This pessimism is pretty popular, and it's just wrong. It's not about whether the U.S. government will "displace existing corporations." It's about whether a publicly funded and developed solution to a problem is clearly better than a private solution.
Should the U.S. have an official tax preparation system? That would sure save a lot of people a lot of money, but I'm personally grateful for the fact that a bunch of private companies have been spending a lot of dough trying to develop good online tax prep utilities. Self-service tax prep is in a much better place than it was 15 years ago because of the efforts of those private companies. And an official option for tax prep would undercut those efforts. (At this point, of course, it's high time for the IRS to create an official option, and they are moving towards that.)
Congress is aware of the above concern. The lawmaking "meta" since the Reagan years is to not undercut the normal operations of a competitive market unless there's a clear reason to. But sometimes there are clear reasons to. That's why we have things like FDA rules that tell companies what can or cannot be labeled as "peanut butter" or "milk chocolate." It's why we strictly regulate the radio spectrum. It's why we have healthy anti-trust, anti-cartel, and anti-foreign-bribery laws. Congress understands traditional examples of market failures and is very interested in fixing them. But the tax prep industry, for example, is not an example of a market failure, so Congress is not excited about getting involved.
Getting back to FedNow, creating a standardized payment system to be used throughout the financial industry is a prime example of fixing a market failure: the difficulty of coordination, and the obvious benefit of getting every bank onto the same payment system. So I am not especially pessimistic about the prospects of this system.
100% disagree with your comments on tax preparation. Something like 80%+ of tax payers could have their 1040s automatically generated by the government because they only have stuff like wage and bank interest income. The proposal was just to have the government send these taxpayers a summary that they can accept or amend, the default being they wouldn't have to do anything at all to file their taxes.
Intuit et al fought tooth and nail against this, because they knew it would cost them big time.
These companies aren't benefiting from "the free market", they are rent-seeking regulatory capture organizations.
"Something like 80%+ of tax payers could have their 1040s automatically generated by the government[.] The proposal was just to have the government send these taxpayers a summary that they can accept or amend, the default being they wouldn't have to do anything at all to file their taxes."
Sure, that sounds good on paper. But here's a list of people who would be hurt by this system unless they were sophisticated enough to realize that they should revise their return:
- Most people with a kid
- Most people supporting a relative
- Most people supporting someone who has no income and lives with them
- Most people who made charitable contributions in 2021
- Many people with a home energy deduction
- Most people who participated in post-secondary education
- Anyone in the gig economy
That's a big list, and it's far from complete. So it's not clear that your proposed "do people's taxes, leave it up to them whether to acquiesce or not" plan is good for consumers overall.
Agree with SideballOfDoom. Other countries do this, this isn't hard. Besides, most of your examples are specious. First off, it's not hard for the first page of this to be "any changes to your life situation?" which would be simple, straightforward, and account for the vast majority of deductions/credits in the real world (i.e. dependents).
Most of your other examples aren't really valid because the vast majority of people take the standard deduction anyway, so things like charitable contributions, home energy deductions etc. don't matter.
But most importantly, the whole proposal always leaves the "You're welcome to do your own taxes if you have anything we haven't addressed." It's just that Intuit didn't want to even allow this option because they know the vast majority of people don't have complicating factors, and they hadn't gotten really good at scamming "free filing!" users into buying upgrades they didn't need.
This isn't hard, and tons of other countries do this.
I shouldn't have called the home energy thing a "deduction." It is a credit. And in 2021, some amount of charitable contributions could be claimed on top of the standard deduction.
"This isn't hard" -- as illustrated by both my and your mistake, this is as far from the truth as could be. Everything related to taxes is absurdly hard, whether it's setting up the right tax prep system, the right level of complexity in the tax law, or simply the right return to file as a taxpayer. My overarching point here is that Congress made a certain value judgment as to one of these very hard problems—that a healthy industry dedicated to getting people's tax returns correct might be in the best interests of both the government and taxpayers—and this might not actually be the product of corruption.
I still don't buy, at all, the argument that "default do nothing" is better than "default pay TurboTax".
