday from automatic employer withholdings. If your withholdings are much lower than the obligation then you may pay interest penalties. So it’s not really necessary from a cash flow perspective but still would be much more efficient.

> Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?

The humans who make up the state are more keen to replenish their own personal coffers in the fastest, most efficient way possible -- good old fashioned graft. No one with significant power personally benefits from an efficient IRS with a pleasant user experience.


The thing is that the form 1040 is laugably straigbtforwards to fill out. If intuit has had any success, its in convincing people that filing their own tax returns is more complicated than it is

This is only true if you don't own anything, never make any contributions, don't have any investment accounts, and don't have any self-employment income. Otherwise the 1040 is a huge pain in the ass requiring forms within forms and raising tons and tons of nebulous questions about your exact status within the legal definitions.

I wouldn't assume that the people who pay for tax preparation every year are idiots.


I make 401(k) and IRA contributions, have been self-employed (and yes, had to file quarterly returns), have several investment accounts. It's still straightforwards. You don't have to be a rocket scientist to fill out these forms. The IRS provides copious documentation and even has a phone line...

Please stop assuming the guy you're talking to on Hacker news is a simpleton.


That's for point 1. Point 2 is a completely different camp.

Point 2 is after-the-fact rationalization so they don't have to admit point 1 in public.

I think it’s actualy both

The US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.

Which many countries do already.

In France, before this year, if you were an employee, you rarely filled a tax form, you just validated a prefilled one, usually with one click on the internet.

Now it's just taken every month from your salary, and you get a chance to correct it once a year.


Many countries do this, because in those countries, the government actually represents the interests of people. If there was ever a clear case of the US government putting the needs of businesses before the needs of the people, it's this: keep taxes as complex as possible in order to create business opportunities to sell products to make it easier again. It's a complete bullshit business that shouldn't be necessary at all. It exists only by the grace of an incomprehensible tax code.

Wouldn't generalise that much in saying my government (UK) is truly representative more than the US, but in the US in general, it seems that whatever business exists there has to be something for the middleman.

Also whatever government function exists must be open to a middleman to take their profit out of it. The US is optimizing for businesses and investors, not citizens.

I wouldn't call the french tax system simple or made to be easily understood. Here is the code for income taxes : https://github.com/GouvernementFR/calculette-impots-m-source...

But I agree the french gov is less into business.


Recently I was filing my taxes in Chile for the first time and it took about 10 minutes because the tax service already knows most of my activities, including stock purchases via a local broker and dividends from them. I only needed to review the form for correctness and press "send".

This is not done because the IRS doesn't have the power to enforce its tax system, and if it reported the information it had to the people, the people could know they can slip away with not paying anything that wasnt properly reported.

First, a transparent system of the IRS would lower revenue. Second, the deductibles system is very complex for the IRS to pre-calculate it, so they are unable to do it.


You didn't cover the most important—and political—reason: it would delay refunds.

2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks.

As the tax refund check is the largest check many Americans receive every year, delaying that payout gets taxpayer advocacy groups up in arms and is tantamount to political suicide.

Incidentally, this same gap is where a bulk of tax return fraud happens—equalling billions of dollars. In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone.

I haven't seen any analysis that such a system would lower revenues (indeed, it would stop billions of dollars of fraud and tax evasion), or that the deductible system is too complex.


> In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone.

This doesn't really pass the smell test for me. The IRS has, what, 7 years(?) to audit your tax return. They can and will do so, and will send you a bill, with penalties and interest included. (Source: this has happened to me, around a mistake I made with self-employment tax the first year I had non-W2 income.)

Not sure how you'd be "long gone", either, unless you're not a US citizen and have since moved out of the US.


That's correct, albeit more nuanced than I was getting.

My point is that they'll "shrug", accept your return, and issue you a refund. Yes, they may come back later and say, "Actually..."

When I say, "you're long gone", I'm referring specifically to taxpayer identification fraud, where you'd file a (fraudulent) return on behalf of someone else (often a dead person or someone from Puerto Rico[1]), receive their refund in the form of a debit card, and "disappear".

In any case, it's way easier to avoid paying someone in the first place than try and claw it back later.

[1] https://www.irs.gov/taxtopics/tc901


Other note that I like to make just because it's interesting: actual audits by the IRS are very rare. They send a good number of collection letter every year, and the collection rate on those letter is very, very good. But those collection letters are categorically not audits, and more "friendly reminders". (Such that any letter on IRS letterhead could be considered friendly!)

>The IRS can't reliably pre-populate a tax return without all the required information

Neither can I.


The difference is that you know whether you have all your required information. The IRS doesn’t know until it has everything.

Example: your only bank sends your 1099-DIV on February 15, so you file your return. You know that no other bank is going to send you a 1099-DIV because you don’t have any other bank accounts.

The IRS doesn’t know this. The IRS only knows that you didn’t get any other 1099-DIVs after they’ve received all 1099-DIVs and no more are yours.


The IRS could develop a system where they list what information they've received already, and you can then validate that this represents the complete set of expected information and request that they go ahead and process taxes now without waiting.

If they then receive more information later that would affect your taxes, they can bill you, or otherwise just go through the same process they would if you filed your taxes incorrectly under the current system.


Ideally, you'd want the IRS to be able to reliably populate a tax return, where all you do it sign it (or make corrections). A world where the IRS is pre-populating a return that may not be correct starts getting tough, even with such a taxpayer-warrant system.

Ideally, yes. If you need to preserve the ability to get refunds earlier than April 15 then one of two things needs to happen:

1. Move up the deadline for companies to submit tax information to the IRS, or

2. Allow taxpayers to declare that the IRS will not receive any more tax information than what they already have, with penalties for lying (presumably, the same penalties as what happens today if you submit your taxes early and you yourself haven't received all the relevant information yet).

Or we could just pay the one-time hit of "you can't get your refund early" and have the IRS process taxes once the existing deadline has passed for companies submitting tax information to the IRS. I say one-time hit because after the first time, any refunds for following years would occur 1 year after the previous year's refund, just like it does today, it would just be at a different point in the year (assuming you even submitted taxes early to begin with; if you didn't, then no change).


#1 - You’d have the entire corporate world up in arms every year.

#2 - Probably the best solution, though kind of waters down the revolution.

#3 - Probably what SHOULD happen, but again, political suicide.


"The difference is that you know whether you have all your required information."

I don't.


Then this won't affect you, as you'll have to wait until April 2nd just like the IRS.

Especially with the tax reform, most folks will be taking the standard deduction. Making the common case easy is still worth pursuing, even if some people will still itemize.

No they don't. There's a gazillion things you could do or claim to lower your tax bill.

Moreover, if you set up all yoyr withholdings correctly then you do not need to file anything. You only need to file if you owe (ie you set up withholding wrong) or want yoyr money back (ie your withholding was wrong)


That is not true. You're generally required to file a tax return if your income is over 12K, depending on your filing status and various other rules, regardless of if you owe money or are owed a refund.

https://www.forbes.com/sites/kellyphillipserb/2019/01/30/do-...


That's the problem. There shouldn't be a gazillion things, and the fact that there are is a major reason why rich, savvy, and unscrupulous people are able to game the system while average people pay full freight.

TFW you learn it's unscrupulous to read the tax code

The three adjectives I mentioned are all independent variables that each afford more tax advantage.

The second argument is about raising all relevant barriers to submitting your tax return. If I were in this camp I’d be pushing for everyone to have zero withholding and carry cash to a tax filing center. Ideally, there would be very few tax filing centers so you would need to travel far and wait in line. My bet is that within the first year of this taxes would be massively reduced. Also, very few people would actually be able to pay the government.

Again, this is just for the sake of argument.


Yeah ,withholdings are garbage from an anti-tax pespective.

