The “IRS will functionally increase taxes” argument is a distraction and I doubt anyone here takes it seriously.
But the argument matters because it has given Congress political cover to let Intuit keep leeching off the system, so a response is in order.
Congress should require the IRS to give every person an auditable receipt of every tax they paid in a standard format.
Then, truly public-minded services can use the receipt to help people understand if their filings were correct.
There’s no good reason automated IRS filing would result in tax increases for anyone, it’s a fixable problem, and good grief I’m ready to stop paying TurboTax $180/year.
I'm usually lean to the side of "keep your government paws out of the business". But taxes aren't business - it's a governmental function, and there's no reason why the government who levies the taxes can't also produce proper documentation for it and make the compliance easier. There could be corner cases where it's hard to do, fine - just do the easy 80% and let the business take care of the rest. Let the business also be able to check it and profit if they find a mistake. If you don't believe The Man did it right - you should be able to download the data and give it to the same Intuit folks and see if they can do better. It's just adding an easy option, I don't see anything wrong with that at all.
Intuit would do fine with it - yes, they'd lose some income, but they have more then enough other business, both in more complex taxes and other ways of organizing business, they don't need to be able to fleece every single taxpayer. In fact, if such IRS system is built, they'd probably will make a good buck by providing added value offerings to it, just as they do now for existing tax filing systems.
Even if the system to do that costs double to the high estimate - let's say $0.5B per year, given the government projects are always over cost - it's still about 0.15% of the taxes collected every year. There's no reason why it'd have any influence at all on the level of taxes collected.
It seems illogical for the government to not have a free, easy way for the taxpayer to remit their taxes to the government (or submit the paperwork that should generate a return from that government). But at the same time I think it's fine to be skeptical that you should trust the government to be honest in showing you what amount of taxes you actually owe given how complicated the tax code is, and because there exists, ahem, a bit of an incentive problem there.
Is the free-filing system designed to maximize your return? Is it designed for ease of use? Generally I agree that TurboTax is a leech, but just because they're leeches doesn't mean there isn't an incentive problem that should be addressed.
>Then, truly public-minded services can use the receipt to help people understand if their filings were correct.
Do you mean a private company does this? Or something else?
Do you consider it an incentive problem for cloud providers to send you a bill instead of asking you to submit what you believe you should owe? We have societally solved these problems my making them auditable. People don’t necessarily trust the bill, and have means of disputing it. If you think the government’s tool is overcharging, you are welcome to file your own taxes and deal with the possibility of getting audited.
Wait, do people not keep track of their own usage to compare it to their AWS bill? I just use free tiers for personal projects, but I guess I assumed that there would be some log reviews at some point if you were using it for running an actual business.
Anyway, I guess that means my answer is "yes".
>If you think the government’s tool is overcharging, you are welcome to file your own taxes and deal with the possibility of getting audited.
"Pay what we say you owe or we'll nuke your finances with an audit". Yes this is exactly my problem.
> "Pay what we say you owe or we'll nuke your finances with an audit". Yes this is exactly my problem.
You might be misunderstanding in what an audit entails.
There’s no direct “nuking” of finances due to an audit.
In the vast majority of cases an audit is nothing more than “you claimed this on your return, can you please provide the documentation that supports it?”
More specifically, I believe most audits are about claiming child tax credit and them wanting documentation to support the claim.
If your finances get nuked that means you lied on your return, with very few exceptions.
Main exception that comes to mind is claiming expenses that are up for debate.
Also circling back to your earlier comment. Yes the tax code is needlessly complicated, Intuit et al. are the ones who caused that and are actively lobbying against simplifying it because their paid services would become obsolete if the tax code was nice and simple.
> Is the free-filing system designed to maximize your return?
The solution to this is for the government to publish the source code in the public domain. Then anyone who can do better can fork it and sell it, which will make that market more competitive when it's cheaper to enter because the government has already done 80% of the work, but there will only be a market for this if the government isn't maximizing your return. "Better return than the free system or your money back" would be a great way to get customers, and they'd be viable with fewer customers when they're only paying the incremental cost of doing what the government failed to.
And then the government system would be embarrassed if private forks could frequently beat them, which improves their incentives.
Oh, nice, this is a fun idea. If submitting taxes were essentially an open API endpoint and the front end was an open source government-sponsored UX. Love that.
The US Digital Corps has the technical chops to do that well if the politics could work out.
To the Intuit folks reading this because your boss told you to keep an eye on the sentiment on Hacker News…don’t worry you can _totally_ have your own fork and since you’re the best you would have nothing to worry about. Since you care so much about the American tax payer, I look forward to your enthusiastic support of more transparent tax filing.
You don't need the code even - though the code, as being already paid for by the taxpayers, should be available to them anyway - the rules are public, the data should be available to the public, so you can just reimplement the rules and see if you get the same answer. They key here to make the data a) available b) portable c) every decision the system takes be documented and having the audit trail.
You do need the code because if the public system gets it right for (or is otherwise used by) 90% of the taxpayers, a private system for the remaining taxpayers would have to cover its costs with only 10% of the revenue. Releasing the code reduces their costs because they don't have to duplicate the parts the government already got right, they only have to fix what it got wrong.
"The rules" in this case is the tax code, which is thousands of pages and written in lawyer. You can imagine how converting that into computer code is a non-trivial undertaking notwithstanding that it's public information.
> a private system for the remaining taxpayers would have to cover its costs with only 10% of the revenue.
Is it that hard? Americans filed about 260M returns last year. 10% of it is 26M. Let's say you get only 10% of those - since you're not the only person on the market - to pay you $100 (if you save a significant amount on taxes, paying $100 for it would make sense, won't it?) - that's $260M, or about as much as the government says their whole system, for all 100% of taxpayers, would cost. If you can do better job than the government on the efficiency (not a very high bar), and you only have to support 1/10 of the volume the government does, I think these numbers look ok for you.
> You can imagine how converting that into computer code is a non-trivial undertaking notwithstanding that it's public information.
It is. But there are multiple businesses who already have been doing it for years, so it looks like a solvable problem.
> Let's say you get only 10% of those - since you're not the only person on the market - to pay you $100 (if you save a significant amount on taxes, paying $100 for it would make sense, won't it?) - that's $260M, or about as much as the government says their whole system, for all 100% of taxpayers, would cost.
TurboTax is ~$39. Also, the cost of developing the system doesn't depend on how many people use it, and those are only the development costs, not anything else a business has to pay, like marketing, billing or interest on capital.
Moreover, suppose a business could actually get away with charging $100 and that would be enough to cover their costs. Why would you want this as opposed to releasing the source code, which reduces their costs and allows them to get by charging $25, while driving the market price down to that level by reducing the barrier to entry?
> It is. But there are multiple businesses who already have been doing it for years, so it looks like a solvable problem.
That was when you don't have a taxpayer-subsidized competitor providing an almost-as-good service for free.
$39 is the cheapest offer (well, beyond free ones). If you want to cover your mortgage, your charity giving, savings, maybe a little stock investments, maybe some side gigs, then you very quickly get to $100. And of course state is extra (my tax return, if I choose to file with Intuit, would be at around $120 with current prices). It's not all people, for sure, but in those 10% that need non-trivial filing, those would be much more frequent that "one salary, nothing else" fold. For the latter - the pre-baked offer would be the way.
BTW, that's the cheapest offer TurboTax now does, where you do all the work. They have full-service offerings now, there it could be 3-4x from that easily. So I don't think their business is much threatened.
> That was when you don't have a taxpayer-subsidized competitor providing an almost-as-good service for free.
They already have the platform and 99% of stuff implemented. The only thing they need to do is year-to-year updates. True, it's some work, but as I just shown, their potential market is in hundreds of millions of dollars. Every year, recurring. I think many VCs would look favorably at such potential - and here we're talking about already established companies with all sunk costs already processed and paid off, needing to spend just on maintenance and recurring updates. I don't think it's as bad as you think it is.
> $39 is the cheapest offer (well, beyond free ones). If you want to cover your mortgage, your charity giving, savings, maybe a little stock investments, maybe some side gigs, then you very quickly get to $100. And of course state is extra (my tax return, if I choose to file with Intuit, would be at around $120 with current prices).
That's the right now pricing, which is basically an attempt at price discrimination or bait and switch -- lots of people have common deductions like that and then they get sucked in with a free offer or $39 only to learn it's going to be more. But those are the kind of things a government system would be likely to handle well, because they actually are common deductions.
Whereas what you'd need from a private system then is that they don't phrase the questions in such a way that it pressures you to be unnecessarily fearful and overpay your taxes, and strike the right balance in the interface between simplicity and complexity so that you actually find every deduction you're entitled to without having to spend many hours looking through forms.
So then the customers are the people who have weird taxes, rather than the ones who have some mildly complex but fairly common deductions they can navigate in the free system. And yet not the people whose taxes are so weird or complicated that they end up going to a private accountant.
That's not necessarily a huge market.
> They already have the platform and 99% of stuff implemented.
By "they" you mean an incumbent. What about anybody new who wants to enter the market once the dynamics are different?
You are right that cheap lower layers are a funnel to guide people into expensive higher layers. But if the business model would be to cater only for 10% hardest cases, you don't need the funnel, since people coming to you already have a $100 need, so to say. You can't start with $100 price tag because people are going to ask - why would I pay $100 for just basic stuff? If you cater to top 10% then they answer is obvious - because your stuff is the most complex 10%!
That's a different approach, for sure, but a viable one nevertheless.
> That's not necessarily a huge market.
It's not huge, but our tax system being a byzantine spaghetti mess it is, it's bigger than you think. I have relatively simple taxes, yet I certainly wouldn't want to do it all by myself and I do shell out over $100 each year to do it right now - so I probably would at least consider using such a system. The rest depends on how well it works, of course.
> What about anybody new who wants to enter the market once the dynamics are different?
That's no different from entering any other established market right now. Yes, incumbents have an advantage, this is always so, always have been so and always will remain so. It's hard to deal with incumbents - and yet it's possible, I myself am an evidence for it - despite Google being a giant of an incumbent, I am a paying client of Kagi, who are a startup in the space. I don't know if they will survive long term, but that's nothing new too.
> But if the business model would be to cater only for 10% hardest cases, you don't need the funnel, since people coming to you already have a $100 need, so to say.