The fact is the vast majority of taxpayers do not have special situations, and it's straightforward to say "if you think you have any custom situation that may apply to you, file yourself".
And Intuit's behavior, as well documented in the ProPublica report, absolutely point to corruption and scammy behavior.
Note that some European countries like Nordics already operate like the parent comment. These corner cases are naturally included in the four page paper where you can mark any corrections with tick boxes and amounts. So it is definitely doable, and not very hard, because other countries manage to do it as well.
> So it's not clear that your proposed "do people's taxes, leave it up to them whether to acquiesce or not" plan is good for consumers overall.
I disagree, if you want clarity, look at other countries (e.g. UK) that already do this kind of thing. There is no "how can we know?" argument to be made. And IMHO, It's so much better for consumers overall.
Looking at other countries is unproductive, since their tax laws and tax credit systems are completely different.
For example, in the UK, I believe where a child is living is tracked through some centralized benefits system throughout the year. That hugely changes the calculus as to whether an automated tax return makes sense. If the U.S. had a similar sort of centralized system for tracking dependents or at least children, then an automated return would make a lot more sense, since claiming children/dependents is a huge part of getting the credits you deserve, and it would be great if it were possible to do that automatically. But it isn't.
I've already explained why I think automated returns are bad in the United States. If you disagree, make counterarguments based on how taxes work here, not in some other country with an entirely different system.
IDK, this is a variation on the good old "The USA can't do this proven common sense thing that delivers benefit to citizens in many other developed countries, because ... uh ... USA special!" (1)
There's a chance that it's correct, but institutions that cannot learn from examples right in front of them are "special" in a different way, not a good one. Being able to learn would set a better trajectory towards greatness.
Anyone who works for a FAANG couldn't have their taxes done automatically - the IRS doesn't know the cost basis of your share compensation. Same for anyone with crypto trades, or more prosaically anyone who's sold anything at a flea market or garage sale.
Conversely if you buy and sell the same stock with two different brokers and cause wash sales, or do anything with HSA investments in California, TurboTax and any other consumer tax product will not get your taxes right, and it may not even be possible to do them properly by hand, so everyone is doing them wrong and the IRS just isn't noticing.
> Self-service tax prep is in a much better place than it was 15 years ago because of the efforts of those private companies.
I guess, if you're only looking at the US. My understanding of the history is very different. In 2001-2002, the US was already behind other countries since it had no e-file option. The IRS was considering an official tax prep service. Because Bush was in office and there was huge pushback from the tax prep industry, it was pitched that a public/private partnership would be the fastest way to "catch up."
In 2019, ProPublica runs a story about TurboTax's shady behaviors hiding and up charging for what was agreed to be a free service. It should cover 70% of tax payers, but in practice is only used by 2-3%.
To me, this looks like an example where the government explicitly tried not to replace a large, private industry and the result could only possibly benefit 30% of people (likely significantly fewer since much of that 30% will still require personal tax prep). Even after 20 years of fallout and very explicit bad-faith behavior, the threshold for change hasn't been crossed.
> Should the U.S. have an official tax preparation system? That would sure save a lot of people a lot of money,
Would it? Seems like a conflict of interest to me. Down the road the government might be tempted to abuse its control of both tax laws and ubiquitous tax preparation software.
I think it would be better if:
- Tax laws and tax law updates are required to be released in machine-readable format (i.e. JSON) using a machine-parsable protocol (i.e. converted from "English" to "Tax Grammar")
- IRS was required to maintain a public API for submitting returns
This would lower barrier-to-entry of tax filing software and weaken incumbents' (i.e. Intuit's) lobbying power. Furthermore, IRS is free to build a tool if they want, so long as it is both open source and dogfoods the public API and public tax law data that everyone else has access to.
> the government might be tempted to abuse its control of both tax laws and ubiquitous tax preparation software.
Could you describe a scenario where this could be the case? What kind of things would abusive tax prep software do? Would it lie to get people to overpay? Why would the government take that approach instead of just levying directly from people's accounts and/or reducing their refunds?