Great example of that today is that most americans believe the trump tax reform didnt help them (only 17% believe it helped them) but it literally and factually increased the income for 80%. At least one reason for that is that withholding was reduced, but refunds were reduced as well. Availability bias makes people remember refunds, but not their monthly payments.


It helped them until they expire:

> The law creates a single corporate tax rate of 21%, beginning in 2018, and repeals the corporate alternative minimum tax. Unlike tax breaks for individuals, these provisions do not expire [in 2025].

https://www.investopedia.com/taxes/trumps-tax-reform-plan-ex...


I don't understand what anyone would gain from this. Citizens would be more cash-rich throughout the year, then cash-poor when tax time came. Over the years, people would learn to squirrel away similar amounts to what they're withholding now. Withholdings exist now as a forced savings plan for the poor and a free loan system for the .gov for the upper class.

> My bet is that within the first year of this taxes would be massively reduced.

Making the filing and paying of taxes difficult and painful won't change a person's tax liability, it'll just irritate every citizen until we collectively demand an easier process. If you can't pay, you get penalties and a payment plan. Don't forget that the IRS is a government entity capable of legally charging, suing, etc. with the force of law. Why would having to travel to a payment center reduce someone's tax liability?

I guess I want to know more of the argument, for the sake of argument, because the argument doesn't make sense to me as presented.


The anti-tax group wants to make paying taxes as painful and inconvenient as possible based on the assumption that if taxes suck, more people will be more actively in favor of reducing taxes (as opposed to, you know, making the process not suck).

It's not about reducing liability at all right now, it's about making more people anti-tax.


I haven't heard an anti-tax argument in this topic, but this is a main argument between economists and statists.

Economists will always say that the tax should be explicit, and it should be placed for the people that ultimately pay for it. But pro-taxes people, mainly the government, want higher revenues first, which means putting a tax wherever you can, and that is about what is politically feasible, not about what is economically sound.

The end result is a hybrid of both interests. For example, San Francisco charges sales taxes, known to be regressive and punishing to poor people, but at least you know you are paying them on a ticket. Other countries, like europe, hide the VAT taxes, so it looks like you are not paying taxes at all. VAT reaches 10~20%, sales taxes in SF is around 6%.

Making it explicity DEFINITELY reduces it.


> Other countries, like europe, hide the VAT taxes, so it looks like you are not paying taxes at all.

That is not true at all. In all European countries that I can think of you get to see the whole price, including VAT so that, you know, you can actually tell how much the product is going to cost you. The composition of that price is then shown, often in smaller font. This is true of price stickers, receipts and invoices.

I do not find it the least bit misleading, and would be rather annoyed if a cashier told me to pay more money than the price sticker indicates.


Parent did not say that it is misleading.

The claim was that the tax caused price increase is hidden in the overall price.

And while the reasons for that can be plentiful (even consumer protection, if wanted) one effect is certainly and obviously that it hides the amount of sales tax you pay.

The VAT is usually declared somewhere in the bill.


It is very misleading: do it the other way around and people would complain about the tax constnatly, which is what people do in the US and in Canada.

Whether I'm going through the terrible process to pay $20 vs $20,000 doesn't make a difference. How would a lower tax rate improve anything in this scenario?

You're more likely to pay attention and double check some maths when writing out a $20,000 check as opposed to a $20 check.

The easier and more "automatic" any tax is, the easier it is to hide, and the less people understand that they're paying it. And as they become less aware of what they're paying, it becomes easier to take more.

OP is acknowledging the inverse is also true, and that if "automatic" aspects of the system were removed, people would become much more aware of what taxes they are paying, which would lead to public support for reducing the amount.


> Withholdings exist now as a forced savings plan

A pretty lame forced savings plan that nets you zero interest. I'd rather park the money I expect to need to pay in taxes in at least a high-yield savings account and get a couple percent rather than let the gov't have it.

But this ignores the fact that the US income tax system is actually a pay-as-you-go system, not a "you owe your taxes every April" system. You'll note that if you fill out a W-4 form such that your employer doesn't do much or any withholding, you'll find you owe late-payment penalties come April.


> My bet is that within the first year of this taxes would be massively reduced.

My guess is within the first year, they'd be reformed on administration to put less needless pain on taxpayers. My guess is also that with the needless administrative headaches so visible, it would actually make it politically feasible to pass tax increases that would otherwise be impossible, so long as you also deal with the needless administrative headaches.

Plus, I'd guess that even before that, every single politician attached in any way to creating the administrative headaches would be hounded out of office, or worse.


A better way to do 2 would be to do away with withholding. After a year of that we’d see a radically different tax system.


Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes.

What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea.

What would be nice is if we make the easy filing system but explicitly highlight the amount you paid in taxes compared to your income. Most people only judge on refund amount and rarely check the math on the exact taxes owed.


This is actually how things were done pre WW2. If people were able to budget for it then, why not now? The current system makes filing taxes and getting refunded seem like a reward, it should probably be a bit painful to do your taxes.

Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.


> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.

This narrative is based on nothing. The overall tax rate has been basically flat bouncing between 15% and 20% since WWII[1].

[1] https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...


Income taxes in the US applied to a much smaller segment of the population before WW II than they do today.


A situation worth getting back to, imo.


Which taxes (if any) would you prefer?


The point isn't so much that people are taxed. It's that they are taxed by a monolithic out-of-control bureaucracy that has grown much to large for anyone's good. To add to this, I'd be 100% ok if my tax bill was flipped such that the federal government got what my local government had gotten and my local government got what the federal government had gotten.

I’m curious as to how you think your proposed structure would be significantly different from the structure under the Articles of Confederation. It seems as though we’ve already tried having minimal revenue raising structures for the federal government, learned that such a structure does not work well at international scales (240 years ago - we’re even more globalized now) and moved onto a more productive form of taxation.

The things we are spending money on (besides arguably defense) have next to nothing to do with working at international scale. Furthermore, while I'm not advocating we return to the era of AoC, the power granted via the current Constitution does not bestow the power, size, and scope of things that the current federal government has embraced.

Well, one thing that would simplify things and reduce the number of taxpayers that have to deal with filing returns is to simply exempt people who make less than a certain threshold, perhaps $40k. People making so little money are already struggling, so why do they need to pay taxes, and worse, spend time and money filing tax returns for that?

That's already effectively the case, though the numbers are different. If you're married and make under $24k per year, you don't pay tax. (And other credits that low-income people often are eligible for can increase that number.) It is annoying because you still have to file, and if an employer withheld anything, you have to wait until April to get it back.

I meant that it would be nice if people with low (and even middle) incomes weren't saddled with having to file a tax return. It's a huge pain point for people struggling to make ends meet.

This would probably require some simplification of the tax code.


"becomes too easy for the government to nearly invisibly turn up the tax rate"

Or not.

Source. I live in a country where the vast majority have income taxes handled by their employer. It would still be front page news if income tax rates increased or decreased.

Painful transparency is just pain.


It would be front page news for a day then people would forget and you'd never hear about it again.

Do it in the US and it's front page news on the day and then it's on the second and third pages January through April the following year.


That's not my experience. The UK has automatic taxation but the current government lowered effective tax for most people this month and parties make tax-rate pledges during election campaigns.

That doesn't really disagree with what I said.

How many days is it reasonable for something to be front page news? Personally I'd prefer 365 different headlines then the same one for 4 months straight.


How much are income taxes in your country compared to the US?

Its UK, so between 20% and 45%.

It's actually a little ironic who introduced the idea of tax withholding. It was Milton Friedman and little did he know that federal tax withholding would allow the government to grow larger than ever imagined.

> If people were able to budget for it then, why not now?

A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years.

> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.

Given that it directly affects take-home pay, any significant change is pretty noticeable. Heck, even Trump's very small changes for the middle class were noticed on paychecks slightly, though there was also an unequal decrease in witholding that made people's refunds smaller.


> A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years.

