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TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) (propublica.org)
807 points by anigbrowl 70 days ago | hide | past | favorite | 199 comments



The leaked internal slides from Intuit are really disgusting [0][1].

From the article:

> Internal presentations lay out company tactics for fighting “encroachment,” Intuit’s catchall term for any government initiative to make filing taxes easier — such as creating a free government filing system or pre-filling people’s returns with payroll or other data the IRS already has. “For a decade proposals have sought to create IRS tax software or a ReturnFree Tax System; All were stopped,” reads a confidential 2007 PowerPoint presentation from an Intuit board of directors meeting. The company’s 2014-15 plan included manufacturing “3rd-party grass roots” support. “Buy ads for op-eds/editorials/stories in African American and Latino media,” one internal PowerPoint slide states.

I'm always stunned and disappointed at how easy it is to game the American political system. I say that with great respect for this country and the freedoms it affords me, but those freedoms mean little if skullduggery like this goes on.

[0]: https://www.documentcloud.org/documents/6483065-Intuit-board...

[1]: https://www.documentcloud.org/documents/6483061-Intuit-Turbo...


Imagine what goes on that we don't even know about


Advertising is an attack on human psychology. Children need to be educated to reason beyond the surface to protect themselves from the ubiquity of modern-day advertising.


Advertising is a cancer on modern society. Not only it messes the psyche of individuals, it also ties businesses in wasteful arms races. We need more than education, the industry needs to be reined in with a regulatory hammer.


Hypnotism is banned in UK television. Advertisment is not that far off from hypnotism, and needs to face similar consequences. Promote your product all you want, but don't exploit human pyscology to manipulate people into doing what you want.


On the Internet, it's a literal attack on your machine (slows the page down, incurs extra bandwidth, and can inject malware). :D

TV commercials back in tha day didn't have any of that, although nowadays they can play ultrasonic sounds that apps on your phone listen for to facilitate analytic tracking.[0]

0: https://arstechnica.com/tech-policy/2015/11/beware-of-ads-th...


That may be, but my understanding of the comment you are replying to is that it is non-advertising techniques which are distasteful.

> manufacturing “3rd-party grass roots” support

...is effectively trying to achieve advertising goals outside advertising channels using deception - astroturfing, etc.


"I'm always stunned and disappointed at how easy it is to game the American political system"

Isn't that the point of a political system without hegemon? And open political system is not one that is fair to all. It is a system that is open to gaming by all.

A democracy and a "completely fair system" are completely different things. I don't think anyone has any idea how the latter would work.


If a political system can be controlled by using power or capital to change political outcomes, without relying on the will or consent of the people, it's hard to argue that that's democratic.

In that case, the hegemon is a faceless allocation of capital and dark interests as opposed to a strongman. This setup is probably better for individual freedoms than a dictatorship, but "results may vary" for anything else. I don't think a plutarchy is an open political system; a plutarchy is, by definition, closed to all without obscene amounts of capital, or access to it. The Wikipedia article on plutocracy is an interesting read on that [0].

There is a gray line, like Prop 22 in CA, where Uber, Lyft, et al. convinced voters to vote yes on Prop 22 by spending over $220 million on ads and campaigning [1]. Does this constitute a plutarchy? I would say no, because the voters were still the ones who chose the outcome! That's a big difference from a backdoor deal with a politician or inviting a them to a $43,000 "lunch" which will change their mind on your issue. However, it does highlight another issue — that of political advertising — but that's something for another time.

The main issue here is that the US did not adequately plan for mitigating the influence of money in politics. The NY Times ran an article highlighting the shock and horror with which the British see the American political system [2]:

> Justin Fisher, a professor of political science at Brunel University London, said the American system was seen in Britain “as the worst of all worlds,” focused on “raising money and not about getting ideas across.”

Living in Switzerland, I came to the conclusion that their political setup is demonstrably better than that of the US (though also, arguably, more workable because of Switzerland's small size). In Switzerland, it would be nearly impossible for a lobbyist to pay a Swiss politician to make an important policy change and get away with it. And in most other Western European countries it would be a scandal/make big news if a politician got €50k to change their mind on something.

In the US, that happens every day.

[0]: https://en.wikipedia.org/wiki/Plutocracy#United_States

[1]: https://www.sfchronicle.com/business/article/Here-s-what-you...

[2]: https://www.nytimes.com./2015/05/05/world/europe/britains-ca...


  the voters were still the ones who chose the outcome
But it doesn't get on the ballot in the first place without Uber, Doordash, etc. spending millions in paid canvassing.


Fair point, and I don't think that was right.

I was just trying to differentiate between voters actually voting on an issue vs. a politician changing their position without any input from their constituents.


And it is relatively inexpensive.


And a good investment. For example, an 86,000% return on $43,000 in campaign donations: https://truthout.org/articles/you-too-can-buy-a-congressman/.


One of the major points I took away from Lessig’s Republic, Lost is that these campaign donations trackers are unable to factor in the credible threat of a donor funding an opponent.

The dollar amount may be relatively low, but the value to an incumbent politician is that wealthy stakeholders will not fund a challenger.


> One of the major points I took away from Lessig’s Republic, Lost is that these campaign donations trackers are unable to factor in the credible threat of a donor funding an opponent.

They also aren't able to factor in independent expenditures (especially direct independent expenditures), or facilitation of donations (bundling) as opposed to direct donation, as well as the credible threat of doing those things, as well as direct donation, in the opposite direction.


That's a very interesting game-theoretic view of the issue. I've got to read that book, thank you for the recommendation.


I was taken aback by this the most when I saw some lobbying dollar amounts earlier this year — I don’t recollect the specifics but most are probably rounding errors for multi-billion dollar Fortune 500 companies, let alone trillion dollar tech juggernauts.


Sometimes it's just depressing to be sold out so... cheaply.


They're selling out because companies threaten to give your opponent millions. Take the $50k and do what they want or you'll be out of a job permanently next election


Shouldn’t that tell you something? What kind of high return market attracts so little investment?


Sorry I don't understand what you're implying -- can you expand on this?


This[0] was an interesting read back '19 comparing total political spending with the size of the almond industry. It's a weird comparison.

[0]https://slatestarcodex.com/2019/09/18/too-much-dark-money-in...


It's easy to buy central government.


Easy is not the word I’d use. Lucrative maybe. Not easy.


Although it's cheaper than you'd expect.

> Well, according to www.opensecrets.org, oil, gas and coal companies donated at least $43,000 to Zincke’s campaign. That’s more than 10 percent of Ryan Zincke’s total contributions from Political Action Committees.

https://truthout.org/articles/you-too-can-buy-a-congressman/

I've seen other articles which back this up for other lobbying too: tens of thousands, not millions!


I don’t understand. You think a pro-coal industry position is, what, unpopular with voters in Montana?

Your interpretation of the facts seems to be based on the preconception that voters in Montana have an antagonistic relationship toward the coal industry in the state. Such that there would be a conflict and companies would have to lobby the elected representative to do something they want at the expense of what is constituents want. That’s not what’s happening. Montana voters know where the jobs come from. And in fact, polls show higher trust in corporations than the government: https://www.wsj.com/articles/more-trust-in-business-than-in-...

Read Gallup’s polling on the issue. Americans are incredibly suspicious of government and government regulation: https://content.gallup.com/origin/gallupinc/GallupSpaces/Pro.... Just 23% of people say there’s “too little” regulation of business. 45% say too much.