The government is naturally incentivized to maximize revenue. Individuals are incentivized to pay as little tax as they can, legally. Private tax prep software is pretty aggressive about identifying all possible deductions to reported income. The government would not be as motivated in designing their own system. You can see this in the paper filing forms, they have detailed instructions, but almost nothing on how to reduce tax paid, besides things like the child tax credit and earned income tax credit.
> The government is naturally incentivized to maximize revenue
This is a fundamental misunderstanding of the situation. The tax law is what it Congress decides it is. The law depends on taxpayers to report their incomes as well as deductions and other facets of their financial lives (e.g. household size, addresses, etc.).
A government-run tax prep site couldn't necessarily pull in all of your deductions, that's correct. But it also couldn't necessarily pull in all your income (especially business income, offshore income, etc.). It's mostly neutral in that respect.
But most Americans have at least a few deductions. How many Americans have offshore income? Especially the ones that would be relying on gov. tax prep?
Roughly 90% of Americans file using the standard deduction ($13k for a single person, $26k for a married couple filing jointly). Median household income is ~$67k, so the median household is not itemizing.
The remaining 10% of people would not be bound to use the free public system.
Well the U.S. tax system is heavily dependent on deductions which the IRS often does not have information on. So I'd imagine a lot of people would go with the default when in reality they might be able to save money.
That said, Trumps tax law greatly increased the standard deduction so it's not as big of an issue any more.
I agree but was just pointing out one method through which this could be turned against filers. If the standard deduction was greatly reduced it could cause taxpayers to pay more tax than they needed.
Personally I hate the fact we have so many deductions. I'd love a simplified tax code but I think that would be a tough sell.
Amazon is buying land piecemeal, lot by lot—probably roughly at market value, then. I don't think it's really comparable to someone buying Sears because they think Sears's land holdings are undervalued.
At worst, they're exposing themselves to the whims of the commercial real estate market as a whole. Not like Sears, where the value of their holdings depended on a pretty niche market—the value of malls.
A lot of businesses sell and lease back their real estate. That way their capital isn’t tied down in non core competencies. Also they can insulate themselves from real estate booms and busts.
Owning land isn’t something that requires a great deal of skill/competence compared to leasing land - in fact if you want to stay in a property for a long time, there is more complexity in managing a lease if you have capital tied to it once the lease period is up and you are forced to renegotiate the deal.
IMO this idea that a giant logistics operation shouldn’t own it’s own warehouses just because owning warehouses isn’t a “core competency” is questionable. In reality this decision just depends on your corporate perspective on the cost of capital (eg the WACC).
lol, most of amazon's money comes from things that weren't the core competency that they figured out how to do at scale.
The 'focus on your core competency' is for small companies on tight budgets with tight human resource capacity. When you have a few mil employees, email is a core competency, when you have a dozen, it's a pain in the ass. The same goes for AWS. def wasn't a core competency, but a huge part of the reason we can tell businesses to focus on core competencies is because amazon made SaaS, IaaS, PaaS a thing.
IDK about real estate. It probably makes sense to own your office buildings and warehouses at scale. They probably have a real estate team that's bigger than most companies that are 'focusing on core competencies' and it probably doesn't look too different than any super focused brokerage.
Once you hit scale, the money is in doing it in house. When you're paying by seat, it becomes a core competency about the time the cost to run a team of pros to do the same job is <= to paying per seat.
This may have been a misstep assuming that their pandemic growth would continue. I believe that's what they said in their last earnings call, something to the effect that they scaled quickly to address additional market capacity that was short lived.
Would assume they'll be just fine. Probably read the tea leaves wrong but I don't think this is getting off track and forgetting what they do to make money.
What they could also do, if they don't want to ride commercial property prices, is bundle the property in a fund, and have it owned/managed by selling shares, but with the caveat that Amazon is effectively on 'rent control' and gets an infinite lease, until it decides to bail out.
> That way their capital isn’t tied down in non core competencies.
That nonsense of "non core competencies" has to stop. All that mindset does is exchange marginal cost savings (by going for the lowest bidder) for resilience.
Yes, it may not be a "core competency" of a rocket company to build valves, but now they are in complete control and not reliant on the valve builder company to not fudge with test results. Yes, it may not be a "core competency" of a logistics company to build and maintain their own warehouses, but that way they don't have to keep a landlord happy to not lose their location.