While these may play a small part in why people couldn't budget for it now, I think a bigger part of it is that income tax just did not apply to most people in as large of sums that it does today.

For example. The lowest tax bracket in 1940 was 4% and went from $0-4000. Median income at that time in the US was about $950.


Using the tax brackets to measure how much we pay in taxes is incorrect. There are things like Earned Income Credit and other credits that generally relieve the tax burden completely from lower income earners.

Check out https://taxfoundation.org/summary-federal-income-tax-data-20... for an analysis on 2015 US taxes. The bottom 50% of the US paid an average of 3.59% of their income. MarketWatch claims that 44.4% of Americans pay no federal income tax at all: https://www.marketwatch.com/story/81-million-americans-wont-...


Far fewer people were subject to the income tax at the time. The average Joe who couldn't read well or do much arithmetic didn't have to worry about it. For this reason the Social Security tax was implemented as a payroll tax.

The tax was intended primarily as a tax on the wealthy or middle class, but over time by not adjusting the standard deduction/exemptions, more and more people ended up paying the tax. You could also make the argument that more and more people became middle class.


> Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.

Non-sequitur. Taxes are already seen on every pay stub and tax return. Even if taxes weren't explicitly state, simply having less money is painfully transparent.


If thats your argument, then you must agree to do away with witholding, there is no downside to the rational actor.

Reality is a bit more complex than that.

But if I were to design a tax system, it likely wouldn't have withholding. I'd probably mess around with some weird purely transactional/continuous tax system though.


Here in the UK we receive a letter from HMRC saying how much I'd paid (in income and NI, not counting sales tax, fuel taxes, etc), and where it goes.

https://www.gov.uk/government/news/millions-start-receiving-...


At least if you're using the tax prep software I did it offers a 'payment plan', which seems like an upfront way of asking to have wages garnished post-taxes due, instead of before (like W4?s do)


This is something the IRS does directly to encourage people to file even if they can't afford to pay right then. This helps with cases like self-employment income or capital gains where you can end up owing at the end of the year even with W4 withholding for your primary income stream.

The penalty for not paying is much lower than the penalty for not filling, if you owe.

It's possible your tax prep software does their own version as a middleman, but the IRS offers it directly through the same system that quarterly estimates are paid.


> What happens when you don't have the cash to pay?

You ask as if it would be a new concept to penalize people who don't pay their taxes...

There are clear laws on the books for tax evasion. No need to doubt about what happens.


Forcing everyone to make quarterly estimated payments would lead to riots in the streets.


Nah, no quarterly estimated payments. You just get your whole salary up front and you're completely fucked in April.


It might be more effective if we moved filing to the first week of November.


Doing that in absence of all other changes would likely have a highly positive outcome in the medium/long term (for tax reform at least).

I've always thought it would be better to replace the income tax with a national sales tax. Then, for those who earn less and have to spend a greater proportion of their income on essential expenses, the government would credit them through their employer's paycheck (essentially the opposite of what federal withholding is now). For those who earn more, they would receive less credit or won't receive any credit.


Wouldn't that make the lower class the only ones that had to file anything at all (for the tax credit), put temporary financial strain in place when waiting for credit for purchases and actually make the IRS more complicated and onerous for most Americans?

I get the attempt to sidestep the regressive counterarguments normally in play with sales tax replacement systems, but I think this system would be equally regressive.


> Wouldn't that make the lower class the only ones that had to file anything at all (for the tax credit

They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes. That's certainly less burdensome than even just the 1040 form now.

> put temporary financial strain in place when waiting for credit for purchases

What I proposed would be a credit that would be applied to every paycheck, much like the withholding we currently have applied to every paycheck. So the wait for credit wouldn't be ant longer than it currently is before the next payday (assuming they're living from paycheck to paycheck).

> and actually make the IRS more complicated and onerous for most Americans?

Having this credit calculated based on the reported earnings on the W-2 form and filing a W4 is certainly less complex than just filing the 1040 form. Plus, most people wouldn't have to worry come later this month if they haven't had enough withheld from their paychecks in the last year.

> but I think this system would be equally regressive.

If people with less income are getting a credit on every paycheck and they spend less overall compared to people who earn more and get less or no credit on their paychecks, then why do you believe that the proposed system would be equally regressive?


> They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes.

This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise. Of course, if the conditions it works were always true, irreducible complexity (that is, excluding the complexity that is maintained simply because both conservative politicians and tax-prep businesses have an interest in making tax prep onerous unless you pay for an additional service) for taxpayers of the current to tax system would be significantly less.

It doesn't, even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.


> This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise.

The current W4 form takes dual income/second jobs into account and adjusts the withholding based on that. Changing that withholding to a credit based on income, number of jobs, dependents, etc wouldn't be any worse than it is now, but eliminating the 1040 and other associated forms would definitely be a big benefit.

> even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.

We have tax brackets now based on income level. Would basing a credit on similar income brackets be any different? Or are you claiming that out current tax system is regressive and my proposal wouldn't fix the underlying issue?


Wouldn't that be regressive, in the sense that richer people spend a lower proportion of their income?

Plus they have the means to spend their earnings abroad.

But a fixed credit could offset some of those concerns.


> Wouldn't that be Wouldn't that be regressive, in the sense that richer people spend a lower proportion of their income?

The paycheck credit I proposed should address that. Plus rich p eople definitely spend a lot more compared to others.

> Plus they have the means to spend their earnings abroad

While that's true, they certainly could be taxes on major purchases. For example, I could buy souvenirs abroad without passing tax on them, but I wouldn't be able to buy a car and not pay the tax before titling it here.


There's a couple of big problems here: 1) Rich people spend a lot of their money on real estate, so unless you're going to come up with a good way of taxing that (which we don't do now; property taxes are local), rich people aren't going to be paying much in taxes, and 2) Rich people spend a lot on foreign vacations and travel, which is untaxable domestically for obvious reasons. Sure, they still have to pay titling tax on cars, but when they're spending tons of money on foreign hotels and such, cars are a drop in the bucket.

In short, there's a reason that no other developed nation taxes this way, and they all have income taxes. And all those other nations manage to have relatively simple taxes for most taxpayers that don't require paying H&R Block to file for them.


> Rich people spend a lot of their money on real estate, so unless you're going to come up with a good way of taxing that

The same thing can apply to real estate as it does for cars. That is, a sales tax you pay when you purchase the home. And the sales tax doesn't have to be a flat amount. It could be a greater percentage of the value of the home for homes that are valued at several million dollars as opposed to those that are worth only several hundred thousand dollars.

> rich people aren't going to be paying much in taxes

Isn't that the case currently (compared to what they could be paying due to all the loopholes in the current tax code)? If we focused on taxing transactions as opposed to possessions and income, then the rich could be taxed far more. Invest in stocks? Then you can be taxed when you buy them. Invest in real estate? Then you can be taxed when you buy property, etc.

> Rich people spend a lot on foreign vacations and travel, which is untaxable domestically for obvious reasons.

That is true, but it seems that the US is one of the few nations in the world that states that you have to pay taxes on income you earn outside the country (assuming you don't pay taxes on it in the other country). That said, I think that we should focus on the majority of tax payers in terms of making how they pay taxes easier and hopefully more fair.

> there's a reason that no other developed nation taxes this way, and they all have income taxes. And all those other nations manage to have relatively simple taxes for most taxpayers that don't require paying H&R Block to file for them.

I don't pay anyone for filing taxes, but it takes days to read through all the instructions for the 1040 form and other associated forms to see what applies to me and what doesn't. Personally, if I was able to take care of my tax obligation by just buying various things throughout the year and getting my full paycheck, then I would certainly be happier and not have to essentially waste several days every year figuring my taxes.


What's the benefit compared to what we have now?


Basically, we wouldn't have to go through the process of filing taxes every year, and we wouldn't have to worry about the potential bill and penalties if we didn't have enough money withheld from our paychecks in the last year.