Now think about the $43,000 in lobbying, except assuming that voters in Montana want what’s best for the coal companies in their state. In that view, it makes more sense to understand that lobbying not as changing the vote, but coal companies communicating what they want to a politician that knows that his voters support giving coal companies what they want.


I really don't like the wording on the question for the

> Just 23% of people say there’s “too little” regulation of business. 45% say too much.

poll. Most people will pretty sanely say that pointless regulation is just anti-competitive so "broadly more regulation" is easy to be against. It'd be more difficult but I think some health or environmental specific policy would be better to poll about.


Many people in the UK voted for Brexit "to get rid of EU red tape", but when questioned were unable to name a single specific regulation they wanted to get rid of. Now UK businesses are swamped in customs red tape that the EU was designed to remove within the internal market.

It's a result of years of being lied to by politicians with an anti-EU agenda. It's very similar.


This isn't all that unfamiliar in the US. There are many people against "Obamacare", but once you start actually polling on the individual pieces that it entails it turns out it is very popular.

There is a reason why despite two years of full Republican control they could not agree on the repeal they kept banging on about for the better part of eight years, and why repealing Obamacare was not really talked about in 2020 lest Democrats successfully bludgeon Republicans over taking away their constituents' health insurance.


Depends which "individual piece", especially whether it was on the side that "spent money" or correspondingly "raised taxes". The individual mandate polled as 43% "very unfavorable" and 20% "somewhat unfavorable". Perhaps that's why it was, in fact, repealed.

https://www.kff.org/health-costs/poll-finding/kaiser-health-...

See also the discussion in this thread, which mentions other unpopular provisions like the Cadillac tax (also repealed!): https://news.ycombinator.com/item?id=24410307


Parts of it have been repealed, sure, but what Republicans were calling for were a full scrapping of Obamacare (and replacement) including the parts that people liked, like the ban on denying coverage pre-existing conditions or charging those people more.

They backtracked on this after Democrats wielded this as a cudgel in the 2018 blue wave.


Hilariously in the US the ACA (Affordable Care Act) polls better than ObamaCare - there is a large portion of the population that has experienced the benefits of the ACA and support that act while also continuing to advocate for repealing ObamaCare.


It's interesting to compare this to, say, the UK, where political spending is capped at £30,000 per seat, presumably to stop elections from being pissing contests to see which companies can spend more on effective lobbying. https://www.bbc.com/news/election-2019-50170067


Google has so much trouble rolling out Fiber. Bloomberg spent hundreds of millions on an election to little effect. Meanwhile, the fossil fuel industry supposed managed to buy a politician for $43,000. That implies that money isn't really the way into politics, not that politicians are easy to buy. Otherwise, it would be much more effective to spend money on politicians than million-dollar super-bowl ads.


> That implies that money isn't really the way into politics, not that politicians are easy to buy.

I don't think they are so hard to buy, but the currency you need isn't $. It's votes. $ are only useful in so far as they are means of getting votes. The $ you give them doesn't go into their pockets, or at least not in places discovering a bribe means someone ends up in jail. So what it is used for? The only use I can see is to earn more votes, by advertising, databases of voters, party machines and the like.

Votes can be delivered in other ways. The media can choose to spin it's stories one way or the other, which gives them an inordinate amount of leverage. In a state that employs a lot of people in coal mining, an employer intimating "if you vote for X, you get to keep your job" can have much more sway that a measly $43k.

Google's problem is they are a capital intensive, high wage, and consequently employ bugger all people for each $ they turn over compared to low wage enterprises that employ a lot of minimum wage people. Also they don't editorialise, and they don't advertise, and they are geographically dispersed. If a coal mining corporation swings the votes of 1,000 employees they could change the outcome of an election, but Google, despite employing vastly more than 1,000 can't do that. That leaves two options - lobbying and $ donations, which as you observe aren't that effective.

What has just transpired in Australia is an excellent example of what happens when Google does find the will to flex some real political muscle. I wrote about it here [0], but put briefly the newspapers decided to use their waning political muscle to get the Australian politicians to force Google hand over money from the ad revenue they generate from search. The pretext was very weak, so weak they could not define the sorts of activities the newspapers must be paid for so the proposed legislation literally named Google and Facebook, and demand they hand over $ to the newspapers. Capitalist cronyism at it's best.

I guess the newspapers thought they could deliver votes and Google couldn't. The politicians definitely thought so, as they floated a draft bill and it was at it's second reading. But it crossed some line for Google, the line that normally stops them from editorialising on their digital properties. They publicly threatened to shut down search in Australia and ensured it was broadcasted on every news channel in Australia, they put a 1/2 page banner on they search page (something most Australians see at least once a day) saying the same thing. Australian's read the sub-text: all your gmail.com accounts and emails, all your Google contacts, all your Android photos and a whole lot else besides is under threat.

Or at least that's my reading of what happened. In any case last Friday which was only a few days after that, the Prime Minister announced Google was being much more reasonable. As far as I could tell, Google's position hadn't changed at all from 6 months ago and they hadn't donated a single extra $, but they had just demonstrated they could shift a lot of votes.

[0] https://news.ycombinator.com/item?id=26043954


No, it really is easy, compared to buying a distributed government. Single points of failure, we call them. From an attacker's perspective a single point of failure is an efficiency waiting to be exploited.


In any case, whoever succeeds in this, should only do this once (for any particular issue).


> I'm always stunned and disappointed at how easy it is to game the American political system.

It’s easy to be a cynic, but you still need to match your beliefs up against reality. This particular belief really shouldn’t have survived the Trump era. Trump won in 2016 and almost won in 2020 despite Clinton and Biden having a huge financial edge from donors in the biggest industries (Wall Street, media, tech, etc.) See: https://mobile.twitter.com/annalecta/status/1323370439306055.... See: https://www.npr.org/2020/10/26/927453369/outspent-in-the-hom...

Bloomberg spent $100 million in Florida alone only to have Trump win it by a bigger margin than in 2016.

See also: https://www.cnbc.com/2016/11/09/trump-spent-about-half-of-wh... (“Trump spent about half of what Clinton did on his way to the presidency.”).

In the 2018-2020 timeframe, gun control supporters vastly outspent gun control opponents. They failed. Supporters of Prop 209 in California vastly outspent the opposition. They failed by a huge margin.

It’s actually hard to “game” the American political system. What companies like Intuit do is spend money to expose existing fault lines. Republicans are up and down the line opposed to easy tax filing because they think it’ll make it easier for government to raise taxes if people have to manually do their taxes every year. Intuit didn’t create this political fault line. It’s pre-existing. It’s based on ideology. The money is to connect Intuit’s issue (tax filing software) to this existing political fault line.


I think this thread is conflating election contributions/outcomes with lobbying. The main point of lobbying is not in the direct, (historically) small campaign contributions but in the large staff of lobbyists who spend time with congressional staff and leadership.

Lobbyist groups don’t care (too) much about who’s elected. They want to influence the lawmaking process.

The election examples above are not particularly relevant to lobbying. But they are relevant to money in politics, so I for one upvoted your comment. You definitely hint at the distinction between elections (and the relative lack of effectiveness) and lobbying, but I imagine people were confused by your reply (though “game the political system” is also vague).


Republicans are up and down the line opposed to easy tax filing because they think it’ll make it easier for government to raise taxes if people have to manually do their taxes every year.