Now consider that the people with a $100 need are going to depend on how good the free system is. If the free system sucks, it's a lot.
But if the free system sucks, lots of people are going to be complaining about it because they don't like paying $100, and then it might improve some. The number of people who need something else goes down from 15% to 8%. Then there are fewer complaints, but the paid system has that many fewer customers.
At some point there are few enough people complaining and the free system stops being responsive to their complaints, but the main thing that depends on is how much the government cares about making their system any good.
If the premise of embarrassing the public system when a private system can do better is successful, the public system could get arbitrarily good over time -- until the private system doesn't have enough revenue to do better.
You push that point further down the line by not forcing the private system to duplicate the public system's work.
> That's no different from entering any other established market right now. Yes, incumbents have an advantage, this is always so, always have been so and always will remain so.
It's not the incumbent's advantage which is the issue because that isn't the change. What you'd be doing is closing the door to new entrants regardless of whether the incumbent continues to exist.
Even if the market provided enough revenue for Intuit to continue if well-managed, if they were to become mismanaged or otherwise go out of business, or just do a crappy job while not actually ceasing to exist, no one could replace them because no one else could cover the initial entry costs while competing with the free system.
I'm sorry if this is stupid - I'm not American and this is entire conversation about taxes here is nuts, but:
>Is the free-filing system designed to maximize your return?
Why does it need to? I mean, why do you need a tax return, if your taxes would be lower if you just got charged the right amount in the first place? And then isn't the role of society to audit their own taxes, and at the same time support candidates that vow to simplify the tax code?
To simplify what is an absurdly complicated topic, the US Tax Code gives you a lot of "breaks" for certain things. For a lot of those things, the government won't know they happened unless you tell them (and you prove it). In most cases (i.e. for regular salaried or hourly employees) your taxes are automatically deducted, and then at the beginning of the new year you basically give the government a list of things that happened that could/would/should reduce your taxable income, which results in you getting money back from the government (sometimes).
> if you just got charged the right amount in the first place?
right amount is loaded phrase. There is big range and disagreement over what is right amount.
> And then isn't the role of society ... to simplify the tax code?
It is about as intelligent as saying isn't it role of society that ensure we all live peacefully, then we don't need armies, defense budgets and so on.
You've always been able to file your taxes freely.
My biggest problem is the IRS already knows what I owe, with the exception of a few small things. So why do I have to go through the process of telling them what I think I owe.
For anyone interested in why the system looks the way it does, I recommend patio11's insightful recent blog post, which is nominally about payroll systems but ends up discussing the history of taxation in the US because that's the origination of many of these systems: https://www.bitsaboutmoney.com/archive/payroll-providers-pow...
A relevant quotation for much of the discussion here:
> And, relevant to the question of whether Intuit controls U.S. tax policy: it can’t, because that would imply they have wrested control from Norquist. Norquist considers a public filing option a tax increase by stealth and opposes it automatically.
patio11 has a huge and well known bias here, which is that he wants to claim, not necessarily with evidence, that all inefficiency is caused by governments and not by the private sector.
A comparison of tax filing in the United States with other countries, including those where governments are much bigger and more interventionist, leads to a different conclusion.
Forget about the evidence of other countries (which is completely valid), I just hate the argument that government inherently because it's government is inefficient and will never be effective
In the US half the people in charge of the government hate it and want it to fail. Of course it's going to be bloated, inefficient, and costly. It's being sabotaged from the top. If everyone agreed that, once we make a choice on what the government is going to do we should do it well, we could have government services that are just as effective as whatever private enterprise example people always like to cite (being from the South it's usually the Chick Fil A drive-thru)
And that's why our west coast cities, which are not run by the half that hates government, are shining beacons of just how effective and successful governments can be.
There's this idea that west coast cities are shitholes, and honestly it's BS. I live in the Seattle suburbs and I'm downtown regularly, and the only obvious problem is the public disorder visited on us all by Martin v. Boise. It's pretty clear from housing prices that wealthy people are still happy living in Seattle: the market is speaking loudly. Don't get me wrong—I live in the suburbs for a reason, you couldn't pay me enough to live in Seattle—but as cities go, it's fine. Republicans who hate big disorderly cities like I do should just enjoy their suburban parking lots and breathing room, and quit pretending city chaos equals Democratic mismanagement.
I agree that in many cases there isn't any substance behind the talk. Yet the single largest state-to-state flow of people is from California to Texas, not the other way around; surely there's something objective that is driving that. And, given the time and effort required for such a move, it's not something most people would do on a whim without doing at least some research.
Hm. We have plenty of Washington-to-Texas migration from the suburbs, and there's no serious contention that, say, Auburn and Kent are mismanaged by Democrats. I know multiple families who have left for Texas in the last few years, and it wasn't "this place has crap government," it was "this place is woke." That is, they wanted more "traditional values" in their kids' schools and fewer BLM and pride flags. To me that's a valid and objective reason to leave (and honestly they're welcome to go, I don't want them running for school board even if we are friends) but it doesn't support the contention that government here is incompetent. It just means government here is socially liberal, which it unquestionably is.
"why is the largest single state transfer from the largest state by population to the second largest state by population" is perhaps not that surprising a result.
Perhaps, but look at the entire people. California is losing people; Texas is gaining them. And it's not just California that has a net outflow to red states; New York and Illinois are also seeing an outflow.
An even better comparison in California to California. The year Apple IPOed, Reagan handily won California. Santa Clara County only voted a democrat for President twice between 1948 and 1987–LBJ (who won 20 points nationwide), and weirdly enough Hubert Humphrey. In the founding and golden ages of Silicon Valley, it was a red suburb in a red state. It was like what Florida is now.
Yeah, no. GOP today has very little semblance to GOP of Reagan times (although the seeds of the present insanity have been sown then, and even earlier - Trumpism is a perfectly logical end result of Birchers, "moral majority" etc). And there's nothing "golden age" about Florida today; certainly not when it comes to quality of governance.
In terms of tone, it’s quite different, but in terms of governance Trump’s term was a pretty standard GOP term with the exception of immigration and foreign policy—which aren’t issues at the state level. Tax cuts, bootstraps, etc.
Calling Trumpism an extension of Bircherism is a coping mechanism, seeing as how the GOP is winning record shares of minorities under Trump. Instead, the Trump GOP is a hybrid of the Reagan GOP and Jacksonian/Jeffersonian populism. The opposition to immigration given the prospect of cultural change also appeals to many immigrants who left those places for good reasons. My parents immigrated to Ronald Regan's America, not Kamala Harris's America.
Florida is a tremendously well governed state. It has great schools, low taxes, low debt, a booming economy, etc. I know multiple families that moved there from Illinois and New York in the last couple of years.
So, letting any veteran be a high school teacher without any further qualification makes it great schools? The governor purging state universities makes it great schools?
Letting veterans teach while working on their degree, which is what that law does, is a great idea.
And curating the education offered in public universities is a great idea too. Public universities must serve public purposes. CRT serves to undermine the society, not reinforce it.
It’s especially important to get rid of it in a majority-minority state like Florida. CRT education is racism. It teaches minority kids a different worldview and values from white kids—and an inferior one. My mom was born during British colonization, but she was educated as an equal person. She can tell you about Plato and Tolstoy. My kids—thanks to living in a blue state—are learning how to whine about “white men” and see themselves as different, and aggrieved. They will not be equal citizens when they grow up, because they are being socialized to be a lower, dependent class.
It wasn’t the British running east Pakistan from 1947-71. I’ve actually posted an column in Bengali from Prothom Alo here before about the pre-71 education system (which does praise its high standards and quality from the British but also says that Pakistan federal government invested a lot. And then goes on to say after the 71 war the rate of people getting first division in BA exams, went up to something above 50%, which it then compares to Bankimbabu getting a second division only and leaves you to draw your own conclusions from that)
Another important point is that in 1947 right before independence the Muslim League in Bengal (remember AIML was founded in Dhaka and sponsored by Nawab Dhaka!) was demanding parity of representation (professors, etc) in the education system with Hindus and the Hindus were refusing and telling them to set up their own educational establishments.
I don’t know anything about the education system back then. My mom had a British tutor.
> Another important point is that in 1947 right before independence the Muslim League in Bengal (remember AIML was founded in Dhaka and sponsored by Nawab Dhaka!) was demanding parity of representation (professors, etc) in the education system with Hindus and the Hindus were refusing and telling them to set up their own educational establishments.
Is your point that CRT is a good way to turn America into a third world tribal society?
I understand, and it still isn’t. I’m just focusing on a narrow point: my mom perceived herself as equal because she received the same education British kids. Separate but equal doesn’t work. Kids must learn to view themselves as similarly situated, or else they will not be.
In my view, this is a big problem with the Muslim world. We have this tremendous victimhood complex. Contrast the East Asian countries, who have just sucked it up and focused on getting rich.
Abdus Salam tried to get the OIC to commit to spending a certain % of GDP on education and research and they basically told him to pound sand. It didn't help when Pakistan (Zia) didn't back him for UNESCO chief.
That doesn’t really respond to the point, though. Is Seattle’s government efficient and effective? To my recollection, Seattle doesn’t have great public services.
It doesn't look to me (from 20 miles away) as if Seattle's government is notably efficient or effective, and I'd even say one-party rule is partly to blame: opposition parties serve a useful purpose. But I don't think the standard Republican sneer of "look what a crappy job the Democrats do of running the big cities" makes any sense, either. The things Republicans are pointing at as symptoms of bad Democratic government are mostly just side effects of what people in American cities like.
This is where it gets subjective again and I bow out, because the Seattleites I know would disagree with you (except about the cops, which is the same problem nationwide).
Seattle's 2021 budget was $5.5B against a population of 734k or about $7,500/head. Bellevue, WA's 2021 budget was $1.7B for a population of 149k, or $11,400/head. To pick a random DC suburb as a comparison, Alexandria's 2021 budget was $955M for a population of 155k or about $6,200/head.
I think there is a correct perception that many west coast cities are shitholes relative to what their per capita tax expenditures buys in most other cities. It is an argument about relative ROI, not absolute quality of life. If I spend $150k on a car, I don’t expect a used Toyota Corolla.