We would have to file to get the proper credit, though, right?

The W4 form should be sufficient (since it's used to determine the credit, if any, you receive per paycheck). You shouldn't need to file a 1040. Your employer would file the W-2 form which would allow the government to determine your income for the purposes of the amount of credit you receive per paycheck.

So any income other than as a W-2 employee doesn't count influence your credit?

This includes capital gains, rent collected from tenants, AdSense revenue.

The right way to handle this stuff is not immediately obvious to me.


Isn't that income also reported to the government via 1099 forms or similar? Do those who make less money typically also have income from sources such as collecting rent or capital gains?

I suppose that reporting does happen or at least could be made to happen under the new system.

I used to make $80k per year in salary(which is far less than most of the top decile in the USA) and in one of those years had over $10k in capital gains. In the same year I thought about buying a house to rent out. I ultimately didn't do it, but if I had, then I would have had to declare the income as part of my tax return filing process. Just as one data point.


I'd say within six months we would be back to the same tax system. People would either get a monthly bill or withholding would be reintroduced. Payroll processors would give people the option to do the withholding. As an experiment we could try to switch to withholding taxes on a quarterly basis. There would be lots of trouble as people hit that first quarter's reduced paycheck.

Sure.. Having had to pay estimated tax before, i say make everyone do it. Then we'd get rid of these taxes like no ones business

Checking math? You must have simpler taxes than I do. By the time I’m done entering various non w2 forms I don’t even know what math I’d check.


I would classify causing mass pain for political gain as purely evil.


Right because filing your taxes is the moral equivalent of strapping the population to the torture rack

He isn't claiming paying taxes is bad, he's claiming (correctly) that lobbying for a complex tax code and to prevent the IRS from offering a free-filing tool because it competes with entrenched tax-filing companies is evil, and it is.

So:

Politics is evil...

Checks out.


Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his biggest point was that his goal was to support a system where people paid as little tax as possible, and this current system we have is just that.


> However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can.

lol. No.

First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations.

Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.


If private tax filing products saved money for their users, as compared to a hypothetical, IRS-produced product, what are these companies worried about? They'd have a clear competitive advantage over the IRS product.


How could they save money, though? The tax code is the same in both cases, and most people's financial lives are not complicated enough to make it any kind of challenge to get the best refund.


Then the conclusion is the same: no reason not to let the IRS provide their own tax filing service.

If complicated taxes are a Republican anti-tax strategy, why did Reagan and the 1980s republicans pursue a strategy of vastly simplifying the tax code?

Doing taxes is a tax -- in hours and fees. Only the wealthiest people who can spend $10K on tax prep to save $100K via loophole deductions, oh.


Simplifying the tax code in the 80s was the public sales pitch. The real strategy was to dramatically cut taxes on the wealthy (e.g. by eliminating the top several marginal tax brackets).

But keep in mind, the Democrats controlled congress, so reform had to gain bipartisan support.


No-one paid the top brackets because the tax code at that point was riddled with ways to generate tax losses that reduced liability. The tax reform really was a good thing (unlike 90% of what happened under the Reagan administration)

https://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986#Passive...


There is openly available IRS data on how many households actually paid highest bracket.

You are wrong that nobody paid it.


This chart doesn’t show evidence of a particularly dramatic cut in effective rates for the top 1% of earners:

https://taxfoundation.org/taxes-rich-1950-not-high/


The top 1% of earners today earn a dramatically larger share of total income than the top 1% in the 1950s.

If taxes kept up, they would have noticeably higher effective tax rates than they used to have.

P.S. The “Tax Foundation” is a right-wing “think tank” (i.e. activists masquerading as researchers) funded by billionaires and corporations.

I would however recommend reading the whole paper they cite, http://gabriel-zucman.eu/files/PSZ2017.pdf

> Government redistribution made growth more equitable, but only slightly so. After taxes and transfers, income in the bottom quintile stagnated (+4%) over the 1980–2014 period while it grew a meager 21% for the bottom 50% as a whole. That is, transfers erased about a third of the gap between macroeconomic growth (61%) and growth for the bottom half of the distribution (+1% before government intervention). Taxes did not hamper the upsurge of income at the top, which grew almost as much as pre-tax.

> The top panel of Figure II provides a granular view of who benefitted (or not) from growth, by showing the annualized real growth of pre-tax and post-tax income for each percentile of the distribution over the 1980–2014 period, with a zoom within the top 1%. There are two striking results. First, the vast majority of the population—from the bottom up to the 87th percentile—experienced less growth than the (modest) macro rate of 1.4% a year. For instance, the 10th percentile declined by 0.6% a year pre-tax (+0.3% post-tax); the 30th percentile stagnated pre-tax and grew 0.6% post-tax; the 80th percentile grew 1.2% pre-tax (+1.3% post-tax). Only the top 12 percentiles of the population achieved a growth rate as high or higher than the macro rate of 1.4%. Second, even percentiles 88 to 98 experienced unimpressive income gains, between 1.4% and 2.2% a year—in most cases less than the macro growth rate of U.S. incomes for the preceding generation, from 1946 to 1980. The only group that grew fast is the top 1%, whose average income increased 3.3% pre-tax and 3.2% post-tax, with growth culminating at +6.0% a year for the top 0.001%. The top 1% has pulled apart from the rest of the economy—not the top 20%.

etc.


Forget Reagan, they claimed they were trying to do it last year. Remember the post card?


By cutting the ability to deduct SALT they made tens of millions of people who would have otherwise itemized do a simple 1040. While not a postcard it did greatly simplify taxes for many people.

That said, most of those people are still going to see it as a travesty because they had to pay a little more (god forbid people rich enough to have thousands of dollars of SALT pay taxes on the income used to pay that SALT).


The idea is not to make the taxes deliberately complex, it is more about the notion of who is telling whom what is owed. A system where the citizen says "hey government, I think I owe you this much in tax because x" is fundamentally different than a system where the government says "hey citizen, you owe me this much in taxes, here's your bill".

In the second situation, the average (complacent) citizen will not look twice at the bill, but rather just pay it and get on with their life. In the former situation, the citizen is forced to have a 3rd party create a statement that says "I owe you this much because x" and because of natural incentives, the company will try to claim the maximum number of [incentives, loopholes, deductions, whatever you want to call them] so that the client saves the most amount of money. Of course the company takes its cut and I'm not arguing that greedy companies are the perfect solution. I'm just saying that there is more to the argument than simply it being a matter of lobbyists getting their way.


> If complicated taxes are a Republican anti-tax strategy...

Republicans only last year substantially simplified tax filing.


about the only simplification on mine was that I no longer have to file that I have a full year exemption on the health care law.

However I do have to file an extra sheet of paper now just to fill out a single line for foreign address that's been removed from the 1040.


Are you talking about the postcard publicity stunt?

* https://www.youtube.com/watch?v=0LhKoefZ2QI


> The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money.

Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers.

The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.


> The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.

I was not asked for such a thing, and used a different preparer this year. I was asked to set a PIN for 2018, but I have never had to use a PIN I previously set. I have always been asked for the prior year's AGI for verification. What software asked you for a prior year's PIN to file this year?


There're at least 12 private companies listed by the IRS who offer some form of free filing service[1]. Direct from the horse's mouth[2] (my emphasis added):

> When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior-year Self-Select PIN.

To be sure, a filer's prior-year AGI would serve the purpose almost[3] as well. It doesn't even matter what "code" is actually required of the filer, only that one is required at all for the convenience of e-filing. The point is it just needs to be something arbitrary enough for free filers to easily misplace record of but is routinely captured as yet another database entry by service providers. That's how repeat customers at the bottom end of the economic ladder are maintained...none of this "maximizing returns" feel good theory that the parent spoke of.

[1] https://apps.irs.gov/app/freeFile/

[2] https://www.irs.gov/individuals/electronic-filing-pin-reques...