I think you meant to say it would make it harder to raise taxes if people had to do their returns manually. I also think you're mistaking the excuse offered by Republicans for the underlying reason. After all, if it were true then Republicans would be logically be opposed to any sort of electronic filing, whether offered from the IRS or by a third party.


Yes that’s what I meant sorry.


I would strongly disagree with

> Republicans are up and down the line opposed to easy tax filing because they think it’ll make it easier for government to raise taxes if people have to manually do their taxes every year.

I think republicans tend to be against easy tax filing since it would involve wider access to the plethora of loopholes that exist in our tax system. Automatic filing would really level the playing field if small businesses and individuals got access to some[1] of the loopholes that corporations regularly exploit.

1. Ignoring, of course, accounting tricks required to set some of these up by offshoring profits/income and other advanced techniques around valuation.


this doesn't really make sense to me. most people have pretty simple tax situations. no matter how much you pay your accountant, there aren't many loopholes for a W-2 employee to exploit. "easy tax filing" doesn't have to mean that the government guarantees an absolutely optimal filing (how could it? it's not clear to me that it understands its own rules without ambiguity). it could instead mean that your return gets prepopulated with the most obvious filing strategy for your situation. for most people, the obvious way would be the same as the optimal way, and people with weird situations could keep doing their own taxes.


Agreed. There are plenty of examples where overwhelming money failed to change the outcome. Bloomberg’s presidential run where he spent $1B and failed miserably is a great example.

As is the failure of the Keystone XL pipeline where according to HN that sweet, sweet oil money would be impossible to defeat. Well, it was defeated.

The mistake people make is “oh this problem hasn’t been fixed and someone is spending lobbying dollars so it won’t be fixed, so that must be the reason”.

I’d ask if Intuit wasn’t lobbying against cheaper ways to files taxes so we really think it would have been implemented?


> What companies like Intuit do is spend money to expose existing fault lines.

...

> Intuit didn’t create this political fault line. It’s pre-existing. It’s based on ideology.

I'm not sure what you're trying to say here, in moral terms.

Is your intention to defend Intuit's actions?


What about my post makes it seem like I’m making a moral point?


I think their point is more generally against the "you can buy anything in politics with money" idea in this thread. They're saying there's evidence to the contrary in the big elections, and that the weak points in the political system are in specific places for specific reasons, and companies like Intuit are exploiting those places, not subverting the entire political system just because they have money. I'm not sure I 100% agree with the argument, but it's a decent case to be made.

(Unfortunately, mentioning Trump and the election quickly triggers people's defense mechanisms and attracts downvotes like here, even if the comment is using it as just supporting data in their argument.)


That's a good attempt to clarify the post, and it does make it easier to parse, or at least it would if I understood what a "weak point in the political system" means, but I don't know what that means.


> This particular belief really shouldn’t have survived the Trump era

If the effect of money is really not significant, why don't politicians simply ignore the funding and do what they think their constituents want?


The effect of money on campaign outcomes is what he was speaking in reference to - a lot of lobbying money ends up getting funneled directly into candidates pockets through advantageous deals and future employment promises as well as undercharged services (like renoing someone's house for a few dollars) and that money can be quite significant.

America has an insane bribery problem.


> America has an insane bribery problem.

I wonder if this is more or less applicable to Politics in general, and not specifically American Politics.


I think that Politics is naturally self-corrupting but the extreme partisan divide in America has, IMO, made politicians less vulnerable to the crap they tread in. There is very little you can do to make yourself less desirable than someone on the other team so corruption is really only an issue for being primaried and toeing the party line can still protect you pretty effectively.


> It’s actually hard to “game” the American political system.

Time magazine disagrees with you[1].

[1] https://time.com/5936036/secret-2020-election-campaign/


The Time story supports my point. Trump was a historically unpopular President who had basically stopped governing during COVID. And as the Time article points out, Biden had everyone from Wall Street to the media to Big Tech in the bag for him. Biden vastly outspent Trump in October. Bloomberg dumped $100 million into Florida. Yet Biden won by just 80,000 votes in Arizona, Georgia, and Nevada, with Trump getting the second most votes in history, higher than Obama.

Maybe the full backing of Wall Street, Tech, and the media combined pushed Biden over the finish line. But it was at best a nudge. And how modest that effect was should be good for thought for skeptics.


In what way did he stop governing?


I'm curious what your definition for "full backing" is.

Trump had a banner advertisement on youtube on election day. NetPAC and similar corporate pacs donate as much or more to Republic candidates as dems. Similarly, you have many powerful people in silicon valley, including Paul Graham criticizing companies for dropping the veneer of impartiality that favored trump, and moving to actually uphold their own values.

Wallstreet similarly didn't exactly do much to favor biden.

You can't talk about the media without mentioning fox, which is the largest single media institution, and favored Trump until at least December.

Yes, biden had much stronger support from individuals, and in some cases that translated to endorsement from institutions. But it didn't really translate to institutional support like you seem to be implying. I mean the only sort of institutional support you could argue is that generic GOTV efforts favor dems, which while true isn't strong favoritism.

There's a vast difference between targeted lobbying for a particular policy position (especially when there isn't a clear opposition, who is the group that lobbies for clear govt managed tax handling?) And political campaigning.

For the first, you don't even need to appeal to voters.


The generic gotv efforts were in geographic locations strongly favoring democrats. Zuck wasn’t helping to get out the vote in rural Wisconsin.


The Generic Gotv efforts I'm speaking about are generic. They're on the facebook timeline and Google search page. They exist just as much in rural wisconsin as they do in downtown SF.


I've always been under the IRS Free File income threshold (I've worked as a high school teacher and am now in grad school), but last year after reading this article was the first time I actually filed for free. That was after 5 years of paying for deluxe TurboTax.

I had heard the government required TurboTax to have a free edition. But back in 2019 (and before), if you Googled "TurboTax free" you'd be taken to a decoy free edition; the real one was called their "freedom edition," and was hidden from Google's listings. If your tax situation is 'too complicated,' the free edition tries to upsell you to the "deluxe edition," even if the "freedom edition" could have handled the situation just fine.

Thankfully now you can find the actual free version on Google, but it's still very confusing that the "free edition" is less free than the (still somewhat hidden) IRS Free File ("freedom") version. And the faux Free Edition is still being heavily advertised.


Good for you. I’ve made an effort to avoid TurboTax for similar reasons, just can’t stand the thought of giving money to a company that lobbies to keep our taxes complicated. Spreadsheet, PDF, and snail mail have worked fine for me so far but I would eagerly welcome a saner tax system.

For anyone else looking to stop paying Intuit, the IRS provides an intro and links to their official Free File options. [1]

[1]: https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...


Patriot Act with Hasan Minhaj did a segment on this, and also set up a site to link to the real free programs of various companies. It's here:

https://www.turbotaxsucksass.com/


It would be nice if that was the top of the search results or had a near limitless budget to be at the top when searching "turbo tax".


> if you Googled "TurboTax free" you'd be taken to a decoy free edition; the real one was called their "freedom edition,"

TurboTax sounds like Free Software Foundation's evil twin... "When we speak of freedom, it's a matter of price, not liberty. You should think of freedom as in free beer, not free speech!"


Intuit is truly a scummy company with the way they behave here and elsewhere. A simple example of one of these behaviors is that you cannot export data as CSV from Quickbooks Online, instead if only exports as a PDF or as an Excel XLSX file. But the XLSX is carefully crafted so it reads out zeroes (0s) in all value fields if opened with LibreOffice or any conversion tools to get a CSV.

