I have no idea why anyone would trust H&R Block to offer competent help with tax returns.
19
I heard Mr. Reid's interview about taxes with Terry Gross recently and was FASCINATED. If only we had a President who was obsessed with NPR instead of Fox & Friends. Highly recommend.
24
Too many respondents are missing the point. Pre-populated IRS form doesn't mean you can't let HR Block or software to recheck it if you don't agree with irs. Americans shouldn't waste billions of hours for something for nothing. The energy should be used in productive purpose, not on something that can easily be done by computer.
18
What the heck, son? We live in the Wild West. If you're not a rugged Individualist, why don't you just go live in half a dozen countries where they like Big Brother fiddling with their finances.
Keep Yer Hands Off My Tax Prep!
Keep Yer Hands Off My Tax Prep!
4
Americans have become increasingly just sheep to be fleeced by hook or by crook by corporate America. Most of our representatives in the congress work for the highest bidder, which ain't you and me.
.
.
29
Looks to me like a perfect collision of American mythmaking and corporate exploitation thereof. Sadly, it turns out that the "rugged individual" who wants the #$!%! gummint out of his hair is really, really bad at interpreting tax law, which works out just fine for the H&R Blocks of the world. His life would be a lot easier if the #$!%! gummint filled out the forms for him to look over, but that would require an admission on his part that gummint is good at something, and that amount of cognitive dissonance would cause his head to explode.
27
I had the pleasure of living in Japan for 5 years... If road work needed to be done, the crews would do it at night... Many times, I'd drive a road one day, and it would be repaved and lined the next morning... When WWII was drawing to a close, Stalin said that he would trade all of Eastern Europe for Japan... I know why....
21
It's called Form 1040EZ. Try it. You'll like it.
But we love our loopholes, credits, deductions, rollovers, IRA's, depreciation schedules, travel allowances, tax free asset swaps, REITs etc, etc.
5
The tax code today is not the fault of the for-profit preparers. H&R Block and others are so far down on the blame chain that they hardly matter. Put the blame where is belongs: voters who keep returning the same no-nothing people to Congress. What a simplistic column. Reid is just looking to sell more books.
4
There was legislation last year that was killed by the corporations that make up tax preparation, the legislation would have allowed in 90% of the people to allow the government to prepare your taxes, if you agree and that was that. Easy peasy. BUT NO! the legislation would make tax services obsolete for 90% of the country. So, your question is simply answered as to WHO RUNS THIS KLEPTOCRACY. Just be thankful they do not require you to shove something up your arsses while you bow to their illegitimate authority.
12
Americans are taxed on their worldwide income, but the IRS is powerless to enforce withholding abroad, so how can it collect foreign payment information?. Ever check out FATCA forms such as w8-ben-E? (Thanks, Obama) Until this worldwide income thing changes, the author's writing is a fantasy.
11
if there is a simple way and a complex way to do something americans always choose the latter
its just their m.o.
Congress will never change the tax code to make it simpler. The simplest method is a flat tax-i.e. you make x dollars you pay x tax-no deductions or additions period! The minute you throw in deductions and additions the problem becomes complex. However, for many, and I bet most, people who are W2 wage earners the simple 1040 is enough and quick to fill out-If that is your case then the IRS could allow you to select for the next year after you file the first 1040 to select that they IRS fill in the form for you. You can always change your mind.
This would allow millions of Americans to forget about filling taxes. In fact what they would get back is a refund-if their prior years did not change-as it is for many Americans. In fact you can estabilsh a computer account with the IRS that would link to your return and you can add children, etc to adjust the next years return.Simple. But if you want a to have a simple return for the complex returns go to a flat tax.
This would allow millions of Americans to forget about filling taxes. In fact what they would get back is a refund-if their prior years did not change-as it is for many Americans. In fact you can estabilsh a computer account with the IRS that would link to your return and you can add children, etc to adjust the next years return.Simple. But if you want a to have a simple return for the complex returns go to a flat tax.
3
What can you expect from a country that elects an admitted tax-dodger as president? Indeed, he says that it makes him "smart" - and nobody bats an eye!
Something to think about for all those poor slobs who pay H&R Block to fill out a form that in other countries comes as a link in their in-box. Already pre-filled and ready to digitally sign. In Norway now, you don't even have to sign it unless you make changes.
Something to think about for all those poor slobs who pay H&R Block to fill out a form that in other countries comes as a link in their in-box. Already pre-filled and ready to digitally sign. In Norway now, you don't even have to sign it unless you make changes.
12
Old joke worth repeating here:
"The IRS has agreed to simplify the tax return. It will have only two lines:
1. How much did you make?
2. Send it in."
"The IRS has agreed to simplify the tax return. It will have only two lines:
1. How much did you make?
2. Send it in."
6
If the I.R.S. were capable of doing its job, there would be no H & R Block. How come the I.R.S. didn't develop tax prep software years ago?? Of course Intuit is against reform. Whose ox is gored???
Itemized deductions will never go away because they are loved by, among others, home mortgage payers and other large voter blocs.
For real tax reform; broaden the tax base and lower the rate.