Cities like Seattle generate inexplicably little public value for the extremely high per capita spending. It should be much nicer for the amount of money it spends. The quality of services relative to expenditure is not defensible. Many cities do far more with far less. I’ve lived in Seattle around downtown for a long time, but it is far from the only city I spend time in. If per capita spending was correlated with quality of city experience, Seattle should be one of the best cities in the world to live in, but I don’t think anyone would make the argument that this is the case. As with San Francisco, most of that taxpayer money is lit on fire with no accountability and no contribution to the public good.
This is similar to the observation that on the same stretch of highway, California somehow manages to spend 10x per mile as its neighbors for visibly and audibly worse roads. People have made jokes about it for decades because the contrast is so stark if you drive on those roads.
It is not unreasonable for taxpayers to expect better than what is available in other cities when they are spending several-fold what those other cities are to achieve, at best, the same results. It doesn’t have to be a total shithole to be grossly mismanaged. People in Seattle spend enough tax money per capita that their city experience is far worse than what they have a right to expect.
I agree with almost everything here, but this isn't what I'm referring to. What I hear ad nauseam is not that SEA/PDX/SFO are used Corollas but that they're Pintos with fire coming out the tail end. If what you're hearing from Republicans is "Seattle is an ok city but should have much lower taxes for the services they get" then I want to know what media you consume, so I can recommend it to my right-wing acquaintances.
I'm not sure they would be. I limited to "west coast" cities because other cities' issues are sometimes blamed on Republican governors. West coast cities typically aren't.
"shining beacons" The same cities in states that are now in massive deficits? or covered in feces? with massive increases in drug and homeless problems? The same cities that have people feeling from states because of overregulation and overtaxation?
> In the US half the people in charge of the government hate it and want it to fail. Of course it's going to be bloated, inefficient, and costly. It's being sabotaged from the top.
How are republicans sabotaging New York City, San Francisco, etc? Historically, half of all governmental spending in the country happens at the state and local level—-and that comprises most of the services that affect people’s daily lives the most. Blue states could have big, active, well run governments if that were possible, and republicans could do very little to “sabotage” them.
In practice, the most well-run places in the country tend to be moderate red areas where government has limited objectives but does it well. I grew up in red state Virginia and it was very well run. When California was well run, it was a red state. Florida is a well run state. I live in a Romney ‘12 county in a blue state, and it’s really well run, unlike Baltimore, where I used to live. I actually love going to the county landfill/recycling center, because it’s so neat and orderly and well run.
Look, I’d love it if there were American cities like Copenhagen. But there aren’t any, and it’s some serious cope to blame that on republicans, seeing as how a republican couldn’t get elected dog catcher in these places.
I'm with you. The Republicans are the cause of all problems for liberals, and when you point out issues with an entire City->State government chain of Democrats it's still the other parties fault.
I love living in a large city, but in the last 5 years it has not become worth it with all the political fighting, high taxes, drugs, homeless, crime, etc... I found peace in a small city, low taxes and a government I don't think about because they stay out of my way.
> I just hate the argument that government inherently because it's government is inefficient and will never be effective
The big incentive problem here is that democracies reduce the power held by private individuals. So (primarily wealthy, powerful) private individuals have an incentive to market the idea that government is inefficient to reduce the impact of decisions made by democratic choice.
This same conflict occurs throughout history. For example, the Magna Carta was a major concession of the power of the English King to lower nobility. There are always going to be people who dream of running their own fiefdom and see democracy as at best a nuisance and at worst an active impediment.
> For example, the Magna Carta was a major concession of the power of the English King to lower nobility. There are always going to be people who dream of running their own fiefdom and see democracy as at best a nuisance and at worst an active impediment.
...what? Are you seriously trying to claim that absolute monarchy is a form of democracy?
The opposite. Absolute monarchy is essentially when an individual (the monarch) has absolute power over a fiefdom. Similarly to how slave-owning plantation owners wielded near-absolute power over their plantation.
What I'm saying is that there has always been this conflict where (some) private individuals want absolute reign over others, and democracy limits this power. The Magna Carta is just one classical example of that.
The distinction between private and public is a little blurred when it comes to absolute monarchs, but the general trend is that the more absolute power a monarch has, the more they're running it essentially as a private estate. That's why lists of the wealthiest people in history often include rulers with absolute power.
Due to the conflict, the private power of monarchs has weakened. That's why, for example, in The Crown we see a monarchy that has to concern itself with public perception and the Prime Minister. But William the Conquerer essentially owned much of England.
> I just hate the argument that government inherently because it's government is inefficient and will never be effective
The more general argument is that monopolies are inefficient, and most instances of government programs are monopolies.
> In the US half the people in charge of the government hate it and want it to fail.
This is uncharitable. It's more accurate to say that they expect it to fail and hate government programs because they regard them as inefficient and net harmful on average.
> If everyone agreed that, once we make a choice on what the government is going to do we should do it well, we could have government services that are just as effective as whatever private enterprise example people always like to cite
The inefficiency is caused by the principal-agent problem more than anybody's ideology. Even if every politician wanted and expected the government to be effective, you still have the problem where a government program is providing a service consumed by e.g. 5% of the population and is serving 20% of them poorly. This is only 1% of the voters, who themselves have to balance their vote against their positions on every other issue on the ballot, whereas in a competitive market the company doing that would be losing 20% of their customers to a competitor and a competitor would be available to satisfy that 20% of the customers.
Meanwhile if a program is inefficient but its total cost is <1% of the total government budget, nobody is paying attention to it, but the same is true of most other programs which causes the average efficiency to be poor. Whereas the proprietor of a small business which is <1% of the economy is going to care quite a lot if it's wasting money and be paying attention to that business in particular, because it's their business and it's their money.
We don't have great solutions for these in the public sector. The best you can say is that sometimes it's worth it. For example, every taxpayer can use tax filing software and it has no unit cost, so even if the government is less efficient than a private company, that could still be worth it because you can spread the fixed cost of developing it over so many people. This is a general argument for the government to create and publish open source software whenever there is a reasonable expectation it would be widely used.
What it isn't is a general argument for government programs, because products with zero unit cost are relatively uncommon and so are software products that are both widely used (as opposed to having a particular niche) but not already well-served by existing free software. Software in the service of regulatory compliance is unusually well-suited to being published by the government. (And they should definitely be publishing the source code.)
> The more general argument is that monopolies are inefficient, and most instances of government programs are monopolies.
Even more general, markets where it is hard for new competitors to enter are inefficient. It's perfectly possible for a market with 10 or 20 competitors to stop competing for mutual benefit. I'd even argue a monopoly (a single dominant company) is fine, so long as it's easy for competitors to enter the market.
Consider the WW1 Christmas truce and other fraternizations. If the same actors are together long enough, they'll act for mutual ease. That was a good thing in WW1, but it's not a good thing when companies stop competing in a capitalist society.
> It's perfectly possible for a market with 10 or 20 competitors to stop competing for mutual benefit.
As I remember it, the empirical research says two competitors can keep a stable monopoly cartel going for a long time. three can maybe do it for a while. With larger numbers things get very unstable.
> I wonder if this was a simulation or an observational study of real markets?
It's kind of both.
Try to name a market where the largest company in the market has <15% market share but they still have a successful cartel going. They exist but you're going to keep finding that their enforcement mechanism is some kind of violence or (equivalently, through the government's monopoly on violence) regulatory capture.
Drug cartels can have lots of members because they murder you for defecting. Landlords collude through zoning boards. OPEC is literally a cartel of governments.
You can also kind of reason this out.
Suppose a market has two companies and the smaller one has 40% market share. If they could increase their market share to 60% by cutting their margins in half, that's losing money, so screw that. The bigger company doesn't even have to buy them off.
Suppose a market has eleven companies and the smallest one has 1% market share. If they could increase their market share to 20% by cutting their margins in half, they're making 10 times more than they do now. The other companies would have to buy them off. But how? More market share without lowering prices? Even if they could arrange it, any company with less than 10% market share would rather have 20% at half the margins, but in a market of eleven the smallest company can't have more than 9% without making someone else the smallest company. And that's if having the lowest price only gets you 20% market share and not more.
Now, you can make up numbers that allow coordination with arbitrarily many companies. Maybe lowering your margins to zero doesn't get you any more customers at all and then no one would have any reason to do it. But how many real markets work like that?
You're suggesting the half that wants smaller government impedes the day-to-day productivity of the half that wants it bigger?
Some things work well in government given limited resources. Other parts of government seek bigger and bigger budgets to implement ideological goals, no matter their efficiency.
(Any amount of money spent is justified by the end goal since the purpose of government is to print however much money is required to ensure complete social welfare.)
The half that wants it smaller, when it succeeds, guts the government, with the result being that whatever remains is incapable of properly carrying out the duties it is still assigned.
Indeed! Japan’s system is very efficient, and he has lived there for some time, so he should be familiar.
Similarly, it took the US forever to implement an instant payment system (commercial banks built Zelle via Early Warning Systems and RTP via The Clearinghouse, and the Fed finally built FedNow after Congress directed them to in order to ensure universal access) while India and Brazil rapidly rolled out their implementations (UPI and Pix, respectively).
Really? I live in Japan, last month I had to fill my taxes, and I found the process to be really convoluted and annoying compared to my home country (Spain). Likewise, banks feel really obsolete and inefficient here.
I shudder to imagine how bad the American system is to make Japan look good :/
My wife calculates and submits our taxes (here in the US). It typically takes her 40 to 60 hours to complete, and that's after spending around $100 USD on tax preparation software to make it easier.
To be fair, our taxes are more complex than many people's (I live in a different state than my employer and we have some stock market investments), but it's still ABSURDLY difficult.
And I'm not counting the time needed to respond to Federal or State follow-ups 9 months later where they question the values we provided. That happens to us about every 2-3 years. So far it has only once found a minor error on our part.
I do my taxes myself for my family. I have W2s, K1s, various 1099s for investments, own a home, and deal with carry overs from the previous years.
It takes me about an hour to do it. And then another hour to amend them many months later when I get my actual K1s.
How hard is it to answer 100 questions and copy numbers over from one place to another? W2 box 1 goes to W2 box 1. No I don't own a corn farm. I donated this much to these organizations. I would consider 25% of my rent for my home office.
Both turbo tax and tax hawk will connect to your investment bank and populate all the obscure 1099 stuff there. Dealing with international investment was definitely confusing the first time around, but definitely not 40 hours worth.
40 hours is 8 hours a day for 5 days straight. I don't know what you value yours wife's time at, but if it really takes that long you might be better off paying a CPA a few hundred dollars.