Why do I know this? I don't have any Windows computers, I mostly work on a Mac, and Intuit doesn't make TurboTax Business for Mac, only for Windows. TaxAct has an online service for filing 1120S/K-1 for LLCs which can import data via CSV that works on any OS, so Intuit responded by no longer offering CSV exports and ensuring they're broken using F/OSS tools. Really is making it a challenge to comply with the law this year for my LLC without me having to have Windows + Office 365 licenses.


Hmm that's really obnoxious, but why would Intuit benefit from forcing people to buy Excel? They don't make any money from that.


They benefit by preventing easy access to an export of the user’s data that could then be importied into a competitor’s software, thereby (presumably) locking in a non-trivial number of their own user base who don’t want to deal with the hassle of re-entering all of their financial data in a new product.


IIRC, they have an Excel plugin. So it's more like: stick with our SaaS; if you really prefer a desktop app, stick to Excel (and our plugin).


I don't live in America, and haven't lived there for nearly my entire life. But my parents are citizens, and they graciously gave me US citizenship. Now, while I earn money abroad, live abroad, receive support from my government abroad, I still have to file taxes in the US. For the most part I don't have to pay, but I end up paying a couple hundred dollars for someone to file my taxes. Most of the online tools don't know what to do about people not living in the US. Also, as a fortunate Hi-Tech worker, I will soon earn enough money that I will have to pay the US government taxes for money that I earned abroad.

I've looked into renouncing my US citizenship, but that costs a few thousand dollars. And, the US can reject it for several reasons, one of which is tax avoidance. Also, as per the rumors, it is nearly impossible to get a US Visa after that (and I still have American relatives who I would like to see). Seeing as us expats don't have a senator or congressman, we don't really have someone to fight for us. At least I am still allowed to vote. Before every election that I am eligible to vote in, I email the candidates and ask them what their stance is on taxing foreigners (and don't get me started on the fbar). Based on their response I vote.


The American system of worldwide taxation based on citizenship is extremely strange and shared by just a handful of other nations such as Eritrea, Hungary, and Myanmar. [1] Even more odd was the decision to shift to territorial taxation with the Tax Cuts and Jobs Act of 2017, but only for corporations and only for income earned with tangible assets overseas. [2]

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

[2]: https://www.taxpolicycenter.org/briefing-book/what-territori...


Thanks for the second link. I remember hearing rumors about how the Trump administration would finally remove worldwide taxation. I guess the result was the end (or ease) of worldwide taxation for corporations only.


Very thoughtful comment.

I’m an American living abroad and got US citizenship for my children. I constantly wonder if I made a mistake.

I do get some tax savings, and most of my income and assets are in the US so I save for them there. But I know the burden of having to file taxes and possibly pay them when they’re old enough is a heavy one.


I'm sorry if my comment sounded very harsh to you. On the "bright" side, if my country ever gets destroyed, I have an insurance citizenship that "only" costs a few hundred dollars per year (and the nearly impossible restrictions when doing "weird" things like becoming a private contractor)


It wasn’t harsh. I meant it when I wrote that it was very thoughtful. I really appreciated your comment.


No. A few hundreds US dollars for US citizenship is beyond worth it. If anything, this coronavirus pandemic has showed us that citizenship does matter and it's actually worth a lot.


You might already know this but taxes you pay to the country you're resident in are (in most cases, depends on the country and the tax treaties) deducted from your taxable income.

You only need to pay Federal income tax and since most countries have higher taxation rates than the US, most expats and up with no tax liability on their income. Capital income taxes are a major pain though.


I wonder if some hedge funds looking to short their next target might do a cost benefit analysis of how much a hit to Intuit's stock price might occur for $X spent in lobbying for widespread free tax return prep.


lolol thats a good play, they are now


I often do my taxes twice with a cheaper competitor and then use Turbo Tax to double check my results.

Let me tell you, Turbo Tax often gets a worse off final result. For example, I changed jobs in Q2 and exceeded my Social Security contribution last year. For some reason, the cheaper competitor actually caught that and got me a better result than Turbo Tax.


I did this with freetaxusa.com and turbotax on 2019 and ended up ditching turbotax for a better return with lower fees.

I now have to copy fields, but I double checked them anyways, so I think it's faser to input them myself. It's just triple clicking on a pdf and middle clicking on the browser


I did the same comparison with the opposite results. Turbotax correctly handled a situation that freetax usa didn't (how much of a state income tax return was refundable from the previous year when my state refund was based on SALT taxes beyond the $10,000 maximum that the feds allow you to deduct). Technically my own fault because I incorrectly answered a question in freetaxusa that contained a double or triple negative, but Turbotax got it automatically without me having to answer any questions


My wife, an employee of freetaxusa.com, said that you can write in to them with more details (I showed her your comment, and she wanted more details), and they will fix the problem. Usability is super important to them; I am the one that has to do taxes every year, and the company asks my wife to watch me do it to learn what trips people up.


Why don't you disclose the cheaper competitor's name? Are you trying to be respectful to Turbotax?


who is the cheaper competitor?


I don't know who the cheaper competitor that the GP refers to, but I use freetaxusa.com, and they are great.

(Disclaimer: my wife is an employee, and they are great as employers too.)


Just want to stop by and say that I love FreeTaxUsa too. They have exceeded my expectations these last three years. No gimmicks or upselling, just straightforward forms with labelled boxes matching those on the government forms. Free federal filing, $13 for my state filing. Remembers my AGI and other relevant info (i.e. employer's address) from year to year. Less than an hour to file everything this year. They do also offer a deluxe product which includes assistance in case of an audit.

I have no formal connection to them, just a very satisfied customer.


I let my wife know. Thank you. :)


That's like the most obvious thing in the world to catch and TT definitely checks for it. So this seems weird


Myself and my accountant find they are off by laughable errors and stir government accepts intuit errors. It is somewhat hilarious. After a disastrous 24k error I hired a real tax professional. Money well spent.


Any tips on how to identify a good tax professional?


Their letters and journals make it clear that the founders knew that lobbyists would be a threat to the integrity of the republic, but they thought that all the competing interests would largely cancel each other out. They could have used a little game theory to show that wasn't the case, as it will always be far more profitable to be the aggressor than the defender. If I want to take a penny from every tax payer in the country, I'm far more motivated than you are to guard your one penny. Even if the tax base were to unite in opposition, I have an infinite number of opportunities to try again. Power words: MPAA, SOPA, PIPA, DMCA, Tipper Gore.


I would love to see some sources on this.


I'm not sure why it doesn't seem to be more well known, but CreditKarma has allowed free filing of taxes (incl. capital gains), and was recently acquired by Intuit. Last I read they were under investigation by the Department of Justice because of the implications they were eliminating a competitor.

Comments: https://news.ycombinator.com/item?id=24038559

I've used it for the past 2 years, and it has worked great for me, albeit I don't have very complicated taxes. I'm actually afraid of what happens if the acquisition goes through, definitely expecting the free tax filing to disappear soon after that occurs.


This has already been settled; Square will take Credit Karma Tax to prevent Intuit from absorbing a competitor.

https://www.forbes.com/sites/jonathanponciano/2020/11/25/doj...


I wonder how they are going to handle the Credit Karma Tax name?

According to this announcement [1] from 2020-12-03, Intuit has completed the acquisition of Credit Karma.