10% consumption tax and NO personal income tax.
Itemized deductions will never go away because they are loved by, among others, home mortgage payers and other large voter blocs.
For real tax reform; broaden the tax base and lower the rate.
10% consumption tax and NO personal income tax.
13
The author has greatly oversimplified the procedure and what works in many other countries won't work in the U.S. That said there is a procedure that will work here, dubbed EZReturn, and is spelled out in my Washington Post Op-Ed last month. Fundamentally the IRS prepares the return from the data it collects and presents it to the taxpayer for acceptance, modification, or rejection. The concept is totally voluntary.
https://www.washingtonpost.com/opinions/americans-shouldnt-be-responsibl...
https://www.washingtonpost.com/opinions/americans-shouldnt-be-responsibl...
It isn't the tax-prep lobbyists that keep the tax-code complex...it is the dishonest GOP politicians sucking-up the lobbyists money. GOP = "Show me the money".
2
I filed a 1040a tax return using a free software I downloaded from the TAXACT website. After reading this article I came to the conclusion that the IRS could have just sent me a pre-filled form for me to sign and that would have been it.
According to the "2010 IRS TAX Stat" 29 % filed a 1040A and 13 % filed a 1040EZ from 142.8 million filers.
According to the "2010 IRS TAX Stat" 29 % filed a 1040A and 13 % filed a 1040EZ from 142.8 million filers.
4
Yes, please. Do this!
1
Aye indeed, it could be all so simple.
1. Enter all gross income
2: x% ( progressively rising )
3. Deductions\Children
----------------------------------
= tax
Simple.
1. Enter all gross income
2: x% ( progressively rising )
3. Deductions\Children
----------------------------------
= tax
Simple.
4
Do these other countries have the concept of "itemized deductions"?
While the government knows how much you made, it doesn't know how much you gave to your church or how much the bag of clothes you gave to Goodwill is worth. Is this also what is stopping simple tax filing?
While the government knows how much you made, it doesn't know how much you gave to your church or how much the bag of clothes you gave to Goodwill is worth. Is this also what is stopping simple tax filing?
2
Good luck. It will never happen in our country.
Socialism for the rich,.... capitalism for the rest of us. If the Mafia had done it before Intuit, we would have a scapegoat they ( Congress) could have attacked.
Same situation in Germany: extremely complex tax law and several days for every citizen to prepare the income tax declaration. It's the lobby but also the feeling that a highly granular tax system provides more justice. But already Cicero said: Summum ius summum iniuria
3
Sure, getting a postcard (really, not a sealed envelope) that says how much you earned last year, how much tax you owed and how much was withheld sounds simple, but as you said, if you disagree, you have to go into the tax office to work it out. I prefer inputing how much I earned last year, how much tax I owe and how much was withheld into a software tax program, and if the IRS disagrees, then they can send me a postcard.
3
Regarding reform efforts by Congress: "...their bills never went anywhere because the tax-preparation industry lobbies strenuously against them. The “Tax Complexity Lobby,” as it has been called, includes big national preparers like H & R Block and tax-prep software companies." This is BRIBERY. The reality is that citizens who likely don't even live in a representative's district (a lobbyist) can offer money in exchange for favors, whereas the ordinary Joe who DOES live in that district can't even get an office appointment with the congress person. And tax reform most likely wasn't even a campaign promise. Until bribery is replaced with truly representative governance, America will continue to have the hypocritical government structure it has at the present. So sad...
2
COMMENTS
Intuit, the maker of the top-selling program TurboTax, has reportedly spent millions over the years to persuade members of Congress to “oppose I.R.S. government tax preparation.” In an annual report, the company warned investors that “government encroachment” — the I.R.S. filling out the forms for you — would be a significant competitive threat, which is why it has to fight the idea. So you do more work, they make more money.
2
COMMENTS
Intuit, the maker of the top-selling program TurboTax, has reportedly spent millions over the years to persuade members of Congress to “oppose I.R.S. government tax preparation.” In an annual report, the company warned investors that “government encroachment” — the I.R.S. filling out the forms for you — would be a significant competitive threat, which is why it has to fight the idea. So you do more work, they make more money.
1
We use the tax code for social engineering and picking winners and losers like electric cars. Our tax code is magic, you can pay nothing in and get thousands out.
4
Breaking news-- congress is largely owned by the corporate world and special interests with deep (or deeper) pockets.
3
You're suggesting that the freedom to cheat should be abolished. Sounds like big gummint socialism to me. Kleptocracy for all.
1
As long as Intuit, H&R Block and others have lobbyists in DC, there will be middlemen trying to profit from what should be a simple short form for most Americans. And until the IRS makes short form filing truly simple, taxpayers will be using these services.
2
If only. What happens with stuff like IRAs when the check does not arrive via US Postal Service? or when you bought stock 20 years ago and the brokerage is out of business and the stock has reverse split 5 times? The worst is that the IRS does not answer its phone calls -- when after 10 minutes you get through you get a recording (a t 1 PM) we are not taking more phone calls today. The IRS 1) needs to hire more people... and 2) start worrying about the people who never pay a penny of tax OK I exaggerate but not by much if what Prez Trump says is true-- all legally. No deduction of charitable donations -- either your practice charity or you don't. And put in a luxury tax already.