"Sale and lease back" is only one thing: foolish and dangerous, particularly when the thing that was sold and leased back were the stores.
But in a place like california why would you do it? You have movie studios who have owned their lots for almost a hundred years now. Tax on those assets are probably pocket change a year thanks to proposition 13. Now when you sell those backlots back to the holding companies to lease back for your own use, they get reassessed at todays market rate, and who knows how favorable of leasing terms the holding companies will offer you when there is a demand for soundstages from every production company in socal?
Yeah, once you get above a basic level of filter complexity, Vapoursynth/Avisynth become much easier to script. The problem is that it's hard to do the initial setup of *synth.
To be clear, there is currently no good alternative to this. The way I see it, the IRS can switch to an invasive "selfie + utility bill" system, or it can remove self-service from their website altogether. It's important to keep tax information secure in order to protect the elderly and disadvantaged. After all, the victims of ID theft in tax are primarily taxpayers who are not regularly filing returns (like elderly and zero-income folks), since two "competing" returns will quickly alert the IRS to a problem.
The legacy IRS identity protection measures are both cumbersome and insecure, so getting rid of the latter problem is a big improvement.
That's a great achievement. It also illustrates why these long bike races are run in stages. A multi-day race where riders can disregard stages will turn into a nightmarish competition of inhuman endurance.
In video game speedrunning, the communities surrounding >24 hour speedruns (e.g. Breath of the Wild 100%) have often set up rules allowing for breaks for runners to sleep. This prevents the speedrun from becoming a competition of who can sleep the least.
> A multi-day race where riders can disregard stages will turn into a nightmarish competition of inhuman endurance.
Iditarod and Yukon Quest are both like this - I met someone (who had won the Yukon Quest) that started wearing a helmet mushing because he had passed out from exhaustion and hit his head.
edit/P.S.
When just googling I saw something talking about if these races were cruel to the dogs. While obviously some people have (or continue to) treated their dogs poorly, I must say his dogs clearly lived to run. They were so cute and energetic. He talked about how a woman a couple decades ago schooled all the men in the sport by truly taking care of her dogs, and it seemed like that had a big effect on how he raised his dogs.
> A multi-day race where riders can disregard stages will turn into a nightmarish competition of inhuman endurance.
i think the most famous example of this is the RAAM - the race across america (https://en.wikipedia.org/wiki/Race_Across_America): "In length the RAAM is comparable to the Tour de France, but the races differ to a great extent. The courses of both races have varied over the years. However, in the Race Across America, the direction has always been from the west coast to the east coast of the United States, approximately 3,000 miles (4,800 km), making it a transcontinental event. More importantly, the race has no stages, i.e., it is in principle a nonstop event from start to finish, with the fastest competitors needing slightly over a week to complete the course."
https://www.transcontinental.cc/
The Transcontinental Race is the definitive self-supported bicycle race across Europe. At the sharp end it is a beautifully hard bicycle race, simple in design but complex in execution. Factors of self reliance, logistics, navigation and judgement burden racers’ minds as well as their physiques. The strongest excel and redefine what we think possible, while many experienced riders target only a finish.
The Transcontinental is a single stage race in which the clock never stops. Riders plan, research and navigate their own course and choose when and where to rest. They will take only what they can carry and consume only what they can find. Four mandatory control points guide their route and ensure a healthy amount of climbing to reach some of cycling’s most beautiful and historic monuments. Each year our riders cover around 4000km to reach the finish line.
If you're curious why, the most recent finisher at Barkley, John Kelly (a PhD Data Scientist, to maybe tie it to HN a bit more), blogs a good deal about the 'why' questions on his 'Random Forest Runner' blog (yes, a ML pun). https://randomforestrunner.com/upper-kelly-camp/the-decision...
I still have no interest in doing it, but it was a very interesting look into the thoughts of someone who does.
This used to be the case for the Tour de France. That is, it used to have no stages with night cycling allowed. I think one reason was that contestants would put their bikes into vans and drive at night while the judges couldn’t see them.