I logged in to Credit Karma today to do my taxes, and the tax link on the main page took me to tax.creditkarma.com where I found the familiar Credit Karma tax stuff, with a notice on the bottom of the page that says:

> Tax preparation services are provided by Credit Karma Tax, Inc. a subsidiary of Square, Inc.

So, it appears that Square is indeed now handling it, but it is still tied in with Intuit's Credit Karma. I wonder if that is just some transitory thing for the 2020 tax year and for 2021 it will be on a Square domain, and the Credit Karma mail site will link to TurboTax for tax prep instead?

[1] https://investors.intuit.com/news/news-details/2020/Intuit-C...


I’m annoyed at Intuit’s purchase of Credit Karma last year. Even with the obligatory sale of its tax division to Square, Intuit eliminated a competitor.

Square will have to build up the customer base and visibility of the tax product, provided they intend to do anything with it similar to what CreditKarma was.

Intuit should simply not have been allowed to buy them.


Absolutely this.

The purchase of Credit Karma is textbook "buying out a competitor", especially since Credit Karma's tax solution was offered for "free" to customers.

Why did the government not intervene? There's hardly better evidence of political capture by the corporate America as that one.


Generally, the DOJ won't block "buying out a competitor" unless you're approaching monopoly levels of consolidation.

It's fine by the DOJ to have the number of players reduced from even 4 to just 3 and they are only really forced to act when it comes down to an attempt to reduce from 3 to 2


If anyone here has Credit Karma: get off it. Use free monitoring services from Discover/Chase/Experian/etc.


if you're a chase/amex/discover customer, by all means use their free service. I particularly like the amex one that lets you do hypothetical projections. I can't recommend experian though. I just made an account with them out of curiosity, and since then I have received emails from them pretty much every day trying to upsell me on their (worthless, as far as I can tell) "premium" features. the website itself is full of dark patterns trying to make the same upsell.


You should be able to at least opt out of daily emails from Experian. Try going into your profile's communication preferences and opting out?


the emails aren't such a big deal. they just go into my "promotions" folder that I rarely look at. I still find their web UX pretty bad. all kinds of buttons and tabs that just send you to a paywall. the credit card companies also use their websites to try to get me to sign up for more of their credit cards, but they're a little more respectful about it. I personally just hate the style of web design where some UI elements lead to a paywall and others don't, with no clear signal before you click through.


I swear I've read some version of this headline yearly for at least the past 5 years. They are clearly winning this fight.


This reminds me: I was kind of late in reading Lean Startup only two years ago, and I was surprised to see Intuit to be described there as length and in positives, pretty much a role model for innovation.

I guess the book needs an update to this example, a chapter on what it means to take innovation too far.


At this point it's not innovation, just American politics.


There is really no losing for them here. They make the whole thing more complicated and make money. As part of this they "lobby" lawmakers and so the lawmakers are happy. The candidates running for office get to use "streamining tax filing" as an election promise from time to time. Its a win-win all around for them. There is no way this changes.


You can tell there's no losing by the fact that these kind of reporting about how the whole thing is rigged has been around for years now and nothing has changed. That generally shows how locked in this whole situation is.


I forget from what country. Years ago with a bunch of international friends one mentioned you don't really do taxes at all. If you received wages, it is the company's duty to file them and it's done.

Filing taxes does seem complicated here in the U.S. when you may have also other forms of ordinary income. So many rules, forms, etc. I wonder if people use something like TurboTax because they are just not aware how to complete this task, unless, systematically hand held in a way and just walk through getting it done before the deadline.


I have a company as a side thing, so for me the process is more involved, but for most Swedes the following is what you do:

- receive a tax summary of what the Swedish tax agency believes about your earnings. - check that tax summary if it is OK (you receive a summary from all your employers in the beginning of the year. Just check if it adds up) - go online and change any numbers you believe are wrong (in my experience they are usually usually they are correct down to a granularity of a couple of hundred SEK). At that level calculating it precisely gets very hard, due to how your employer reported sick leave and such. I have always ignored anything below 1000sek (~$100) - do any deductions. Many are already pre-filled (like deductions on interest, household services and such). - sign it with your online ID

Done. Last year this process took my wife about 35 minutes. Most people are a lot less diligent.


To be fair, paying taxes if all you're doing is receiving income from an employer isn't that bad. There's a simple form for it. Where it gets bad is the stuff your employer doesn't know about:

* Investment income

* House or other capital sales or purchases

* Stock option purchases or sales

* Child custody, dependents

etc. I don't see how any country's tax code would capture these income or loss streams without some manual filing process.


Most of what you mention is filed automatically for me, here in Denmark. I think the only thing normal employees regularly file manually here is kms driven to and from work, which gives a tax deduction (kørselsgodtgørelse).


Perhaps these don’t need to be lumped into a single tax return and can instead be handled independently by the appropriate institutions — brokerages deducting tax on investments, closing agents deducting tax on house sales, IRS mailing a check each year for dependents, and so on.

Sibling comments suggest that other countries successfully automate much of their taxes.


Just to add, regarding the "single tax return": In Finland many of the remaining have-to-input-manually things (e.g. kotitalousvähennys, tax credit for household expenses) can be reported on the tax web portal at any time.


Ex-pat American living in Germany. Unless you have some slightly less common situation, you don't have to worry about taxe filing here.


You really should though. I would say it‘s only a safe bet if you worked the same job for the entire year, got no bonuses and had no other income at all (even from the state).

Otherwise you either have to do it or you are missing out on credits.

It‘s pretty straightforward too. If you want you can only file your basic personal data and bank account and have the information already submitted by the employer electronically picked up. That way you can get any obvious credits for e.g. uneven earnings.


> if you worked the same job for the entire year, got no bonuses and had no other income at all

I would wager this is most people working a 9-5. That's my point.

It's optional, entirely. In the US, it is not. You are forced to file, every year, by penalty of law (really nasty IRS calls/visits/audits). And in order to file, you must wade through endless forms and confusing tax law, usually missing a tax break costing you more - unless, that is, you use software.

And that's the rub - those software vendors are the ones lobbying against simplifying tax processess so that citizens are forced into using their software. It's not a "maybe this is happening". This is a "definitely happening" thing for decades now.


Israel is like that. Unless you own a business. If you’re a salaried employee you never have to file.


In Sweden most people get a prefilled paper form. You also get the sums from your employer and compare with the form. Then you either sign the paper and send it back or you send an SMS with the signature code on the form. The goal is to include more and more cases into this automatic taxform every year.


That's seriously a large part of it.


The UK


This is a nice NPR episode about how a professor tried fighting back against Intuit in California and almost won.

https://www.npr.org/sections/money/2017/03/22/521132960/epis...


It is a shame that some parts of American govt is such a slave of big businesses that they keep public good behind corporate good. For instance: gun ownership, monopoly of car dealerships for unfair & opaque practice, not upgrading railroads to help it compete with airlines, state & non-investment in public transport in non major cities, allowing large wall street cos to manipulate the markets


  gun ownership
You think big business that actively contributes to politicians favors gun ownership? The opposite is true. Michael Bloomberg's spending alone against gun ownership dwarfs the spending of the entire "gun lobby" combined.


This is an old article already discussed last year - https://news.ycombinator.com/item?id=21281411. We should mention year in the title.


In here we file taxes over internet. Tax administration takes about 10 hours every year. I am self employed dev, deal with multiple countries.


In the UK most people never file taxes. It's all done Pay As You Earn (PAYE), i.e. taken out of your monthly pay check. You get an annual summary of your tax payments every year, as well as it being detailed each month on your pay stub.