[3] maintaining record of prior-year AGI has utility beyond just tax returns--e.g. applying for benefits and/or services which are limited to people below certain income thresholds--but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism


> To be sure, a filer's prior-year AGI would serve the purpose almost[3] as well. It doesn't even matter what "code" is actually required of the filer, only that one is required at all for the convenience of e-filing.

It matters to your statement, which is wrong as you made it.

It matters whether the "code" needed is something the taxpayer made up for this one specific purpose or is a number readily available on the form they are supposed to print and file, and can thus easily retrieve.

> maintaining record of prior-year AGI has utility beyond just tax returns

Everyone should be retaining at least three prior years of tax returns, so anything that helps prod them in that direction is a good thing.

> but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism

More effective mechanism for what? I personally think they should just ditch the PIN entirely and rely solely on AGI, for the reason I stated above.


It's quite apparent that you've completely missed the overarching point of this discussion.

> It matters to your statement, which is wrong as you made it.

What part exactly? You speak from narrow anecdote in your limited encounter with 1, maybe 2, online service providers and have provided precisely zero supporting reference otherwise. I've provided corroborating citation direct from the IRS.

> It matters whether the "code" needed is...and can thus easily retrieve.

No, it really doesn't. All that matters is that it's easily misplaceable or forgotten...the more arbitrary and useless, the better it'll serve the objective role of vendor lock-in in a world where options abound and financial incentives to the filer are the same as a direct consequence of the inherent simplicity of their case filing.

You've also made certain unjustified presumptions on the ease of retrievability. Once upon a time, at least one well known service provider would produce a digital summary of your filing only after the IRS had accepted the return (not to be confused with receiving it), and this personal copy was generated for free if and only if it was downloaded before the tax year rolled over. So if you forget to download it for personal record, they'd gladly reproduce the summary any time in the future...for a nominal fee. In the past, this dark pattern disincentivized e-filing with a different service provider in subsequent years, and it wouldn't surprise me if some still pull this tactic.

> Everyone should be retaining...

What everyone should be doing from a records management perspective is both completely irrelevant to this discussion and disconnected from happenings in the real world, especially as it pertains to individuals on the lowest rung of the socioeconomic ladder. It might surprise you at how many people actually fail to maintain a copy of their vehicle's registration and proof of insurance in the only vehicle that it would be applicable to, or how many people don't even have a copy of their own birth certificate. These are pretty damn important documents, yet surprise: the human condition is real and people are inherently lazy as fuck. That you actually expect the poorest and least educated in society in general to maintain annual records on something as obtuse as tax returns is quite naive. Do you really think the tax return service industry isn't actively exploiting the crap out of basic psychological shortcomings of society to the benefit of their bottom line??

> More effective mechanism for what?

It's the whole point of my original remark: identifying the fundamental mechanisms which are largely responsible for producing repeat conversion in an industry where options abound, the product is free, and little to no differentiating factors of value exist between competing service providers.

At the ass end of the totem pole, the game of repeat conversion isn't about which service provider is going to somehow provide a filer with the biggest tax return as the parent asserted, and to which I disagreed...we're talking about candidates who qualify for free filing; these are the simplest of turnkey cases, hence why the service is offered for free to begin with! It doesn't matter what you think about the pragmatic utility of the self-service PIN because the fact is it's one of two options mandated by the IRS as a requirement to e-file. Some service providers will require you to produce last year's self-service PIN to e-file, some will require last year's AGI...wouldn't surprise me if some require both.


The 22% tax bracket goes well above the median income. Meanwhile, in 2010 less than 15% of people filed the 1040ez.


Bottom end of 22% tax bracket is ~$43k/annum based on 2019 Notice 1036...that's a $23k margin before hitting the $66k AGI threshold for free file offerings.

That number is more like ~25mil, or just over 18% in 2017; +4.6% over previous year[1].

EDIT: I suppose I should probably ask what point you were trying to make? I didn't quite track where you were going with all that.

[1] https://www.irs.gov/pub/irs-soi/17in01pl.xls


Except the tax preparation industry must be taking a significant enough cut to make it lucrative to spend money lobbying. Is that cut smaller than the total extra tax that would be paid due to mistakes in the auto filing system? I'm skeptical.


Tax preparers usually file federal taxes for free while charging a fee to file state and local taxes. That's where they make their money.


I suspect (but don't know) that they make more off of the various up-sells for people with more complex filing situations. Also, the free filing is marketing. It's their foot in the door. If something like rapid return happened, they would lose that strategy.

So basically even if the IRS wanted to create a system, they would be competing with a free system anyway?

And the IRS wouldn't go out and do a system for each state.


If republicans wanted to make a system where people would save the most money we'd just reduce the tax loopholes and simplify the system - the system we have now actually only has the wealthy pay the least money.

Some would say the republicans think this is a feature.


This is not true. There are tons of bread-and-butter deductions for the middle class. If you do a cross country comparison of taxes, the biggest difference between the US and Europe is not the rich. It’s the folks making $40-100k, where our low brackets plus tons of deductions (mortgage interest, child care, child credits, etc.) drive the effective tax rate way down


Folks in Europe comparable to the ones you are talking about here (i.e. the 50th–85th percentile) are generally much more financially stable/comfortable than in the USA.

Varies a lot from country to country, but in general they have e.g. more-or-less functional healthcare systems, better parental leave, more vacations, easier access to childcare, stronger worker protections, ....


A lot of what you mentioned on our side of the pond is paid for by our social security contributions, not from our taxes though.


Social security contributions are a tax, just one earmarked for a specific budget rather than the general fund.

You can't really compare tax rates without considering other mandatory costs like health care. Include health insurance and the numbers don't look so good for the USA.


You're not wrong, but it should be noted that in some countries (DE, CH) people also pay health insurance premiums to private companies as well. It's just in those countries health insurance is non-profit (unlike the US).

Just a note that the mortgage income deduction, which is a travesty, benefits high-earners far more than low-earners; something like 70% of its benefits accrue to the upper class.

How do you differentiate deductions from loopholes?


Easy. Any deduction you don't use is a loophole, legislative compromise of yesteryear or not.

> The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.

I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.


There's a few companies that are allowed to efile that do very little besides convert the IRS paper forms to web forms and do the arithmetic for you. They tend to be a lot cheaper than TurboTax/H&R Block. I've been using one of them (OLT) the last two years has worked well enough for me and efile processes a lot faster than paper.

I also believe people should be filing their own taxes and understanding how the system works. I've owed money the last two years by underestimating self-employment taxes, so this year I've set up a spreadsheet that tells me how much I'll owe each quarter with all deductions built in and a tiny bit of overestimation.


I make sure to mail them in so uncle sam has to waste his money paying an actual person to input my data.

It’s worth it to me to pay a couple hundred dollars not to deal with it it and have someone else's signature on my return - that being said I have a back of the envelope spreadsheet that estimates my tax liability using about 5 inputs and is usually pretty accurate vs my prepared return

Are you under the impression that having someones signature on the return means you do not owe tax penalties if they do it wrong? If you read the copious amount of detailed instructions the irs provides, you'll soon find that thats not the case


Conspiracy theory: what if IRS (the Govt) when designing the free software with all the options--thousands and thousands of pages https://www.politifact.com/missouri/statements/2017/oct/17/r... --lean on the side of the government when in doubt? Intuit, HR Block etc have some sort of guarantee and incentive to save users, IRS not so much. Doesn't even have to be a conspiracy theory ("We need the money so let's make them pay $xx Billion more this year") just the way incentives work. Maybe simplify the code first?


The IRS outsources the development of the free software.

All the IRS does is publish the tax code in a specific XML format. MEF (mechanized e-file) is the interchange specification. It's rather a shame there's not more open source effort around tax filings...


>It's rather a shame there's not more open source effort around tax filings...