Yeah, just taxes alone doesn’t seem like it should take that long—but doing accounting for taxes can take a long time, especially if you’re self-employed and taking deductions, or have employees for your schedule-C business, etc.
Perhaps the poster is including the accounting in the tax prep.
Yes, because there is only one tax authority (国税庁, Kokuzeichou, National Tax Agency).
Here in the US, we have more than one tax authority:
We have the IRS, which is the federal tax authority.
Each state then has their own tax authority.
Each county then has their own tax authority.
Each city then might have their own tax authority.
And we must submit filings and returns with and pay taxes to all of them as applicable, and they all operate on their own laws, regulations, and taxes.
To reframe this, let's talk about sales tax. In Japan, there is only one nationwide sales tax; because there is only one tax authority.
In the US, sales tax might be levied at the state, county, and city levels as applicable (federal doesn't levy sales tax, as far as I'm aware). Some might not have sales tax, others might, and they are all different rates. The sale tax in one city will be different from its neighbouring city.
TL;DR: Paying taxes in the US is complicated because everyone wants their taxes.
> Paying taxes in the US is complicated because everyone wants their taxes
Everyone wants their taxes and refuses to cooperate. Most countries have some kind of local or regional taxes, and the single tax authority is responsible for collecting and distributing them all.
I get that the federal level in the US is a bit special (EU for example doesn’t tax citizens directly, instead the member states pay fees from their tax revenue). The local tax authorities per county surprised me though - what a mess…
>Most countries have some kind of local or regional taxes, and the single tax authority is responsible for collecting and distributing them all.
Most states operate this way. Counties will often collect city taxes, and in some states the state will collect the city and county taxes. There are obviously exceptions but within states there's a lot more cooperation than you might think
And most individuals are not paying income taxes to cities or counties, they're paying property taxes and that is typically automatically handled via their mortgage company
>>I get that the federal level in the US is a bit special (EU for example doesn’t tax citizens directly, instead the member states pay fees from their tax revenue).
the US Federal government was not suppose to tax citizens directly either, thanks to the 16th Amendment that was passed under the lie that it would only ever be a "Tax on the rich" of 3% and only apply to 1% of the people, now the federal government takes nearly 25% of all citizens incomes,, and uses that money to bribe people for votes and extort states for policies they desire...
I'm curious percentage wise how many people are having to file returns with their city or county. I've lived in two states (Alabama and Georgia) and even in a city with an "income tax" at the city level and have only ever had to file federal and state taxes
In Alabama the county and city I lived and worked in both had what they deem occupational taxes which are effectively an payroll tax, but there was no system of exemptions or refunds, it operated as a payroll tax only. My employer had to file the taxes, not me
I suspect the vast majority of people in the US only ever file state and federal returns, although a lot of people live in small states or along state borders so a lot probably have to file two state returns
For most individuals (as opposed to businesses), the only relevant taxes for the tax return are federal and state income taxes. Even then, there are several states in the country that have no state income tax, so you end up filing only the federal return. I live in such a state, and I still find the system very convoluted compared to what I've seen elsewhere.
Most crucially, it's still unclear to me why a return has to be filed at all for any tax that is already paid (from wages), and why it has to be manually compiled in cases where the agency has all the information about taxable income. If I don't owe anything, I shouldn't even need to file anything. If I do owe taxes, send me the forms prefilled and let me either sign off on them or add any missing info as needed. Anything over and above this is just pure waste of everybody's time and an opportunity for parasites to profit.
Japan also has prefectural and city taxes that vary by prefecture/city, and get charged separately (the bill comes later in the year from the national tax), they still get their taxes. Just in a less convoluted manner.
Having worked in IT with both the public and the private sector, my opinion is there is no difference in 'efficency' between them at all.
Efficiency seems inversely correlated with the size of the organization. Public sector usually has large orgs, but they are not run less efficient than equivalently sized enterprises.
You might jump to the conclusion that smaller entities would be the efficency solution, and even observe how this allows sometimes for a smaller entity to outcompete a big enterprise. However, if you approach it from a more systemic analytical point of view you have to take into account that surrounding the 'small' efficient business, there are dozens if not hundreds of unsuccessful competing small entities vying for the same niche. Taken together and purely looking at aggregate efficiency, this collection of competing businesses is even less efficient. The strenght of an openly darwinian struggle lies in innovation and adaptation, not in aggregate resource waste reduction.
> Norquist considers a public filing option a tax increase by stealth and opposes it automatically.
When phrased that way, it sounds ridiculous. But those are the author's words, not Norquist's or ATR's.
What Norquist and ATR want is for people to be aware of taxes. In their words (from the article): "More than any other public policy, the way the government raises revenue—how much, at what rates, under what circumstances, from whom, and for whom—has the greatest impact on our economy’s performance."
And even the article admits that making taxes easier to file has the side effect of "decoupling public sentiment and policy changes" (that is, making "tax increases by stealth" easier):
> ATR [Norquist runs Americans for Tax Reform] is institutionally skeptical of withholding, because they believe that withholding allows one to increase taxes by stealth. I don’t think it is excessively partisan to say that, if one phrases that claim a bit more neutrally as “withholding increases tax compliance by decoupling public sentiment and policy changes,” the people who designed the withholding system would say “I’m glad the National Archives makes our design documents so accessible. We wrote them to be read!”
> And even the article admits that making taxes easier to file has the side effect of "decoupling public sentiment and policy changes" (that is, making "tax increases by stealth" easier)
How on earth is this possible? Instead of not having any clue, you actually get to see everything. My taxes have been automatic for years and I still have to approve every step of them along the way and I get to see and approve everything which had been filled in. The big difference is I now not have to spend hours researching everything if it remains the same as it was last year and only check if it changes.
Two psychological mechanisms I can think of for this:
It's one of the reasons why every company in the world wants you on auto pay. It's a lot easier to keep you as a customer through the price hikes if it's only a line item on your bank statement rather than an explicit payment you're making every month. If most people are the same every year, then a small increase from one year to the next barely gets noticed because people are going to be looking for changes to their records, not changes on the bottom line, so the fact that the bottom line is 0.5% more this year will be more likely missed in the face of answering "are the records the IRS claims they have about me the right ones".
The other is related to the concept of "price anchoring". Approving pre-filled numbers becomes more about validating that your information is correct, rather than determining (and looking at) the tax value for the year. It pre-assumes the amount owed is correct (in both the calculated and the policy sense) and sets the expectation that you probably owe whatever the pre-calculated amount is.
Whether it actually plays out in reality and tax payer behavior is up for debate. but certainly there's a reason why so much of sales and financing tactics throughout commercial world tries very very hard to steer you away from the actual math when you pay for something.
> It pre-assumes the amount owed is correct (in both the calculated and the policy sense) and sets the expectation that you probably owe whatever the pre-calculated amount is.
Considering the penalties for getting it wrong. Simply no. You assume it is correct if it matches the data you have, not by default.
What it does do is stop you from having to calculate the nitty whitty parts of the statements when the data from the tax agency matches the ones you got from the bank, your employer etc and you have the partial coverage of having been provided wrong data. You are still wrong but -most likely- you can amend if there are discrepancies outside of your control.
You get an extra point of reference, not a -get out of filing for free card-. Since the system I'm part of also forces companies to provide specialized summaries it's a lot easier to get the right data as well. Correctly filing (which includes ALL deductables) should never be so complicated you require a special degree or a leeching company to do it for you.
>Considering the penalties for getting it wrong. Simply no. You assume it is correct if it matches the data you have, not by default.
We live in a world where people routinely borrow from "tribal lending services" at 500% APR. Where they buy a car on the monthly payment value without consideration for APR or loan term. Where an entire financial crisis was caused in large part by people taking out bad loans they knew (or should have known) were impossible for them to service properly despite the consequences. Where people don't review their own pay stubs only to discover their employer has been cheating them for years or has improperly withheld taxes. And a world where despite the existence of both the 1040EZ and e-filing people still find tax paperwork confusing and too hard.
Forgive me if I don't share your optimism on whether most tax payers would assume the answer the government got was correct or not, regardless of the consequences. It's also not an unreasonable assumption either, why in the world would you want a system where you couldn't assume the result was correct most of the time?
> [...] I don't share your optimism on whether most tax payers would assume the answer the government got was correct or not [...]
Rephrasing your response, it sounds like you would say you expect most tax payers lack the ability (or interest) to compute their taxes correctly under any circumstances.
Review has nothing to do with it.
I believe that providing people the correct numbers is just going to increase compliance. They don´t want to audit anything. They want to pay what they have to pay and get on with the rest of their lives.
I can't speak for "under any circumstances" but I suspect the vast majority of tax payers already outsource their tax computations to either one of the major software vendors, one of the major tax services or their own financial institutions / private accountant. I assume this because otherwise I would not expect "IRS makes a self service portal" to be headline news or a game of politics.
Beyond that though, the thread discussion was about whether there are any mechanisms by which the government pre-filling people's taxes could '[make] "tax increases by stealth" easier'. I proposed there were, though with no claims to the degree to which that actually had real world impact on tax payers and their behavior.
If we assume as you say that people "want to pay what they have to pay and get on with the rest of their lives", then it seems reasonable to think that anything which reduces the amount of effort and thought necessary for the process also has potential to '[make] "tax increases by stealth" easier', simply by the fact that it reduces the amount of thought one needs to afford to the concept of taxes in the the first place.
The alternative would be to propose some mechanism by which the government pre-filing people's taxes would increase the degree to which they pay attention to their taxes. Or at a minimum one needs to argue that people would pay exactly as much attention as they do now and thus it would be a net-zero change in focus on taxes, but if that's the case, then any compliance increase would be a function of making it easier to be in compliance at all, which is tangental to whether or not it '[made] "tax increases by stealth" easier'
> The big difference is I now not have to spend hours researching everything
I think you've answered your own question. If it weren't automatic, you would spend hours learning about tax policy, what is taxed, what is deductible, and what credits exist.
Personally, I learned most of what I know about taxes while preparing my own.
Norquist don't want people to be aware of taxes. They want to not pay taxes; and believe that if taxes would be citizen friendly, people would be more welcoming to pay them. By making it as obnoxious as possible, they hope to have a society that provides them services by the magic of fairy dust.