People that are self employed tend to need to do self-file, or those with slightly more complicated investment approaches but even then that's generally not a particular hard task.

One of the other advantages of it, is it discourages a rebate based approach to incentives. With most people not needing to file taxes each year, rebates wouldn't be particularly effective at encouraging behaviour. The government instead opts for subsidies, so the item is cheaper _at the time of purchase_. No shelling out the extra money and then eventually clawing it back, without any interest it might have accrued for you.

It was quite a shock when I moved to the US and got to experience the "delights" of filing taxes here.


How many people go through the process of making sure the gov’ts calculations are right?

And for those that don’t, how many are losing out on money because of an error?


The UK tax system is very simple in most cases. Everyone has a “tax code” which denotes how much tax free allowance they have, if they have a company car, etc, and the tax scale is progressive with a few bands. Your employer actually deducts the tax and forwards it so as long as the code is correct (and for most regular wage earners the code is a default that is never changed) your employer’s payroll system spits out the tax withheld at the end of each month. There’s no annual return (again, for most people) and no need for refunds or additional payments. Most interest/benefits is either paid outside the tax system or already has withholding applied.

I’m not saying it can never be wrong, just that the system is simple and employers have done it for years. If one really wanted to check comparing to a website like https://listentotaxman.com/m/ is easy.

My parents have almost 100 working years between them and have never once filed a tax return.

For those who do file, the return is quite straightforward. There are some weird bits — capital gains on stocks are much more complicated than the short/long hold in the US — but on the whole a UK return is a couple of dozen pages (many of which are skipped) and easily within the scope of a self-filer.


If you think you can beat the system you have the option of a voluntary self-assessment for under 100k, over 100k you have to file one anyway and it offers plenty of wiggle room. Self assessment is such a non-event the entire procedure always feels new by the following year.


How many people that do their own calculations actually come up with a lower number than the government would have charged them in the first place?


Almost none, because that’s highly unlikely for most people. The system is designed such that most tax-related things don’t need a return and end of year squaring up. Income is taxed monthly by subtracting the correct amount. Interest is tax free to a threshold then has automatic withholding. Investments and savings can be held in tax-free wrappers with no reporting requirement. Benefits are paid outside of the tax system, etc.


The way it works, you get a tax code. The tax code is documented on your pay stub. The tax code changes based on things like marital status, kids, etc. The tax codes are all standard and you can easily look them up. That tax code informs payroll software how you're supposed to be taxed, and it adjusts automatically.

If you're US Based, think of it as being similar to the withholding calculation, only significantly more accurate.

I've known a few people that manually check their taxes each year, and never known them to find mistakes. Most people just don't bother.

HMRC already has the information it needs to calculate the information correctly. The same is actually true of IRS too. For almost all cases, the IRS can accurately calculate your taxes for you. In several countries, the agency responsible for taxes pre-populates your tax document for you, and sends it to you to sign off on each year. Doing taxes often involves no more than skimming through a document to verify accuracy, and mailing it off.


In the US? Plenty. I've had the gov't misattribute income before, and not in my favor.

And it's not just the gov't. I assume your employer is the one transmitting the info back to the gov't. I've had my employer miscalculate my social security tax in one paycheck.


> “Dark patterns are something that are spoken of with pride and encouraged in design all hands” meetings, said one former designer.


It's repulsing that this kind of thing happens. It's because of the greed and sleaziness of companies like that that we end up needing regulation.


Amazing. The most difficult thing I had to do with tax last year was wait until my employer pressed a button they had forgotten to press on some web form. Then it all filled out instantly.


There is another interesting angle to Free File. If you are really annoyed at having to pay to file your taxes, there is a pressure relief value you will inevitably find that will make you reasonably content.

Anyone who really wants to not pay doesn't, so there is never a critical mass of passionate people.


I have had my taxes filled incorrectly by the government about 5 times, each time about 300-400% of the right amount (Switzerland).

Thanks but no thanks. This is like "why do you need an attorney if the government can give you one for free"?


This was published October 2019.


And it should be reposted over and over until something changes for the better.


Its tax season. Expect it to show up at least 3 times a week till April. Cost of tax filing, cost of internet specially on mobile hurts more than thousands of things that are cheaper in USA.


In Ireland, employees pay as they go through the year and don't have to file return. For self employed there is very simple online system provided by the Government. I despise the US tax system.


Technically the system is pay-as-you-go in the US; employers are required to withhold estimated tax from paychecks and pay the IRS in the employee's name, or quarterly payments are made if self-employed. The broken part is that you will receive penalties if you withhold too little, or you end up loaning cash to the IRS until you file for a refund; and there are far too many variables that change the actual tax you owe for the year, so there's no way to get the number exact except in limited circumstances.

A "cheap" fix would be to eliminate deductions, and automate marginal withholding. An expensive fix would be to service deductions on a rolling basis, applying them to future income withholding.


The root of the problem is a tax system that requires complex software to use optimally. Remove this complexity and the need for specialized, expensive software companies will disappear.



I have had bad experience with RSUs and ESPP through TurboTax. Do any competitors handle it better? Should I just seek out a professional?


Credit Karma’s free file could be the end of paid tax filing. We may see an ad supported model, or synergies, like if Microsoft gives free tax software for office users. History has shown many software that was once paid become free, as entrepreneurs figure out a way to give it away and still monetize it.


Same story every year around tax filing time but nothing changes.


Someone needs to start a non-profit competitor to TurboTax that uses its fees to advocate for simplifying tax policy.


Intuit will acquire or break the company before it gets legs


"Never let your inferiors do you a favor. It'll be extremely costly" --Mencken (b. 1880)


Ultimately this is not up companies to decided, but for lawmakers to simplify taxes and reduce loopholes and complications.

I am self employed, and it took me a few years to figure out properly how to pay and not overpay for all my taxes. The entire tax system is insane, depreciated assets, tracking car mileage, LLC fees and taxes, annual report filings, and paying quarterly taxes.


This is so true. I don't think most folks understand how complex it all is, otherwise there would be more pushback to legislators that "allow" (through inaction) the tax code to be so complicated. It certainly has discouraged some from running their own business, because complying with it all costs time and money, which are resources large corporations have plenty of, but small businesses have precious little of.


Gosh, Intuit has gone on a total advertising offensive recently! It seems every ad on YouTube nowadays has the same jingle: 'free free freefree freefreefree'. They are advertising their free tax filing service and advisors, which I'm sure everybody here knows is a Trojan horse disguising their lobbying to take away actual free filing provided by the government. Here's the catch: they make it really difficult to use their software for free: you have to have a very specific financial status (under $66k a year in income) and for a long time they just blatantly hid it [1]. Those ads make my blood boil whenever they come up, but the production quality/creativity is Geico-level. They must've spent a lot of money to steer people from the truth...

[1] https://www.propublica.org/article/turbotax-just-tricked-you...


[2019]


It's little wonder that democracy is in a state of decline and that faith in our public institutions is at an all time low when government can be so easily corrupted by disingenuous carpetbaggers such as Intuit. It's not as if this corruption of process by Intuit is an isolated instance, the trouble is that it's commonplace.

It seems to me that the first step in citizens reclaiming their democracy back and having our faith and integrity restored in our institutions is to take charge of the lobbying process and rescue it from corporate interests and other bad influences. I would go so far as to suggest all lobbying of politicians be done in public and that to bypass the system of public scrutiny be made a felony.