This is one place where FOSS just isn't going to work. Let me ask you: are you willing to invest a lot of your time and effort into contributing to such a project? No, I didn't think so. Me neither.

Here's the problems with it: 1) It's not very fun. Volunteer coders don't want to work on something as deadly-boring as tax filing. 2) It's USA-only: lots of FOSS volunteers are outside the US. They're not going to spend their time on a tax tool they're not going to use. 3) It's constantly changing. The tax code changes every single year. Lots of FOSS projects become mature at some point, and only get maintenance or occasional feature additions. Most do not work according to a schedule. The IRS requires you to file your taxes on April 15, and they release the changes to the tax code a certain amount of time before that, so a project would only have a certain window of time to incorporate all these changes. 4) The risk to users is high, since there's no one really willing to guarantee this product. Of course, bugs in tax-prep software don't absolve taxpayers, but there's still a certain appearance that a big company standing behind a product makes it safer.


maybe not exactly the same but it is aguable if the majority of people had to write check to pay their taxes instead of having their taxes auto-deducted by their employer they'd push much harder for lower taxes and less government spending

it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k)

PS: don't have an opinion if this would be a good or bad idea. can see it both ways


Why is it "arguable"?

What you suggest is exactly how it worked before 1943 and there was a massive expansion of government, government services, and tax rates between 1913 and 1943.

The actual historical evidence strongly suggests this theory is spurious and easily dismissed.


Congress sells out the american people. Congress doesn't work for the American people. Congress works for moneyed interests (corporations). This is congress aiding crony capitalist theft


Oh man, I've had government provided automatic filings for ages now (Finland). US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems). Or have I completely misunderstood what's going on here?


It's because historically our society has treated businesses, their leaders, and the free market as churches, priests, and God, respectively. They've brought us much wealth and power, but putting restraints on them or getting in their way at all are cardinal sins in American politics. Politicians can take bribes and then package the resulting deregulation with euphemisms like "small government" and "supporting the free market". The most brilliant part is how they serve huge corporations, but then sell their actions as supporting all (read: small, too) businesses, even when they don't.


seems like the antithesis of small government to have it explicitly bar itself from providing free services helping its citizens pay for said government. the latter should be as seamless as possible given that failure to comply results in adverse government intervention.


Small indie companies, like Blizzard.


More like, corporate interest > citizen interest


Corporate pressure is important but the fact that people in the tax preparation industry form a decently sized and committed voting block is even more important.


We’ve had great digital government services In Sweden for years. I did my taxes yesterday in 3 minutes from my laptop, digitally signed and submitted.


I live in Germany, which is said to have one of the most complicated tax systems known to man. If I had one (realistic) wish for a German government, it would be to do it like Finland.

Sadly there is a whole branch of people working on this, without any interest to make it easier..


Norway is very simple too. Most people can just do nothing at all. The way it works is that the tax authority creates a proposed tax record and notifies you by SMS or email or both or even by letter if you ask for it. If you agree that it is correct you don't need to do anything at all, otherwise you log in to the web site and adjust whatever needs adjusting in a bunch of simple forms.

The tax authorities also have a duty to calculate the taxes in the way that benefits you most.


In Portugal, of all places, it’s just a web form. This year it took me a grand total of 3 minutes to review all info and less than 10 clicks after logging in.


Just a few weeks ago, I logged into Elster, opened the pre-filled tax return (Belegabruf) and sent it. Instead, I could have filled the short and simple Vereinfachte Steuererklärung by hand which covers all common cases.

Most workers don't need to do anything to get their overpaid tax back thanks to the Lohnsteuerjahresausgleich.

They need to work on their marketing though.


Aldi (or Lidl) every year sell a Tax Prep software for 5 euros. Our in-laws buy a copy, install it, then pass it on to us (same key works on multiple PCs). The software's UI could use some...clarity in certain places but it is incredibly full-featured.

We've been happily using it to file our German taxes for years.


In the US, legislation always goes to the highest bidder.

Keep that in mind when reading stories about the US government, and it all makes a lot more sense.


Yes, the US really values the middleman. There is something to be said for it, since middlemen can compete and innovate. In computer science, this is called indirection — it provides more flexibility and without it, you have one-size-fits-all solutions. In the real world, you have for example Uber/Amazon/Apple /Google/Facebook squeezing providers, due to their monopoly powers.

What happens in the real world is that the doctors aggregate (AMA, ADA) and then the patients aggregate (insurance companies) but it never quite gets to a complete single buyer/payer on both sides without government action.

There is also the argument for how many jobs will be lost in X industry if we replace it with a more efficient solution. Here is a recent video of a famous paleoconservative debating it with a famous neoconservative in the US: https://m.youtube.com/watch?v=YFMcq0Vzsb4

Usually the solution is social democracy - letting the private markets operate but having the government run a single payer system for the basic level of service so sellers compete and buyer’s don’t, and everyone is entitled to the basic level.

Single payer can achieve far lower prices, as can eliminating IP protection. But after a while this may have a deleterious effect on R&D (unless you eliminate the IP protection).


The question I have is whether a government provided automatic filing would actually be cheaper (or more effective) than say, Turbotax.

I see a couple of ways in which it might not be as favorable:

1. It costs more than $100 per tax payer per year to implement (about the cost of Turbotax). However the flat $100 or so that most people pay to Turbotax can be seen as a kind of regressive tax.

2. It is less effective at finding the biggest possible return.


>The question I have is whether a government provided automatic filing would actually be cheaper (or more effective) than say, Turbotax.

The question is valid, but the numbers do not add up. TT asks ~$50 for federal return. If everyone in US used the service, the cost would amount to over 16 billion dollars. That is more than the entire IRS budget[1] right now.

[1] https://www.irs.gov/statistics/irs-budget-and-workforce


On the other hand, the IRS generally already does many of these calculations, since they receive many forms of income directly (W-2s from your employer, 1099-INT from your bank, etc).

The better question is how much it costs TT to operate returns, and how much of that $50 is profit-taking.


Every single living person does not file a tax return. You can't just multiply the cost of preparing a return by the population.

It's an order-of-magnitude estimation. Turbo Tax offers multiple products with different prices. Even if you plug in more exact numbers and use the cheapest product you get a hefty sum of 9 billion (150M individual returns * $60). IRS total budget is 11.5 billion and they do way more than just process returns.

There is no way an e-File system run by IRS would costs additional 9 billion dollars per year. They already do most of the calculation internally.


First, adding a host of third party’s increases the risk of data breaches for minimal benifit.

Anyway, the government needs to collect and verify all information anyway. So, the sum total of TurboTaxes value is creating screens to collect information. If they can do a better job than the government then let them charge for it. But, by banning the free option they are saying they don’t actually create value.


>the government needs to collect and verify all information anyway.

That's a great point. IRS already has most of the information and infrastructure to fill out your taxes. Third-party solutions have to build large chunks of the same thing from scratch.


> Anyway, the government needs to collect and verify all information anyway.

Eventually. Not necessarily by the time you file, and not necessarily on every return. Remember, the IRS only audits a small fraction of returns for accuracy. Auditing every return would be a much bigger job than they currently do.

I'm not saying they shouldn't, but it isn't as trivial as a lot of people here seem to think.


The IRS does basic verification on all returns. An audit is a more extensive check, but when somone makes a math error on a paper return they will end up getting a bill.

Doesn't the government already need to calculate what everyone has to pay so it knows when someone hasn't paid enough? The IRS probably already has the same systems being developed and maintained to keep track of everyones taxes, the system would need an user friendly public interface, but it wouldn't have to be developed from scratch.

The idea that some business gets to ban the government from offering a service and some people argue that it's good for eveyone is totally absurd to me.. from a country where I log in to our version of the IRS, where my salary information is pre-filled, I only need to add stuff if I had some other income.. and the system is totally free to use for everyone, and most people just spend about 5 minutes once a year to declare their taxes.