Not a good analogy, for two reasons. First, workers who don't have equity in a company don't really have a gun to their head even if the existence of the company is at risk. The real "gun to the head" is the threat of jail time. Second, it has historically been difficult to convince dozens of people to coordinate with each other and do something illegal for little to no personal gain.
If you look at nominal interest rates, yeah. Real interest rates haven't been particularly lower post-1980 than pre-1980. Sure, high interest rates pre-1980 built wealth passively, but periods of high inflation also destroyed wealth passively.
I agree that removing public dislikes is a pretty bad idea, but it's not that important of a tool in fighting misleading videos. I mean, there was once a HUGE glut of videos with misleading thumbnails/titles, and what stopped the glut was not dislikes, but rather Youtube's use of watch time as an important metric.
Beyond the debate on whether or not downvotes are useful as a tool, I think about the higher-level implications of a change like this.
One of the most powerful media platforms in the entire world can institute a change like this under everyone's watch, and none of us have any recourse.
A couple of programmers in their two-week sprint can fiddle around with some Javascript and push it out to the masses, and suddenly large swathes of the historical record are gone forever. (If you consider downvotes to be historical, that is.)
Imagine if someone could white out a section of a book and apply the changes instantaneously to every printed copy of that book in existence.
I think about the implications of being able to look back on human history, and how that historical narrative is increasingly in the control of technology companies and a relatively small amount of people who decide to change that narrative for everyone else. I remember many chronological videos that specifically call out the dislike ratios of some YouTube videos as evidence of the negative backlash certain companies or individuals have received. With no dislikes, that point can no longer be made. That information is lost.
During a live recording of a Japanese entertainment group I watched, whose videos will be preserved on physical discs and be watched by thousands for decades to come, they announced on camera that, in the span of their two-hour performance, they had reached trending status on Twitter. All they had to mention was the word "trend," and the audience responded with enthusiasm. The influence of Dorsey's creation has permeated so many of our lives, including the people who, ten years ago, would never have cared about what bizzare-sounding technologies like Ruby on Rails would eventually enable them to obtain: a universally understood, instantaneous signal of approval.
I believe that the record of who we were and what we did will be important for us to be able to look back on, as it has been for centuries. But it seems that, in the coming decades, that will not always be up to us to decide - just a couple of people in the engagement bureau who decided for us that the alternative was better.
Totally agree with you on this. We're reaching a point where the services some private companies provide are becoming too important to remain private, or at least, being served in a monopolistic fashion where the user has basically no power.
> Imagine if someone could white out a section of a book and apply the changes instantaneously to every printed copy of that book in existence.
Considering a fifteen year old YouTube video can resurface and the millions of votes can change the vote-ratio, digital media isn't necessarily the same as a permanent historical record.
Fair point, but I think downvotes have been useful to me relatively recently. Fake videos may not show up in recommendation feeds, but they still appear in search results don't they? (And if you're searching for something relatively obscure, you can realistically hit the bottom of the barrel, rather than only seeing the more highly rated results.)
I would for anything truly extreme (like some horrible shock footage in the middle of a supposedly innocent video). But I don't know if all of these videos actually violate any rules; often they are of the kind <title: THING YOU'RE LOOKING FOR>, where the content is actually someone talking about the thing I'm looking for.
edit: Or another relatively common type, not necessarily fake or even strictly misleading, just cynically low-quality: a video made by pulling some text content from the web, feeding it through a speech synthesiser, and playing that over over the top of some 'relevant' images.
When you are reporting a video there is "Spam or misleading" option but then again you are left with YouTube algorithm deciding whether video is really "spam or misleading" or it is malicious report.
For the past couple of months I was regularly reporting group of spammers spamming links in comment sections but to this day I still see them running amok.
From a YT standpoint, if I am looking for "interview of HenryBemis" and there are 10 likes and 1000 dislikes, it means that this is probably NOT the video, but someone commenting on the video (e.g. I wanted to see the Oprah-Harry-Meghan video).
If YT removes the dislikes from the public eye, I will either have to scroll ahead, OR watch 5-10mins waiting for the thing to start, then go and try some other video.