This may sound like highfalutin idealism and overkill but after what we've witnessed in Washington in recent weeks we can no longer ignore the fact that trust in our governance is at an alltime low - and that as citizens we have a collective responsibility to ensure we fix the problem.

We have to break the nexus of mistrust between the Citizenry and Government and desperate times call for desperate measures.


Just a tangential historical note: the carpetbaggers were the good guys. They went from the North to the defeated Confederacy to take advantage of the votes of newly freed slaves. The acquired such disdain for precisely that reason.

https://www.britannica.com/topic/carpetbagger


I'm not sure "good guys" is correct. They went seeking to further their own fortunes (whether financial or political), which is mostly amoral – you can increase your own fortune by collaborating with others but you can also increase your fortune by taking advantage of others.

I think the carpetbagger comparison is rather apropos. In the same way as carpetbaggers, you can be a lobbyist who genuinely suggests things that are good for the American people and also are good for the corporate interests you represent. Alternatively you can lobby for things which benefit your corporate interests at the expense of the American people. Unfortunately seems like lobbying in the US is almost entirely the latter. And maybe postbellum carpetbaggers were in fact more of the former. But it's a similar scenario.


Right, like so many other things these days, the term has been corrupted. Guilty as changed. ;-)


Duh! I meant 'as charged' (damn edit doesn't stay active long enough).


They weren't the good guys. They ate up ridiculous amounts of reconstruction money meant for southerners, and the south didn't truly recover for a century. There were other reasons too, but the carpetbaggers were among them.

They were the civil war's equivalent of Haliburton in Iraq.


Can you point me to a reference? I don't know a tremendous amount about this.


How much of this mess would go away if we didn't have income tax and increased sales tax?


My foot was hurting, so I cut it off and now just walk on my hands.

Which is to say, that's a terribly obtuse way to deal with the problem, and does nothing to keep this kind of abuse from surfacing in other domains.


The idea here is to shift the work to more streamlined systems already ran by businesses instead of relying on individual citizens to figure this all out. Citizens are not equipped with the time and money to deal with these abuses. Large private businesses who are already optimizing these expenses might keep things in check.

It's not a unique idea. In fact, I first heard it from IRS employees themselves.


It's attacking the wrong problems, and will have the same set of problems if it succeeds.

The actual root problem here is Grover Norquist + friends (comprising a large part of the republican party), who are opposed to all taxes, under basically all circumstances. Norquist is on record saying that it's GOOD that taxes are overly complicated, because it makes people dislike them more, and trust government less. There's an obvious marriage of convenience between the anti-taxxers and TurboTax, which is why TurboTax is able to hold the whole American tax infrastructure in stasis with seemingly miniscule amounts of contributions.

https://en.wikipedia.org/wiki/Grover_Norquist

https://www.npr.org/sections/money/2019/04/03/709656642/epis...

Remember, loads of other countries do this easily. Income is easy to track on the government side: they have all of the employment information, and can fill in the blanks easily. Tax day should really just be a chance for you to double check the calculation. It's a political problem, not a technical problem.

(Also, what the others have said about regressive taxes is 100% correct.)


There is no reason for pushing tax accounting into businesses to be better than for it to be on the citizens.

It does not make it a better tax, it does not make necesarily make it cheaper to manage, and it has the gravest of dangers of misaligning the incentives between the net tax payer and the net tax consumer.


Here is a simple example. You buy 10 stocks from Robinhood for $50. You sell them for $75. You now have to pay taxes on this. The broker can just inform the government of this taxable event and thus automatically deduct the tax for you.

One argument in favor of filing taxes yourself is that you can transfer the stocks to a different broker. No single broker knows what you have been doing with your stocks. However, the government already exists as a central entity and it can simply receive a full record of all taxable events from all brokers.

Where do you see this misaligning the incentives between the net tax payer and the net tax consumer?

If anything, it would make cryptocurrency based credit cards viable as a means of payment because the taxation problem is no longer intractable for the individual tax payer.


You buy a bottle of wine at 10bucks with your income that pays 10%, meaning that it cost you 11 bucks. Know you know you paid taxes and got your fine bottle.

You switch it to the store. Now the store charges you 11 dollars for the bottle of wine. It looks like you paid no taxes, but you did. Now you dont know your tax rate, you dont see it, and they can be raised without your approval as it is hidden from you.

VAT taxes work like that and have reached sometimes 30%+.

Furthermore, it doesnt make taxes simpler, the business still has to do tax handling for you, which means you also pay that company accountant.


Could you please describe why is that a bad idea? Or point me to a good reading source? I’m learning different aspects of economics and am genuinely interested to understand the downsides of taxing consumption as opposed to earnings. Now that I think about it, in India we are taxed on both ends.


Sales tax is regressive (lowest earners pay the most as % of their income, highest earners pay the least as % of their income) whereas income tax is [usually] progressive (lowest earners pay the least, highest earners pay the most)


that would incredibly regressive. it's an awful idea


Why?


Most sales taxes exempt essentials like basic groceries, clothing, toiletries.

It’s actually a great idea.


If you wanted to make a progressive tax, certainly income is way better than the proxy of what poor people or rich people consume differently.

In any case in practice this is obviously not done, as cigarettes, alcohol, food, basic online purchases etc have sale taxes.


Rich people consume more than the poor. Even if you have illegal income it gets captured by consumption taxes.

And yes it is done. Food, clothes, toiletries aren’t tax in most states in the US or Canada.

Of course alcohol and tobacco aren’t exempted. You’re trying to discourage use not encourage it.


While technically rich people consume more than the poor in absolute numbers, they consume a smaller percentage of their income than the poor, so a consumption tax is inherently regressive, taxing rich people less.


Source?

If you exempt the necessities of living (food, etc) I’d suggest the rich would be tax on a far bigger percentage of income than the poor.

And even if they didn’t spend it, any capital gains or interest income would still be taxed too.

And you’re ignoring the fact that a consumption tax would capture spending from black market income as well. Expanding the pool of income taxes.


> And even if they didn’t spend it, any capital gains or interest income would still be taxed too.

The post you are responding to is talking about getting rid of income taxes. Those are income taxes.


If you wanted to tax richer over poor, this is not an efficient way to do it at all.

It is also a pretty distortive tax, and it creates smuggling, robbery, and disproportionally punishes those that consume those products and are also on the poorer spectrum.


Even still, there is no sales tax rate that ends up charging wealthy people anything meaningful. Roughly speaking, the savings rate of wealthy people is so high (and therefore 1-that as spending rate) and everyone else basically spends all their money, such that you need exorbitant taxes on “stuff only rich people would buy”.

Zucman and Saez have a decent figure for this, which this article in the Atlantic includes as a high resolution version [1] or a non paywall one at [2]. People quibble with the details here (particularly post taxes and transfers like social security), but much of the income and much of the wealth is in the top 10%. The bottom 90% basically saves nothing, and while many at the true bottom decile / quintile spend it only on the goods you would exclude, you still end up with “we can’t tax wealthier people, without being regressive” for most of the middle.

For example, car payments, home sales, electronics. These are all “normal” things for most people, so unless you want to raise taxes on the bottom 50% or so (who currently do not pay much in income taxes), you have to exempt a much wider variety of goods.

What does that leave you with? Yachts? Cars over a certain amount? Houses over a certain amount? It’s not impossible to figure out how to do it, but you then get to pile on import taxes (“Fine. I’ll buy my yacht in the Bahamas and sail it here rather than pay 10x in taxes”) and so on.