> Doesn't the government already need to calculate what everyone has to pay so it knows when someone hasn't paid enough?

It needs to be able to (eventually), but it doesn't. Setting up a system where this was possible requires some significant changes to the tax code, process, and the IRS itself. Of course, this shouldn't stop us from trying.


But TurboTax has many other incentives besides making tax filings more efficient, including reselling user data, targeted ads for their own products, they might even have reasons to nudge you towards certain options and dark-pattern others.


Turbotax jacked their prices up quite a bit this year as well.


Same in the Netherlands. These types of backwards laws make America look bad.


On the other hands, Americans are much less likely to commit tax fraud than other countries, so perhaps the netherlands should encourage more people to report their sheltered assets?

https://www.theatlantic.com/magazine/archive/2019/04/why-ame...


>US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems).

I wonder what extent this is decided by how we vote. As long as voters pick the politician who prioritizes the middle man and gets their campaign contribution is selected over the politician who prioritizes the public but whose opponent gets the middleman's campaign contribution we will continue to see this behavior. The moral of the story is to look at the voters' actions and not their words. They select candidates based on oftentimes harmful criteria.


Is the public really to blame for this? Is there an actual broad constituency that doesn't want this, or at least who trusts an interest group to represent them and who doesn't want this?


Want and behavior aren't always aligned. Does anyone want to be unhealthy? Yet many people act in ways that makes them very unhealthy, some of whom have the ability to change it but choose not to.

How much does someone want something if they aren't willing to change their behavior to increase the chance of getting it?


Well, first of all, lobbying for good laws is a public goods/collective action problem, so it may not be optimal to spend money on pursuing it even if you are the "go getter" type.

Second, I was just addressing the claim that politicians pass these laws in response to broad support, by questioning whether such broad support actually exists, even if it doesn't translate into lobbying (since the implicit model i that politicians will still care about it).


I don’t want this? We are very bad in America about hiding taxes, e.g. through unfunded mandates and mandatory cross subsidies. We don’t need to do anything more for people to have even less insight into what the government actually collects from their paycheck.


That seems more like an argument for a different interface than against the service entirely -- that would justify making it so that you still have to see and sign a form that shows how much you're paying against what earnings.

I think you're falsely equating (as do the Norquist types)

a) "the financial burden of the tax should be explicit" (which is fair) and

b) "the paperwork should be unnecessarily burdensome" (which is sadistic).


Can someone explain how rayiner's argument goes against the idea of IRS-prepared taxes itself rather than the UX of the implementation? It sounds like he’s just trying to be devil’s advocate (to put it nicely).


Why are Norquist types inclined to impose even more burden on what the tax burden actually is? Even if the IRS calculated your taxes, you'd still get the bill to pay it. That's already more than could be said for payroll withholding, which is the primary "unseen" tax.


I don't know! I actually strongly lean toward the Norquist "taxes suck and need to be lower" approach. But for me, that was about making sure people are aware of the rate and amount. Making it painful to file is just sadistic (as I might have suggested before).

As I always like to say, we are getting the government we deserve.


Same thing here in Norway. We get the tax return forms pre-filled and if we want to make changes it can be done on a government web page easily. Capital gains, most deductions and assets/loans are also registered automatically.

If you have no changes then you don't need to do anything at all.


Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?

In the US, the IRS supported an e-file system that basically allowed electronic versions of forms to be submitted, but it was arcane enough that a cottage industry developed to assist users in prepping documents for e-file.

How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?

Even if the US went to an IRS-pre-filled return, there would still be room for third-party tax software that improved on the user experience, so I think if the IRS supported direct filing of taxes it would also be good to preserve the ability for software or designated parties to submit information on the taxpayer's behalf.


"Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?"

The taxation has been pretty automated for a long time.

As a regular taxpayer nowadays I just get a paper form that describes the precalculated taxes, and if they are fine, I don't have to return anything. There are some pre-deducted things, and if I have anything add to that, I'll then just either fill in the paper form or the electronic equivalent.

So yes, there was a basic "semi automated" scheme that has been steadily improving and now the tax authority has just added a web based interface for feeding data into it.

About filling the taxes on behalf of someone else -

There really is no need for tax preparation services unless you are business entity (in which case you likely already have your own accountant doing it) or the wealth is considerable enough to merit actual tax planning. Otherwise the tax code is so straightforward and simple that anyone can do it. If there are some questions, you can always contact the tax services and they will usually offer helpful and professional advice on how to proceed.

So there is no market for that kind of thing in the large. The "defaults" provided by government help in this regard as well.

I kinda understand the adverserial positioning of "people vs. the government" in the US - it just sounds to an outsider the main reason not to make things easier is because that would eradicate business from turbo tax. Kinda like the government mandated you need to own a useless dead parrot, that you can only buy from Parrot Co, that needs to be kept in the refridgerator in an exact position mandated by the law.


> Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?

The "tax return suggestion" was introduced in 1996. So it predates all electronic filing.

Filling tax returns via a web service became available in 2008.

The first (non-web) electronic tax filings were made in 1997, but those were for corporate returns. Not sure when it became available for income tax returns (that use case is rare here).

Source: Finnish Tax Administration https://www.vero.fi/contentassets/09b6f07e61dd490ab0caabba8e... (Finnish PDF)

> How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?

Electronic tax filing using files is available: https://www.ilmoitin.fi/webtamo/sivut/Esittelysivu?kieli=en

You can use an online service to authorize another person to file your taxes: https://www.vero.fi/en/About-us/contact-us/efil/authorisatio...

The other person can then file using paper, file, or web.


I would love automatic filing in France. The process isn't that complicated, as long as it's just a single income. I dread the day where I'll sell my shares or qualify for a tax-return, because it's not going to be fun.


Is this similar to PAYE or do you actually have to submit a tax return but it's pre-filled for you?

In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.


>Is this similar to PAYE or do you actually have to submit a tax return but it's pre-filled for you?

As long as your PAYE is like Ireland's (ROI) PAYE, then the American's system is far-removed from it.

Even though their tax revenue office gets the reports from businesses for how much they were paid and how much taxes they paid, the Americans still need to fill out a tax form - every year - to repeat the same information (it's an added benefit for the prison system, in that mistakes on tax forms can equate to jail time). They get a form from their employer (which their tax office also has), that contains all of this information.

>In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.

Aye, it's the same in Ireland (ROI). You can just call-up or email Revenue and they check if you've overpaid, by how much, and they just send you the money. No forms. No bullshit. No threats of jail time. It's pretty deadly[0].

You want nothing to do with the Yanks' tax system, trust me.

[0] - https://www.whygo.com/ireland/irish-slang-deadly.html


> Even though their tax revenue office gets the reports from businesses for how much they were paid and how much taxes they paid, the Americans still need to fill out a tax form - every year - to repeat the same information (it's an added benefit for the prison system, in that mistakes on tax forms can equate to jail time). They get a form from their employer (which their tax office also has), that contains all of this information.

You seem quite ignorant of the U.S. tax system. There are no criminal penalties for mistakes on your tax form. (the IRS doesn't even have prosecution authority--all it can do is collect evidence of a crime, and refer the case to the Department of Justice.)

And your tax return doesn't just "repeat the same information" as your W-2s. For example, the W-2 reports income on an individual basis, while married couples file a return as a single unit. The amount of tax owed will generally be different for married couples versus the amount of tax withheld. (And there is no federal government database of marriages the IRS can use to match up things on the back end.) The IRS also has no idea how many children you have living with you, and can't give you the appropriate credits for that.


>There are no criminal penalties for mistakes on your tax form.

Odd, I thought you faced the penalty of perjury[0]?

[0] - https://www.forbes.com/sites/robertwood/2017/02/15/fudging-y...