YT increases user engagement (I have already watched 10mins of one video and now heading for the next.. and the next.. and the next..). So, for YT this is a win-win.. it's the user that gets tricked.
> if I am looking for "interview of HenryBemis" and there are 10 likes and 1000 dislikes, it means that this is probably NOT the video, but someone commenting on the video
This is the sort of thing I had in mind. Some of it is complete junk and some is probably interesting to some people, but the titles are sufficiently misleading to attract an eye-catching number of downvotes. I can't remember exactly when I last came across this kind of content, but it was definitely quite recently, so I don't think youtube has stamped it out.
You see this very frequently in DIY how-to videos. There's usually about ~30-60 seconds of very helpful instructional content, buried somewhere towards the end of an 11 minute video of rambling and common knowledge. I suspect largely because the monetization gets better if your video is longer than 10 mins...
Dislikes are good not just for identifying bad videos, but also good videos. You can see it in the like/dislike ratio. The higher the better, videos with ratio around >98-99% have very high probability of being good etc
Comparison of likes to views works well enough. Actually, they don't even need likes, they can understand good and bad videos just by analysing how long viewers spent viewing the video.
Likes (and dislikes) are needed mostly for viewers who might want to feel helpful.
It's still absolutely rampant for some types of search terms. For example, try searching for "electronic projects", "crafts", or "life hacks" in an incognito window. The vast majority of the results for all of those search terms have misleading thumbnails and/or descriptions.
Oh if you're going back that far, then yes, it definitely still exists, though I don't doubt it used to be a lot worse. (I phrased my first response carefully in case there had been changes in, say, the past few months that I hadn't fully noticed.)
I agree with the basic premise that the IRS is nothing to be afraid of if you make a simple mistake. Though if you make a $5,000 error (which is getting out of "simple mistake" territory), they'll tack on a 20% penalty.
That being said, audits are incredibly annoying if you didn't make a mistake, especially if children are involved. The Examinations department of the IRS is hard-headed, to say the least, and they will often make any excuse to deny you credits that you are actually entitled to. In order to get a fair hearing, you have to appeal the case to court. (The U.S. has made the appeal and court processes pretty doable even for taxpayers without an attorney, though.)
Even besides the risk of pecuniary damage, the problem with an audit is that it can take a long time. It's a time sink for you where the best outcome is usually nothing different happens.
I made an error like that one year. It was as simple as me (personally) not receiving one of the 1099s from a few months of work my wife had done for a non-profit.
For those unaware: You get a 1099 when you're paid as a contractor, which means taxes haven't been taken out yet. It's fairly common for temp work and similar oddjobs that don't warrant a dedicated employee.
There was no audit in my case. They just sent me a letter that boiled down to that I had missed that 1099, and they were correct. I was just a little miffed that they waited almost a year to send that letter, which by then had higher interest / penalties than if I had been notified sooner. Still way better than an audit would be, though.
Should the U.S. have an official tax preparation system? That would sure save a lot of people a lot of money, but I'm personally grateful for the fact that a bunch of private companies have been spending a lot of dough trying to develop good online tax prep utilities. Self-service tax prep is in a much better place than it was 15 years ago because of the efforts of those private companies. And an official option for tax prep would undercut those efforts. (At this point, of course, it's high time for the IRS to create an official option, and they are moving towards that.)
Congress is aware of the above concern. The lawmaking "meta" since the Reagan years is to not undercut the normal operations of a competitive market unless there's a clear reason to. But sometimes there are clear reasons to. That's why we have things like FDA rules that tell companies what can or cannot be labeled as "peanut butter" or "milk chocolate." It's why we strictly regulate the radio spectrum. It's why we have healthy anti-trust, anti-cartel, and anti-foreign-bribery laws. Congress understands traditional examples of market failures and is very interested in fixing them. But the tax prep industry, for example, is not an example of a market failure, so Congress is not excited about getting involved.
Getting back to FedNow, creating a standardized payment system to be used throughout the financial industry is a prime example of fixing a market failure: the difficulty of coordination, and the obvious benefit of getting every bank onto the same payment system. So I am not especially pessimistic about the prospects of this system.