> What Norquist and ATR want is for people to be aware of taxes.
Norquist is entirely disingenuous. Nothing would stop a tax payer from looking into the details of taxes assessed just because the government prepared something for them. (In fact, nothing would prevent a tax payer to continue to use TurboTax to verify and understand the taxation.) On the flip side, nothing about the current system actually makes tax payers more aware of the taxes they’re paying. Half the marketing of TurboTax is to allow you to finish your taxes quickly by basically just clicking through and adding basic information.
Speaking for myself, I would definitely be _more_ aware of taxes I’m paying if the government would prepare taxes for me. When comparing my filing of taxes in the US to the filing in Sweden that’s definitely the case. Sweden sends me information which I can then verify and correct if necessary. The grunge work is done and I can focus on details. In the US, I need to waste a bunch of time duplicating work and the go through the details later (and hopefully have enough time and energy to do so).
P.S. I keep using TurboTax as an example but they’re obviously not the only one. I chose them since they’ve parasitically attached themself to the current system and lobbied government to keep it from making things more efficient at a detriment to their bottom line.
> "More than any other public policy, the way the government raises revenue—how much, at what rates, under what circumstances, from whom, and for whom—has the greatest impact on our economy’s performance."
A perfect world would have people writing a check for their entire annual tax just before stepping into the voting booth.
> A perfect world would have people writing a check for their entire annual tax just before stepping into the voting booth.
That would definitely be a horrible idea. No, I won't vote for drivable roads because I just payed my taxes, potholes be damned. And afterwards complain about the potholes anyway.
I think most people would still vote for drivable roads, and that there are a lot of government policies that could be eliminated before drivable roads are even on the table.
There are places in US where the firefighters won't respond to a fire in buildings where owners haven't specifically paid the bill for their own coverage, because the local voters like it that way (those that haven't had their house burn down while the coverage lapsed, anyway).
My experience in Omaha suggests drivable roads get sacrificed much sooner than one might expect. (And no, not for something nice like bike paths or even like, functional sidewalks.)
I never said you don’t get to vote if you don’t pay your taxes. Nor that you have to pay taxes to vote.
I’m saying those that do pay taxes should have the totality of the amount of their income that is going to the government in mind when they head to the polls.
And the large number who get a net payment instead would get a check right then?
I don’t think that will accomplish what you expect.
One of the main reasons conservatives and libertarians want filing to be hard is to confuse people into thinking the income tax hurts them, when in reality it benefits many of them.
Taxes in the US are not due annually. They are due on an ongoing basis.
You do not get a net payment. You paid your taxes throughout the year every paycheck. Your employer likely files quarterly.
At the end of the year, if you tally up your taxes and figure out you’ve given too much of your money to the government, you get some of your money back.
It’s called a refund. Not a payment.
I’d put those ongoing taxes throughout the year into the bucket of “shadow taxes” GP refers to. I suspect many people do not view their refund checks as a no interest short term loan they floated to the government. Their refund check came from their paycheck.
What in the libertarian nonsense is this? Why not make people ride public transportation or use a public restroom or sit in a park or read about the history of the interstate system or visit a national park just before voting?
For reference, Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming are participating.
For those who don't know, of those 12 states, only 4 actually have income taxes. The other 8 do not.
This whole system stinks. The overly complicated tax code, the sleazy corporations making tons of money on it, the entrenched politicians and bureacrats who make a living on it, etc.
The program is for federal tax filing, not state tax. I think you may be misreading this line:
> Most of those states don’t tax income at the state level, but the four that do...will guide participants to a state-supported tool that they can use to submit their state returns.
Which means it's _more_ incomplete in states with income tax (federal return through IRS pilot, state return through a state system) than in states without income tax (just federal IRS pilot return).
We can still appreciate progress. And this is progress.
Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why not just tell me? Reckon it's since people also over pay, and there's no refunds for doing that.
I have overpaid my taxes several times due to clerical errors, and each time the IRS sent me a letter explaining what happened and a check for the overpaid amount, plus interest. One time I forgot to deposit the check, and after waiting a year they automatically sent me a replacement along with a reminder of why it was they owed me money. My general impression is that they’re tedious and bureaucratic, but scrupulously inclined towards accuracy in both directions.
An IRS audit isn’t because you underpaid the amount they think you owe — for that they usually send you a form saying, in their own special language, “hey I think you may not have included this XYZ income in your tax return, we think you owe an extra $ABC”.
Instead, it’s because they want to make sure you were truthful in what you reported, and may have some reason to believe you were not. Often, they don’t know how much you owe in this case.
Because some people believe that if filing taxes would be easy, people won't object to paying them. There's are multiple groups, all donate a lot to certain politicains, and all are hell bent on trying to eradicate taxation.
So…they know very little actually. We just got a nasty tax bill from the IRS because when my wife gets an RSU grant, her company sells some stock to pay income tax for that grant. Little did I know, that generates a 1040 for the stock sale (to pay ordinary income taxes) with a cost basis of zero! Instead, you have to adjust the cost basis to the entire sale (or even more!) via supplemental information. Annoying, so I had to learn a bunch of tax rules over one day on the weekend, and in the end the amended return said the IRS owed us money.
It’s crazy stuff like this that means the IRS can’t really calculate your taxes for you.
True, but 99.5% of Americans don't get RSUs. There are other cases like business expenses and unusual deductions, but again most people don't have those. So the IRS can probably only calculate taxes for 80% of Americans. (I'm guessing, not an expert)
Last time I looked it up, it is indeed somewhere between 10% and 20% of individuals that file Schedule C to report business income, and thus could not be handled by an automatic IRS tax system. Good guess!
In years/decades past figuring out cost basis through options and acquisitions could be a real nightmare. To be honest there have been times when I’ve thrown my hands up and just come up with a plausible average.
But as I wrote, I think things are mostly pretty good these days. But who knows with things like RSUs you have limited visibility into.
We both work at big techs
, so first world problem. But her company grants RSUs and sells stock to cover income tax, mine gives less stock and grants cash to cover taxes instead. Which is why I was surprised she was getting 1040s at all. But the stock is sold to cover tax, since a stock grant is taxed as ordinary income, that this generates a 1040 with a cost basis of zero is crazy.
Yeah I wonder the same question about UK taxes. If you self-assess they'll still say "actually we calculated your tax and got this number so you owe us £X".
The vast majority of people don't need to file taxes but even then it somehow still comes out wrong and you occasionally get a refund.
I have a hard time understanding why the IRS doesn't at least have a basic web portal for individuals and businesses to do simple things like update addresses, send secure correspondence, check on the status of correspondence, file forms electronically, etc. A lot of paper forms and letters, human resources and time could be saved with such a system, even if it doesn't actually provide for any tax computations itself.
As someone from Mexico, it's honestly insane that our system works as good as it does compared to the US.
1. All my incomes are automatically filed.
2. Each month I say "yes this is correct" on the website, and pay immediately via any bank.
3. At the end of the tax year, the system calculates if they own me money automatically, I give it my bank account and in some days I have my return.
An archaic, windows-only Java app to generate pairs of password-protected keys, which then have to be fed back into the system to declare your tax status. And they expire every so often, so you have to track down your old keys from years ago and remember the password. Confused? Just set up a SAT appointment, they'll be with you in... weeks.
Having to declare your tax categorization multiple times per year.
Facturas that companies will only generate for you for a limited amount of time, and complicated questionnaires to fill out if you DO want one so you get the right type. Assuming they'll even give you a factura at all.
I fully admit that I have an incomplete understanding of the system, this is just what I've seen my wife try to deal with. And she's the equivalent of a 1099 so her situation may be more complicated.
From what I understand it's easy if you are under a salary but every other regime is complicated af. They also obligate you to get the electronic signature (FIEL) by going to their office, and like you said it takes weeks to get an appointment
This claim is not correct in several ways. The $80B was not earmarked for hiring agents; that was an additional $80B for the entire agency spread over 10 years. While some of that money might be used to hire additional agents, it will also be used to upgrade old technology (the IRS still uses software from the 1950s), make fixed capital investments that have been long-deferred, regulate third-party tax preparers, provide better customer service, crack down on tax evasion and improve enforcement.
Additionally, this funding needs to be set in the context of an agency whose budget has shrank 20% over the last decade and whose staffing is set to further shrink through attrition and retirements. The IRS Commissioner testified that the IRS would have to hire 52,000 employees over the next 10 years just to keep staffing at current levels [1].
Finally, the Treasury has argued that this $80B investment would (conservatively) lead to an additional $700B in tax revenue over the next decade, so this spending ends up being entirely revenue-positive [2].
Edit: since this is Hacker News, I thought it worth pointing out that most of the IRS' software is written in COBOL. I can't think of many things more inefficient and cost-ineffective than continually making bit-part upgrades to 60-year-old software written in a language almost no one knows anymore because of a lack of predictable (human and financial) resources needed to rewrite it.
I appreciate your corrections and agree with all of them.
Yet they do not imply IRS is operating efficiently, as efficiency is left undefined.
If we're talking about social efficiency, the tax code appears massively inefficient to me. I believe the tax code should be redesigned to reduce that inefficiency. That may obviate many IRS needs for resources.
> yet they do not imply IRS is operating efficiently
The IRS budget for 2020 was $11.5bln to support $3.42 trillion in tax receipts, so I'm not sure that's inefficient. Could it be more efficient? Sure, but it's not as bad as people like to paint it. For comparison, the Los Angeles Unified School District budget alone for that same year was $15bln.
It doesn't need to be "efficient" in terms of cost, that doesn't really matter. What matters much more is whether it is seen and being effective and fair in collection of taxes & enforcement of violators.
A large part of the Individual Master File processing engine is also written in mainframe assembly language.
But the broader issue seems to be that the IRS is really bad at planning, goal-setting, and managing its development lifecycle [1]. They've burned through $5.9B just on modernization projects since 1998, with very little to show for it. Many of those projects, including replacing IMF and CADE (which was supposed to be the modern system that would replace IMF, but which failed), have been paused indefinitely. Clearly replacing these legacy systems is time-consuming work, but any way you look at it, it should not take 30 years (that's how long it would have taken if they accomplish their current goal of retiring the IMF by 2028).
It's not just that development is slow; this is holding back IRS from operating efficiently. IRS employees reportedly have more than a hundred internal applications they have to be trained in and switch between in order to accomplish basic tasks, and they have a huge backlog.