Technically, the social security administration gives out social security numbers. But that aside, more than 40% of children don't live with both biological birth parents: https://ifstudies.org/blog/more-than-60-of-u-s-kids-live-wit.... So your automated calculation will get it wrong almost half the time.

> All of those tax credits you mention are given by our respective tax agencies when we become employed and/or we change status with the tax agency and/or we obtain a new job (depending on how you avail of tax credits).

There are many tax credits in the U.S. that aren't tied to changes in job status. Every year, I have to dig up receipts for what we spent on daycare, what we spent out of our HSA accounts, etc. The government doesn't track any of that.

> Odd, I thought you faced the penalty of perjury[0]?

Perjury requires willful (i.e. knowing and purposeful) false statements in your tax return. I guarantee you that if you make false statements using Ireland's online system for claiming tax credits, you're under penalty of perjury as well.


>Every year, I have to dig up receipts for what we spent on daycare, what we spent out of our HSA accounts, etc. The government doesn't track any of that.

Aside from the daycare costs (as an aside, creche in Ireland is quite decent[0]), isn't all of that is still reported to the IRS? Your HSA isn't sitting in some dark corner that the government doesn't know about, ever since the Patriot Act, yeah?

I'm fairly certain it is reported to the IRS because Americans find getting bank accounts overseas quite cumbersome because your government strong-arms agreements that demand that Americans' overseas bank accounts are reported to the IRS. Surely, more domestic reporting shouldn't come as a surprise or shock.

>I guarantee you that if you make false statements using Ireland's online system for claiming tax credits, you're under penalty of perjury as well.

What do I get for a broken guarantee[1]? :)

This batering back and forth really only arrives at the conclusion that I originally posited:

Those of us in the PAYE system[s] would abhor having to do things the American way and this wasn't meant as an affront (and I apologise if anyone may have taken it that way).

Our tax agencies are responsible for keeping track of these things and the only things we're responsible for is reporting status changes and/or providing receipts for other proofs of burden (such as Independent Contractors who file as Directors of Umbrella Corporations and need to write-off business expenses).

[0] - https://www.citizensinformation.ie/en/education/pre_school_e...

[1] - https://www.revenue.ie/en/personal-tax-credits-reliefs-and-e...


The IRS does not in the ordinary course receive informational returns about people's bank accounts. They do receive informational returns about interest generated by bank accounts (and other places), but they don't get e.g. transaction lists by default. Google "1099-INT example" to see one of these informational returns. They're minimalistic and they are minimalistic precisely because a large portion of the US polity hates the notion that the IRS would have arbitrary read access to people's financial lives.

You can reasonably assume that the IRS can use subpoena power to compel a US financial institution or foreign financial institution to surrender records to it. This is an oppositional process and they use it relatively rarely next to the total universe of taxpayers and accounts, generally only after they already have evidence of hinkiness and want to quantify unsurveilled amounts and/or locate assets.

These are not secret facts about the world; the operations of the IRS are exhaustively public (trust me, I have weird hobbies). People on a programmer-dense message board should have more weight for "While I understand that X would be accomplishable via an API if it existed, it is possible that that API does not factually exist" than they often do.

Also, the number of times someone in the financial industry typed in git commit -m "tldr Patriot Act compliance" is orders of magnitude below the number that HN comments routinely predict.


No, your day care does not make itemized reports of potential deductions for all its clients to the IRS.


Do you live in the United States? It doesn't sound like it. This is not the way things work.


A tweak to W4 could easily encapsulate planned filing status.

Tax returns really do take a huge majority of repeat information and a tiny amount of additional metadata.

There's no reason for the vast majority of Americans this couldn't be automated.


Google already parses purchasing information from emails.

Alphabet Taxes doesn’t sound too bad.


You are correct. US Congress (most of the time) legislate in favor of whoever pays more.


This makes me laugh a lot, even down here in Mexico have automated, electronic, government provided tax filings.

My tax filing is as easy as: Login, verify, click a button.


We can file ours online in the UK, it's easy to use and pretty reliable (now).


Also, AFAIK, most people don't even need to file because HMRC handles the simple situations automatically (I've never had to do a return, for example.)


> the benefit of the middleman over the benefit of the individual citizen

I think you put it just right. Health and Education are the two areas this is bought up, but the taxes are a good example.


In Sweden too it’s super easy.


For ages, it's for how long exactly? 10-50 years of more or less "success" history is nothing. It doesn't prove it's save and works in a long run. Also consider scaling. 5.5 mln in Finland, 22 American states have more than that.


(in the US) I would trust the government provided tax-return software to provide the smallest refund possible. It will also take $50 billion and 3-4 years to develop, and it will be down from April 1st to May 7th due to overload on the system. Your confirmation emails won't come through, and the database will be hacked and all records leaked within the first 18 months of operation.


Then you can go ahead and use the option to check them for things they forgot. You can also probably use an option to file yourself, which might be the case if you have complicated taxes. The great majority of Americans, however, are pretty poor and qualify for few tax breaks that cannot be done automatically. All they need to do to encourage the automatic filing would be to consistently prove to be accurate.

The database will be hacked and all records leaked within the fist 18 months of operation

You know, the same information they need for most people's taxes is already in the IRS database.

I'd also like to say that I've had automatic filing for my Norwegian taxes since moving here to Norway, and always have to file American taxes manually. The emails get sent to a secure email system which you can check. Letters get lost and stolen as well, by the way. The system doesn't have to go down either - I don't even have to interact. I just get the email telling me I can check taxes, but it is not required that I do. (Safer to do so in case of owing). They tell me I'll get my money in a 3-month timeframe. It goes to the same place paychecks go to, though I imagine if anyone gets checks they take longer, as do the people that manually file.

I'm also pretty sure that the reason it would be expensive is that the government isn't exactly known to keep the IRS fairly current and the government isn't really set up to handle the digital age well. But then again, the records are already there. They already plan on getting refunds. And easier filing means more people do tax returns... and it catches more people that owe. Oh, and you won't need as many people working at the call centers because fewer people will need to actually calculate their taxes. I'm gonna guess it would be a net benefit and profit within a very short amount of time.

The main people that do badly with this sort of system are the tax filing companies along with, I'm guessing, some accountants.


We used to have a telefile option where you spent ten minutes on the phone punching in numbers off your W-2 forms and then you wrote down a confirmation number. It only worked if you had a really simple tax situation, but it was so easy. I assume it was killed by the same lobbyists.



Some flash website sites from the government don't do much to address actual concerns.

Weak security: [1]

Cost overrun: [2]

Inability to design a highly available website From [3]: > The basic architecture of the site, built by federal contractors overseen by the Department of Health and Human Services, was flawed in design, poorly tested and ultimately not functional.

[1] https://arstechnica.com/information-technology/2015/06/epic-... [2] https://www.theatlantic.com/politics/archive/2014/07/obamaca... [3] http://swampland.time.com/2013/10/24/traffic-didnt-crash-the...


Then vote a better government.


Why do you believe voting works? Remember when people voted for BRexit?


I believe "Voting doesn't work" works very well for preserving the status quo. Don't you agree?


If voting is shown to not work, I'm not sure how you would peaceably replace such a system, but that doesn't mean it shouldn't be replaced.


> voting is shown to not work

I'll grant that voting works only sometimes. And when it does change things, it's often not everything we want changed, and definitively not fast enough. But it can change things. If it didn't, voter suppression would not exist[1]. (One of the ways of suppressing vote is promoting voter apathy, by the way).

The only sure guarantee is that not voting doesn't work.

> peaceably

Even something as seemingly mundane as voting carries a lot of risk of physical violence in some places. That's how voting was in the US in the 1870s[2], if you were black. It might sound like a far away past for certain US citizen, but I (an European) own a house older than that.

[1] https://en.wikipedia.org/wiki/Voter_suppression_in_the_Unite... [2] https://en.wikipedia.org/wiki/Disenfranchisement_after_the_R...


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