Fundamentally, in designing a taxation system, you’re deciding how to fund the government and redistribute wealth. It turns out that spending, even of non basic goods, isn’t a good proxy of what an individual can afford to contribute without noticing. Income isn’t perfect, but spending is actually pretty bad.

1] https://www.google.com/amp/s/amp.theatlantic.com/amp/article...

[2] https://www.financialsamurai.com/the-average-savings-rates-b...


This is not very convincing. Top 1% save 40%, so they spend 60%. In order for a consumption tax to work, it would need to be in the 30-40% range. So you'd be capturing 60%*35% = 21% of income. Currently incomes tax is 27% of income for the top 1% in the US.

Add on top capital gains and you're collecting the same or more than you are now.


But that 35% sales tax is a huge increase for everyone at the bottom, that’s the point. The bottom 50% pay “no income tax”, spend roughly 100% of their income, and would have their taxes go up by XX * 35% in taxes under this scheme (where XX depends on what you put in the exemption bucket or not). There’s probably data from Washington state or similar on the distribution of purchases, but you can’t just stop at “35% would work” since you have to exempt more things if you goal is not to be regressive.

P.S. I don’t think when people call for “just sales tax” they also mean “oh and sure plus capital gains” (besides, this would just shift back towards dividends).


I don't qualify for "Free File" tax software, but I still file my taxes for free using the IRS forms. It's easy. Yes, it could be easier, and yes, Intuit's tactics are repulsive, but the fact remains that filing individual income taxes is easy and free.

I would not be surprised if articles like these are just another form of PR for tax preparation companies. The goal of these articles seem to be to convince us that taxes are complicated and difficult.


I'm not from the USA but I live here now. I came from a country where you log into a government website and hit a button to confirm your return because your employer already typed it all in and sent it in earlier... The idea that you're printing out forms and filling them out is crazy. The idea that you have to type in numbers someone already has is crazy.

I don't think it's a case of people making free tax filing is difficult. It genuinely is far far harder than it has to be.


One side of the political spectrum has argued that the government will take advantage of this to overcharge citizens. Which sort of treats the taxing entity as an unscrupulous business looking to make a quick buck.


I don’t think increasing compliance costs and complexity is part of any mainstream political ideology. It seems a lot more like a perverse special interest to me.


It's because everyone wants their situation to be special and get special tax breaks because of it. Don't get me wrong, Turbotax is scummy but the real truth is if a politician wants to eliminate "deductions" which is what makes taxes so complicated - then you get a large backlash because someone's taxes are getting increased.

The government can't automate it because a lot of these deductions are not things they can learn about looking at your W-2.


If anything _your_ comment sounds like propaganda from the tax prep companies: "hey! Why you hassling us! See this bloke filed his taxes by filling out the forms himself, people always have that option! All we do is offer a paid easier option! Also don't mind us lobbying the hell out of the status quo which is quite literally insane if you compare it to any other developed country! "


Easy for you, yes. As someone who has helped others with tax preparation, plenty of people find it daunting. Many Americans struggle with both financial literacy and literal literacy.

Tax preparation should be automatic and handled by the government, full stop.


Again, I agree tax preparation should be easier. Most income is already reported to the IRS, so it stands to reason that the government could calculate my taxes for me.

I still think we're playing into the tax preparation industry by calling it daunting. I maintain the current process, while inefficient, is in fact easy for most Americans.

The IRS provides free fillable forms regardless of income level. The process for individuals is to first collect all of one's tax documents, read the instructions, and copy the numbers into the correct boxes. The forms calculate most of the math for you. If you make a mistake, the IRS will likely tell you. Not perfectly efficient, but far easier than I was led to believe.


How easy is it? The system here in Australia seems super well done. They already have all my data. I just look through it and confirm its correct and add in any deductions I want to make.


Its not terribly difficult if you only have say wage income and some interest on a bank account [0]. But, it can get very complex very quickly if you have other sources of income, or want to be sure to take all of the deductions you might be eligible for. On top of that, each state has their own set of taxes (though in my experience, they are simpler and largely rely on information from the federal taxes). Hence why most people use software or pay tax professionals to prepare their taxes for them.

The IRS probably could provide a more or less pre-filled form for many people. They have the information on most taxable income already. However, they dont. The reasons for this are complex, like the tax code, but mostly boil down to "politics".

[0] Here's the main tax form: https://www.irs.gov/pub/irs-pdf/f1040.pdf


I think that it's straightforward enough in Australia, but that's partially because we file and pay only federal taxes, with states levying payroll tax, land tax (or stamp duty), etc, but those are less frequent transactions and generally accountants are involved.

For federal taxes, payroll systems typically transmit your data to our taxation office on each payrun, and then a few weeks (or sometimes, immediately) after the end of the financial year, your details are already in the system and you just need to hit the button to submit.

Our tax office has also tried to make it easier for individuals with simple requirements to keep records of work-related tax deductions, etc, such that you can use a mobile app to record them, and then it can also be imported into your return with a single click.

I think for many people - myself included - it's easy enough that you can (and I have) complete it on your phone on the way to work on July 1st (the first day of our income tax year, and the first day you can file for the prior year).


>would not be surprised if articles like these are just another form of PR for tax preparation companies

They absolutely are not - the crux of the issue is tax prep companies should be a very niche product - the government should provide an efile option. Since most people's taxes are fairly simple they should be automatically done for you so all you have to do is log in and approve of the autogenerated form. At the very, very least e-forms should be pre filled out with what the government already knows about you because your employer, bank, or brokerage reported to them.

All this standard in almost all other developed countries. It's absurd there is for profit companies calling the shots in this area.


I’ve been paying for it for years and honestly I don’t regret it. There’s a lot that goes into their software that makes filing taxes really easy. Their site also provides so much help during the filing that I would probably spend hours researching otherwise. It’s not for everyone and yes I agree their taxes are deceiving, but does save me time each year.


The point is that filing taxes is way easier in many other countries, and TurboTax have lobbied hard to stop any changes to the system like that in the US.

In Australia, you just log on to a portal on the tax office web site and most types of income are already in there, pre-filled. You spend a few minutes putting in any deductions or other income, and then it works out if you're eligible for any credits, offsets etc. and you click 'File'. It's free and doesn't generally take me more than about half an hour per year.


I think the point is that tax filing being difficult, hence software to "make it really easy" is in some part their fault.


why cant the govt build a frigging excel sheet or a website for filing taxes because "THEY MAKE THE RULES" of what goes into a tax software. This is one of those things that is used by companies to force people into their ecosystem.

in india, the govt makes 4/6 tax returns available to be filed on the govt portal itself. It has a simple workflow based approach, asks you a few questions and in minutes you are done. Software companies exist alongside them but there is no "bad blood" between the two because they both do the same thing. the software companies products make it easier for tax professionals to keep a record and such but otherwise millions of users just dont bother with paid offerings.

that is a much better alternative than the one US has


I think the issue is less the truth I. Your statement (it’s undeniable really). But more that it’s by design. Intuit lobbies the govt to make the tax system over complicated, and the gov provided tax documents half asses as hell. And then along with few others (H&R Block for example) make a killing by having software that easily navigated the shit hurricane they otherwise would be a tax filing. Hell H&R Block can literally hire part time meth heads and window washers to fill out the forms, while without the software a Bonaire accountant can fuck up a filing.




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