I don't think this issue is specific to the IRS; it has much more to do with how the government is funded - via a series of Continuing Resolutions which make it really difficult to achieve any sort of long-term planning or projects. In the case of BSM funding, your source cites fluctuations are truly wild and were likely enacted on very short timeframes (i.e. months or weeks), which makes it incredibly difficult to hire and retain the expertise or make capital investments you need for success. The debacle around the IRS funding in the Inflation Reduction Act (the subject of the now-deleted parent comment I replied to) highlights these issues - a bunch of funding was allocated, some of it was later clawed back through a budget deal between the White House and Congressional Republicans, and a likely deal this January may continue to reallocate funding. I don't want to lay all the blame for all the IRS' ills at the feet of the state of government funding, but I certainly think it makes it really, really hard to get significant multiyear projects completed.
The efficiency bar has to be particularly low when you consider that it is enforced by law. What incentives do they have to do anything differently when people HAVE to pay them or face consequences.
I'm glad they are at least now trying to have a semblance of customer service awareness.
It's not that easy. The efficiency is actually a benefit for many private companies and it's lobbied very hard. Just look at a comparison with other countries that are also restricted by law and have much nicer systems.
No, that just means it makes economic sense to spend it. Doesnt mean that IRS is run the most optimal and efficient way. You can have a very inefficient monopoloy that still makes a lot of money because it is a monopoly. One can imagine where IRS is more effcient and 1 dollar spent results in 20 dollars more etc.
Why does that matter? No government agency on the planet is run in the most optimal and efficient way; nor businesses or even households. What actually matters is the trend and how it's current efficacy compares to its past.
They did just get a big boost, but this was after years of stagnant funding, as the link in the comment you replied to shows.
Comparing government agencies' efficiency to private entities' is tricky since they tend to have different goals and constraints, but I'm not sure 87,000 agents is that many considering the number of households and business that have to pay taxes, and the number of non-profits that don't pay taxes but still file financial information.
The agents being hired are mostly just support agents answering the phone. And on net the investment in improving the IRS is a net positive on revenue because they can more effectively go after folk who are cheating.
It's amazing how some folks will be ardently opposed to "defunding the police" ... except for the tax police.
it's unpopular because IRS only goes after low-level tax cheats, not the already-rich ones who steal far more, and funding them more doesn't change that priority. similar to police.
In this particular case, this funding does change that priority. Janet Yellen has instructed that "any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels" [1]. Unfortunately, auditing extremely wealthy individuals is complicated and expensive because you're pitting underpaid and overworked IRS employees against a wildly complicated tax system that is exploited to the max by the super-rich and their well-remunerated tax lawyers.
https://www.irs.gov/newsroom/irs-announces-sweeping-effort-t... (“IRS announces sweeping effort to restore fairness to tax system with Inflation Reduction Act funding; new compliance efforts focused on increasing scrutiny on high-income, partnerships, corporations and promoters abusing tax rules on the books”)
The $80B is new, and until recently they were understaffed and underfunded.
It's like a poor person finally getting Section 8 housing, and then you turn around and accuse them of being wasteful and inefficient with their spending, because they have a house so they clearly aren't as poor as they say.
Is it possible that the IRS lacks the engineering management expertise to build an effective in-house software team? Sure.
Is it possible that they won't spend their money efficiently as a result? Sure.
Is it possible that they'll hire B-grade programmers, because the top people won't want to move to some random suburb in MD to work for $120k/year? Sure.
But to somehow accuse the IRS of having "massive" funding and imply that they are in fact well-supported is just disregarding the facts of recent history.
Precisely. They'll spend $80b to hire "agents." They won't spend a time to make the system actually easy to use. They're not underfunded, they're just incompetent.
Not quite. Of the $79B, $46B was earmarked tax law enforcement, while $4.8B is designated tax processing modernization, including a plan to replace the current legacy systems (IMF and others that are written in a combination of COBOL and assembly language and that run on 1960s mainframes against IBM VSAM data files, and which the IRS have been trying to replace since the 1990s) by 2028. That money is supposed to be spent that way, and the IRS have to get approval from Congress' House and Senate Appropriations Committee (and TIGTA, Office of Management and Budget, and GAO must all sign off on each request) for all their expenses.
I won't disagree that their IT woes seem to be in large part due to incompetence, however.
There's certainly room to debate how the IRS is spending its money, but they've spent some of it on responding to taxpayer questions, resulting in a decrease in wait times and other improvements: https://home.treasury.gov/news/press-releases/jy1421. These are their own metrics, so it's possible they're being gamed in some way, but it's not true no money is going toward helping taxpayers.
Because they are constantly under resourced so rich people can use the 'IRS sucks' line to get everyone else on board with their ability to do tax evasion.
How do we know that your list better matches the most common desired/needed features than the initial implementation by the IRS?
IRS business features:
Sole proprietors with EIN
A sole proprietor who files with an EIN can:
View business balance due
View business tax records
View select digital notices
Request a tax compliance check
View business name and address on file
Give account access to your employees
Register for clean energy credits (if eligible)
Partners and shareholders
An individual partner or shareholder with access can:
View business balance due
View business tax transcripts
View business name on file
Access for more business types and roles coming soon.
What would be awesome is if the IRS software would automatically prefill all the data and forms sent to it. It would be nice of your W-2, 1099s etc were all included and all you had to do was verify the information and enter any income not already reported.
> In one possible scenario included in the agency’s report to Congress, the I.R.S. could fill out tax returns with information it already has, like data from W-2 wage statements. For the pilot, however, participants will have to enter their own financial information, the I.R.S. said.
Yes, it could be better. But an mvp-type launch that does some things well, without trying to achieve everything on day one, would definitely not be a "complete waste". If successful, it's laying the base for the next iterations of functionality.
For a lot of folks, they have one or two W2 forms to enter, and that's it. It's really not that hard. If even a million or so folks get benefit from it to start with, that's great, and we should then build on that.
Let's also remember the context of this project. It's not just an overly-cautious MVP rollout. This project is something that has tremendous resistance against it, for stupid reasons, but the resistance exists nonetheless. Much like ACA benefits, people will only realize it's actually a good idea after they've gotten used to it. Starting small, with a minimal project that is most likely to succeed, is the best way to ensure that the project can continue at larger scale in the future.
The IRS should play try to create an actual MVP. Create an API which allow for efile (which I assume already exists given turbotax) and create an API which allows the download whatever information the IRS has on the tax payer.
Then allow companies or open source software to create whatever value add they want on top of these APIs.
That does not sound like an MVP. Then it’s up to random chance that they create the right API format and then someone makes an app to use said API and doesn’t also use it to steal data from gullible people. You’ve multiplied the number of ways this can go wrong and reduced the chance that anyone would use it.
You've increased the places where things can go wrong (in third party client apps) while not having any control over their quality. We'd hear "oh, IRS opened things up!", then deal with a dozen half-baked clients, and conclude "IRS sucks at something so simple!".
Agreed - public API first is the wrong place to start.
If it gives feature parity with the existing solution, it seems fine as a start. At least we'll presumably be able to file on a .gov now instead of freefilefillableforms.com, which seems like it was chosen to be intentionally sketchy looking.
Edit: actually looks like it doesn't reach parity with the existing free e-file system and only covers the simplest cases, and "the annual cost of a direct-file system could range from $64 million to $249 million" sounds absolutely absurd to me.
The high end estimate would be for 25 million households and would mostly go to customer service [0]. It may well be too high, but "absolutely absurd" doesn't seem fair.
The customer support costs make that seem more reasonable (or at least I'm not familiar enough to judge), but $7M in technology costs to go from 5M to 25M users without an increase in product scope seems very steep. Like even with 100KB of data stored per user, which seems like way more than necessary, that's only 2.5 TB. So storage isn't the issue. And if everyone did their returns in the last possible hour and did 100 requests/return, that's ~700k requests/second. In actuality the load should be far lower; maybe it'd peak in the thousands. I'm not seeing why there would be any variable technology cost at that level, much less $7M.
Putting some concrete numbers on the infrastructure, for $500k you could have like 10 servers each with 60 cores and 32 TB of mirrored NVMe storage. Any one server could handle the load while being almost completely idle (i.e. you're really just buying extreme redundancy). So what are the other $6.5M for, and how is that an annual variable tech budget?
I'm with you; if I still have to fill in the paperwork then quite literally what is the point? I'll continue paying an accountant to do this bullshit. This 'new' system is useless to me.
You're not me. The tax situation covered by this initiative fits my needs perfectly. Fine, there's nothing wrong with you paying. Not all of us have that kind of money.
I don't want an accountant, all I want is the system other countries have where the government fills out the forms for you and all you do is sign; this is what everybody has been asking for, for years, and I'm not going to pretend otherwise. If they can't or won't give us that then there is no cause for celebration. My taxes aren't complicated but I detest paperwork and have anxiety over all of it. I don't hire an accountant for fun, I do it because I don't want to fill in the damn forms!
If I have to fill out the forms myself, then it's utterly pointless. I could already do that if that's what I wanted. Not rhetorical: what is even new about this, being able to do it without using paper and pen? Big fucking whoop, thanks for nothing IRS.
For the last couple of years, my T4, pension, RRSP, and some of my pension forms have all been imported automatically into CRA, and then into Turbotax.
So maybe it's an optional thing for some employers?
Of course, would be great to just skip the Turbotax portion.
I think that all employers are now required to input the T4/remuneration information in a way that CRA can machine-process it, which allows them to make it available to third-party systems like TurboTax or SimpleTax.
But yeah, for the large majority of us, having the option to skip TurboTax and just use a pre-filled, government generated tax return would be great.
I'd go further and say it's less obnoxious than the alternatives thus far. It has always bothered me for example, having to enter into some weird murky relationship with a private company as a third party, in my communication with the government. (That's also true for the categorically similar but unrelated outrage of a few years back where you could get a better response from some agencies by engaging them on Twitter than you could through their actual communication channels.) And say what you will, the piece of paper doesn't try to "cleverly" redirect me to some irrelevant paid service. It has no functionality. I'm the one with all the functionality. And just to amplify your point about how it's free - Yeah there's no way I'm ever paying one red goddamn cent for any of this; I'm already paying the taxes!
Not sure it covers the 3rd party concerns, but freefilefillableforms has been around for a decade or longer. It's fillable PDFs of the IRS forms with all the instructions available, and basic calculation abilities.
No restrictions on income, etc. but federal returns only. You get an email from them within 24 hours of whether your return was accepted or not. It's still obnoxious but for easy returns it seems better than buying turbotax or whatever people use instead.
I heard that this sometimes takes them much longer to process the returns that way. Has that been your experience?
One time I reproduced the forms in a spreadsheet following the instructions and it wasn't much different from doing the online wizards. I would have liked to mail it in but I just paid to e-file anyway.
If you're looking for a fast turnaround I would recommend filing earlier in the period -- like as far in advance of April 15th as possible, i.e. as soon as you have all your supporting materials. As you get closer to April 15th, you are non-linearly further back in the queue.
I can't really make an authoritative comparison of filing methods because I'm mostly a die-hard paper filer and have only ever e-filed maybe twice in my life at most. And it was long enough ago that I barely remember, and in fact never really cared, how fast my refund arrived. I embrace and savor the luxury of simplicity. When will my refund arrive? Answer: sound of one hand clapping. It's a reminder I put in the calendar for like, mid-June, to the effect of "Hey did I get my tax refund yet?" Usually the answer's, yep, and you dismiss the reminder. I can't be arsed (as they say in the UK) to be more interested in it than that.
Now our family unit is not cash starved and can afford to wait, so in the past, before I started using the US Free Filing system I described in another comment, I always mailed in both US and AZ income tax forms. Sometimes it took a couple of months. The US form I think was pretty prompt occasionally.
Now we're also not talking a lot of money. +- a couple of thousand, usually less. But you would have to compare apples to apples which would be the e-file fee vs. the compounded inflation rate for the time difference in receiving, presumably, your refund. I suspect it's a wash.
You need to also factor in the ${turbotax} fee and/or the accountant, as well, if you don't actually fill out the forms yourself.
Fun fact: We moved from AZ to GA last year, and dutifully filed in each state. I am pretty familiar with AZ due to filing our own taxes for most of 25 years, but GA is much more complex, verbose, and quite stupidly, even aggressively, vague.
I produced a spreadsheet for my wife to evaluate that presented my first time interpretation of the GA partial residency filing. We're both B.S. ChE, she's an MS ChE, I'm a MS App. Math. So we know our numbers. The tables were low risk, low refund, medium risk, medium refund, high risk, high refund. She chose medium risk. Fine with me.
Both AZ and GA refunded something like 50% higher than what I filed and expected.
My experience has been that it can be relatively faster.
That is, the last time I filed online it took I think practically a year before they got to it (I think the year of the pandemic)
I figure there's so few people filing by mail these days that they're able to process them faster than the huge amount of online filing.
I'm guessing they're separate teams (online vs mail). However I have no idea.
Regardless mailing has worked better for me the last couple years.
Additionally I do not have to use the third party ID verify thing (might just be for accessing information on irs.gov) that I am just sure is going to have a breach and can not for the life of me fathom why our government (Federal) needs a private company to verify the identity of a citizen via government (State) resources.
My understanding is that it is generally under control now, but a couple years ago their processing of paper forms was in fact so backed up that the physical space was over capacity. There was a fair amount of news coverage of this, including photos of the cafeteria in one of their processing centers being packed with paper awaiting processing because there was nowhere else to put it.
At one point they also basically declared paper processing bankruptcy and just told people if they had mailed something and were still waiting for a response to just send it again because the first one was probably a lost cause.
The IRS just does some very simple checking and then mails your refund (or accepts your payment) - the actual processing/checking of the return can happen months if not years later.
Yes - especially for my state returns here in Oregon. I am due a refund. I received a letter stating that they made an adjustment. They still haven't sent the refund.
Honestly, I’m rarely getting enough of a refund to care; I’m more commonly writing a check.
In any case, I’m complicated enough I just outsource to an accountant. Yes it’s expensive but I’ve never had an issue even with very thick tax filings.
I do them on paper as well. It doesn't take me too long and I hope it adds to their pain of processing it so they get along with implementing free (and good) digital solutions faster.
I use free fillable forms, an online version of the paper forms. They're pretty much exactly the same, just the online one does some basic math and copying values between steps for you.
They should also work with companies and have an opt-in for automatic filing since a lot of people just have one job. Not only do you have pay them a chunk of your salary but you have to also do the work to report it accurately according to a complicated system.
If all you have is a modest W-2 and are taking standard deduction (most people in the US) it would be nice if the IRS pre-filled out a form. It’s also pretty simple to just fill out a 1040 in those circumstances.
Used to be I think. I believe the EZ doesn’t exist any longer.
Basic point is that if your taxes are simple enough to just say that yep these numbers square with the few pieces of paper I received in the mail, filling out a return is maybe 30 minutes work.
My understanding is that they replaced the 1040/1040EZ split with a simplified Form 1040+Schedules 1/2/3, so instead of getting a short form (which only applied to a limited set of situations) or a long form, you always get a shorter one, plus only the addenda needed for your situation.
There was a push in 2017 to make filing taxes more miserable (it was an explicit goal of Trump).
That was also the year when they intentionally broke the withholding calculations so that people end up owing a big unpredictable amount of money when they file, are more likely to be fined for it, etc.
A better idea would be to simplify the tax code so that you don't need complex software to calculate taxes. Maybe even simplify it so much, and make it automatic, so that most people don't have to file tax returns, which is how it works in the UK [1].
One advantage of universal basic income plus a flat tax is that you get a progressive tax system, and it drastically simplifies both the tax code and welfare systems.
It also eliminates tax loopholes, and prevents people from accidentally being paid not to work, being denied bending on a technicality, etc.
It's infuriating trying to log in with id.me as someone who lives outside the states. Your foreign documents keep getting denied with little reason as to why, so you have to keep uploading and trying again and again until you please whatever poor soul is mindlessly looking at pictures of documents all day.
My taxes are kind of complicated. I'm happy to do them. It's a little walk down memory road of the past year. Most people do 1040-EZ, and the "EZ" stands for "easy" because it takes 5 seconds to do. Turbotax is one of the best pieces of software I have used. I don't understand the issue.
The weakness is that state tax will need to be filed separately. Some type of smooth hand off with seamless data transfer is hopefully being planned. I'm in NY and interested, but I don't want to fill in data twice (yeah, i'm lazy sue me).
There are PDFs you can fill out yourself and either paper or e-file, but very, very do it. It's not really hard for most people. Probably 40% of people can put their wages in box 1 and be done. But most people's eyes would glaze over at seeing a 1040.
Every February everybody who paid you or got paid tax-deductibly mails you a form with the finals amounts for last year. On the back are instructions for where it goes on the forms.
The basics are simple, but few people really understand taxes at all let alone care to look at the forms. Instead probably 70% of people go to an accountant and give them the forms to punch into a program which generates the IRS forms and e-files them. Cheap places are maybe $100, but complicated returns at good accountants run like $500.
The other option most people who "do their own taxes" do is to purchase a yearly license to software which you can punch the numbers into yourself and it'll generate and e-file a return for you. It's like $50–$70 normally but some are free.
Most complications arise either from:
* You run your own business and have to do two returns basically without getting nice filled forms for all the numbers.
* Congress constantly wants to incentivize behaviors and give people breaks on their taxes so there are a lot of little things you can get credits for like having kids and buying electric vehicles. It's really easy to miss deductions you're entitled to.
* States have their own separate taxes, so you have to do everything twice and lots of programs have less support and make you pay extra too.
> Most complications arise either from:
> You run your own business ...
Adding to this, even if you have a small side hustle with low overhead (no employees, few expenses, etc.), the labyrinthine process of filling out all the additional forms is just plain ridiculous.
Have you ever done US federal taxes? I did my own as long as I could, but as your tax situation gets more complicated, your taxes get more time consuming.
No, nobody is "forced" to spend $60 to save hours of their free time researching tax code. If the tax system were simpler, doing it yourself would be more appealing.
No I live in France, but I always see talks online about how people in the US pay for software to do their taxes and didn't really understand the scope of it.
Can we just have non-file tax system like other civilized countries? You know, like the ones that are able to provide for good roads and healthcare and housing? Often at even lower tax rates than America?
> A spokeswoman for Intuit, Tania Mercado, criticized the direct file project as a “half-baked solution” and a waste of taxpayer money. “The direct file scheme is a solution in search of a problem,” she said.
Wow, I thought that Intuit would have gone for a little more subtlety.
On the plus side, intuit saying something like this is exactly what I want to hear regarding a program like this. I would have been deeply suspicious if they were anything other than enthusiastically opposed to it.
Or they’re saying this because they know the IRS effort doesn’t have competent people on it (think what happened with the healthcare website when it launched) and is just prepping the waters for a “see we were telling you along this was a bad idea” criticism for congress people to spike it later. It’s really hard to intuit the strategy being employed so best to just ignore them altogether. And if this turns into a partisan issue at all (which an unclean launch might because people are dumb about government tech in the US), then expect the Trump administration to kill this if they win to prevent this from becoming entrenched and popular like Obamacare is.
I've used the US Free File Federal Taxes for the last five years and it just wasn't a problem, and I have yet to see anything that looked like programmer incompetence.
Now, that said, the way you debug your submittal is to paste an entire page of error gibberish that looks like very low level database error output into an entry box they point you to. Sounds gross! Ewwwww! Well actually I've been debugging c++ templates since forever and hohum it doesn't bother me. However... every single time it decoded the problem and told me exactly what I needed to do. It has taken me 2-4 tries each year to get it debugged and then it sails right through. The final result I've fed into two different state forms and that has sailed right through too. All free, and not that much of my time.
Now if they can get the UI for normies painless, which I suspect is the main programming problem (I don't say that UI programming is trivial), this will take off like a rocket ship and the US can the join the coterie of civilized nations that do this for all their citizens.
If you're referring to Free Fillable Forms, the error messages are not DB errors, but "business logic rules errors". They do look like gibberish, but buried inside them is a code that can generally give a pretty clue as to the error.
I agree that it would be much nicer if they said "The amount of line 29 of Form ABCD does not appear at line 18 of Form WXYZ".
Even nicer if you never had to manually transfer amounts between forms.
Oh yes I am sorry; I didn't mean to imply that I thought that the DB was throwing an error. What the filing process email message body stated looked something like approximately "Form line xxx violates schema requirement such and such: <more gibberish>".
I was thinking when I scanned the message was that I bet I could reverse engineer the problem from this back end generated text but why not do what the instructions say and just feed it into the parser box? And every time the next email message gave me exactly the thing I needed to do. It was cool, for a weird sort of nerd.
So no, I was casting shade where the process was right in the sunlight: I made the mistake, and the business logic caught it, and told me correctly every time what I needed to do to fix it. I liked the whole process a lot.
This is why we still have the income tax system that we do. It’s a $14 billion a year industry. I’ve talked to people who work the lobbying system very hard. There’s lots of wining and dining to make sure no one messes with the complexity of the system.
We need more people who are immune to lobbying in government positions. We’ll see how this goes.. depending on the next election cycle this will either get quashed quickly, or, fingers crossed, might fight on against a growing backlash.
Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot of people. The IRS already knows the relevant info: Your employer sends W-2 information, your bank and broker are sending the various 1099 forms for interest, dividends, stock sale gains/losses, etc. Same for your spouse and kids/dependents. Don't even need to itemize in a lot of cases, since the standard deduction is preferable in many years.
Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible.
> Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible.
I imagine there are heavy software development costs, on par with what it might take to build Turbotax itself.
For instance, someone is going to have to figure out wash sales. Right now your broker does it, but you can wash sale across accounts, which requires you (or more reasonably tax software) to both detect this and track the adjusted basis in perpetuity. More complex events, like straddles, further exist, and even consumer-grade tax software won't handle it correctly.
I have no idea what "wash sale" is. I only heard that term when I was reading the help page in TurboTax, which I'm effectively forced to use.
Seriously, I doubt there is more than 100k people in US that have this "wash sale" any year. I'm so tired of every time someone suggests automatic tax filling, there is always one guy bring up some tax term that 99.99% people never heard of. Sure, if auto tax filling doesn't solve your wash sale calculation, feel free to go back to TurboTax. Let the other 99% people who have one job and no other complicated tax situation skip this yearly nonsense.
Beware the paradox of averages. I bet a lot more than 99% of people have some wrinkle with their return.
One person has a wash sale, another has some real estate stuff, another became disabled, another has child care stuff, another has education credits, etc etc etc.
Actually now I am curious how many people file the “simplest” return (wage only, standard deduction, and absolutely no other adjustments).
FWIW TurboTax is easily piratable. There are even instructions out there to crack it yourself with a .NET assembly editor.
I do my taxes in a VM without Internet access and mail in the filings, so there's no way for any information to be backhauled to Intuit or anyone else.
Note the proviso, taxes should be automatic "for a lot of people." Will taxes be automatic for Warren Buffet? No. For GE? No. For Suzie Q. Public? Yes.
IRS already audits at least 10% of the returns. They should have the entire tax system implemented as a software. It is madness that this part was hidden from the wide audience.
As many software projects, the internal system may not be appropriate for external use, but still they should have components very long time ago.
>IRS already audits at least 10% of the returns. They should have the entire tax system implemented as a software
The audits are accomplished by a human re-doing the return with the submitted information. (As no surprise, the low-complexity returns are often chosen)
The article says that "in one possible scenario included in the agency’s report to Congress, the I.R.S. could fill out tax returns with information it already has." We can only hope :)
A lot of US GDP is Rube Goldberg machines to skim off the economy. Intuit, Visa/Mastercard, private health insurance industry, etc. Lots of pushback to be expected as government fixes this (FedNow for payments, IRS improvements for taxes, healthcare reform, and so on). Onward.
It is how it works for most people in both the countries (on different continents ) I have worked in. Only people with high incomes or investment income or who are self employed or similar need to file their own taxes.
There are also cheap systems even for business returns - mine cost £12 for the company and I will use the free HMRC system for my personal return. It might be easier to use more sophisticated software, especially if your finances are complex.
> We need more people who are immune to lobbying in government positions.
What we need to do is stop pretending people like that exist, and come up with a system that works despite people's self-interest, greed and corruption.
This is always my frustration when people suggest things for governments. You cannot design a government that relies on people being good. You have to design a government that highly discourages bad actors, make it easy to eject them, and operates while they exist. It's a crazy hard optimization problem and isn't going to work if people are just smart or good. And I never understand why people suggest fixing government by giving government more power and nothing else.
I worked at a government "lab" (MITRE) that maintained the IRS system. The system was allegedly so complicated that if the tax code and the software conflicted, the software won. The stack is legacy and intentionally on minimal life support.
Notoriously there is also a large contingent of anti-tax politicians and citizens that oppose making paying taxes easier. Their reasoning being the more friction there is the more likely that you will pay attention to how much you are being taxed and support their policies that cut taxes.
I will never in my life comprehend how lobbying isn't just bribery with extra steps. The only distinction between bribing a cop to get out of a speeding ticket and a megacorp lobbying random politicians is that the megacorp has much deeper pockets, absolutely ridiculous
2. Politicians need to know how the businesses they're regulating work, and theoretically they gain a lot from being able to talk it over with the businesses themselves (the existing ones, mind you - not the future ones which might be stifled, and currently have $0)
3. Lobbying is another word for talking with your local politician, what megacorps do (and what basically everyone means when they say "lobbying", really) is paid lobbying, i.e. run the "lobbying" errand on your behalf. Banning the former type of lobbying is impossible, and banning the latter is hard to do when it's a legitimate service for people who have more money than time (and also might violate free speech laws, and also is hard to actually stop)
4. Fuck paid lobbying, it does more harm than good
Just came back to check replies. This is a great talk.
He mentions Obamacare and the digitization of records, which is very on point and a similar issue. In the interview he mentions, Obama says:
“In some cases, you have economic incentives against making the system better; you have service providers — people make money on keeping people’s medical records — so making it easier for everyone to access medical records means that there’s some folks who could lose business. And that’s turned out to be more complicated than I expected.”
I think “more complicated than expected” is a hilarious and sad way to sum up the whole mess that is greed and Washington DC combined.
The W2 doesn't count as voluntary, unless you bear witness against yourself, by filing for a return and identifying yourself as a taxpayer –waiving your 5A rights.
Why would you say that? If a taxpayer can copy the fields from their w-2 and have it provide a straightforward and correct filing without trying to divert them to dark patterns trying to steal money from them, that is a huge benefit.
Turns out, the easiest way to get rid of taxes is to not pay anyone to run the tax system.
Bonus: being able to claim you're being fiscally responsible. (Despite taxes being a revenue generator and salary to administer them being revenue-positive)
In the 1950s, the citizens paid 50% of the treasury revenues. Business paid 25% and excise taxes covered the other 25%.
Today, the citizens pay 85% of the treasury revenues. Business pays 7% and excise taxes cover the other 7%.
They're not trying to "get rid of taxes" they're "massively shifting the burden onto the individual."
This, by the way, isn't a republican vs. democrat problem. This is easily observable by noticing how both parties do the same things once they have "power." There is no real difference between the "parties" on this one.
I will never for the life of me understand why people insist on a progressive tax structure, not only is it unfair, but it disincentivizes seeking higher wages and incentivizes seeking tax-optimization structures.
A flat tax with a tax-free base seems like the fairest, simplest, and most effective way of implementing a tax system (Estonia has been an extremely pleasant experience so far). I am aware this is also a "progressive" tax of sorts, but a much saner one.
In fact, we all seem to agree that taxes work as a disincentive and we levy tax on the stuff we want people to do less of, but when it comes to wages and business we close our eyes and flail blindly saying "WE NEED MORE TAXES".
The IRS hasn't come after the rich for a decade+ because audit groups targeting higher-wealth filers have been systemically dismantled.
It'd be nice to see (a) additional enforcement resources applied to low-wealth filers (where ROI on salary is reliable and positive) and use the proceeds to (b) fund additional enforcement resources on high-wealth filers.
Fewer levers for Congress to defund, when their donors call up to complain.
"Gig workers are not elegible" - that's the Biden loophole written in there straghtaway. Nowadays anyone able-bodied and on low income has at least one gig work app installed on their phone - Uber, Doordash, Amazon Flex, you name it!
If the political system is corrupt, it's unreasonable to assume that one party is better than the other.
I get that people don't want to underestimate someone as bad as him being president again, but at the same time, he's not even going to be on the ballot in Colorado, he's pretty much already finished as a politician.
> Get your taxes done with me for free instead of HR Block charging you a couple hundreds"
He had 4 years to do that and it never even came up. To the degree that he's an opportunist, and doesn't hold stock in Intuit, he might support it (or at least not oppose it).
He _uses_ populism, but not on issues intended to benefit the common people. He will push policy to help the filing industry, pocket some kickbacks in the form of contracts to his hotels/resorts from those companies and their lobbyists, and then tell the people that this is great news for them (a claim his base will not question).
He also signed sentencing reform into law. He's not the devil like he's made out to be. He's just a total asshole who spread conspiracy theories to avoid taking responsibility for allowing Covid to spread, damaged America's reputation with its allies, and packed the cabinet and federal courts full of corrupt industry shills, who in turn tried to sabotage those institutions from their appointed positions.
GWB was worse by far. At least Trump didn't start two massive unnecessary 20-year-long foreign wars that ended up doing nothing but slaughtering millions of civilians, thousands of US citizens, wreaking widespread destruction of both human and non-human environments, and cost US taxpayers untold trillions of dollars that could have been spent elsewhere.
It makes more sense that his party maintains the image that paying taxes is arduous and better left to technicians (short guys wearing yarmulkes in Trumps view). Those who can avoid burdensome bureaucracy are “smart”, presumably tall and yarmulke-less.
This is pretty much how I see it too. I agree that he's an opportunist, but there's still tremendous political value in sticking to the Republican party line on this issue, even if he personally does not benefit from lobbying.
However I do believe that he would flip sides if it seemed like popular sentiment was flipping, and he would claim that he's been in favor of it all along. If this program is successful, that might actually happen, and of course he'll be sworn in by the time the broader program is rolled out, and he'll take credit for it while finding some way to blame Biden for not having it sooner (even though he had 4 years of his own to do it and took no action).
At the risk of doing what I'm about to ask you not to do: please don't comment just to talk about moderation decisions. It's boring and doesn't add to the discussion. If you want to flag or downvote, simply do it and move on.
> If you flag, please don't also comment that you did.[0]