PS we know that privatization means that businesses (people) make money whether profitable or not. (Heads I win; tails you lose.) (BTW I want to know why gas tax, airplane tax-- is that one calibrated to the fare paid -- I think it's independent , etc. are all considered fair but a luxury tax isn't considered fair.
the only nearly fair tax in the US is the income tax but it's not nearly as fair as it should be. (more brackets; fewer deductions; stop Wall St. gambling by taxing stock gains as ordinary income.)
PS we know that privatization means that businesses (people) make money whether profitable or not. (Heads I win; tails you lose.) (BTW I want to know why gas tax, airplane tax-- is that one calibrated to the fare paid -- I think it's independent , etc. are all considered fair but a luxury tax isn't considered fair.
the only nearly fair tax in the US is the income tax but it's not nearly as fair as it should be. (more brackets; fewer deductions; stop Wall St. gambling by taxing stock gains as ordinary income.)
3
You are missing the entire point of the American tax system---it is designed for exceptions---you know all those lobbyists who convince a legislator of a tax loophole that benefits two rich people in their district. Loopholes have a trickle down effect on the average taxpayer---those who benefit from the loopholes can afford the accountants that prepare their taxes---in fact, they write that expense off. For the rest of us---H & R Block.
2
Reasons federal taxes are what they so much absurdly are:
They nauseatingly reflect complex, contradictory culture.
We are rather byzantine reality.
We are semi maladaptive.
I well realize that I'm pessimistic, but this is sincerely what I think is the essence of a monstrous legalistic realm, and so this perception is unhappily sincere.
Income taxes are the essence of legalistic gobble-de-gook.
Phenomenally challenging and truly sad if not actually mad.
They nauseatingly reflect complex, contradictory culture.
We are rather byzantine reality.
We are semi maladaptive.
I well realize that I'm pessimistic, but this is sincerely what I think is the essence of a monstrous legalistic realm, and so this perception is unhappily sincere.
Income taxes are the essence of legalistic gobble-de-gook.
Phenomenally challenging and truly sad if not actually mad.
Like the AMA and private prisons ,Tax prep industry feels entitled to its profits at public expense.. They couch their words in anti-government rhetoric and it usually works because Americans have been 'conditioned' for generations to respond predictably like Pavlovian dogs to such rhetoric. Game over. We Americans are indeed stupid and we would not know to recognize the right thing even if it came wearing florescent neon clothes and wore a pumpkin for a hat
Here in Britain I have filled in one tax return in the last 40 years. It was to declare a £500 pa. income from a bond.
1
Our perverse federal tax payment system will let taxpayers make mistakes that result in penalties, rather than just sharing with the tax payers what the IRS thinks we should pay before we file. It is no better than shell game, where the dealer knows the answer, but you must guess that your answer will match the answer the IRS already knows.
5
The US lobbyists are probably laughing so hard after reading this, they're probably hurting themselves.
1
Now this would be a Mother Of All Bombs worth throwing.
4
One of the biggest tax cheats on the planet told you he was going to fix it.
9
We are a backward nation with idiotic tax system,electoral college, supreme court justices for life, etc.!!!!!
2
"They’ve made paying taxes easy. If you walk down the street in Tel Aviv, ..... you won’t see an office of H & R Block or a similar company; in most countries, there’s no need for that industry."
Most people in Israel do not file income tax. If you are a salaried worker, your employer deducts all necessary taxes, usually at the maximum based on your salary rate and passes it on to the tax people. Most people are finished at that stage with income tax and (Israeli) social security etc. What about deductions getting money back? Many people on salary might be entitled to money back but as they do not file, they lose out and the tax people profit. Good system, for the system, not for tax payers.
Some people on salary have learned that there is no reason to let the tax people profit and file. The laws are impossibly complex and even accountants often admit to not understanding all the details. However, if you are a salaried worker and file, the chances are that you will get back more than what you pay the accountant (and you need one). Salaried workers who file also receive pleasant treatment from tax authorities and they will return what they owe quickly.
People in private business or occupations pay advances on their taxes every few months and must file a tax return. The income tax people usually treat these as potential criminals and audit them at the drop of the slightest suspicion.
Japan might have a better system, but, T.R. Reid, Israel should not serve as your model.
Most people in Israel do not file income tax. If you are a salaried worker, your employer deducts all necessary taxes, usually at the maximum based on your salary rate and passes it on to the tax people. Most people are finished at that stage with income tax and (Israeli) social security etc. What about deductions getting money back? Many people on salary might be entitled to money back but as they do not file, they lose out and the tax people profit. Good system, for the system, not for tax payers.
Some people on salary have learned that there is no reason to let the tax people profit and file. The laws are impossibly complex and even accountants often admit to not understanding all the details. However, if you are a salaried worker and file, the chances are that you will get back more than what you pay the accountant (and you need one). Salaried workers who file also receive pleasant treatment from tax authorities and they will return what they owe quickly.
People in private business or occupations pay advances on their taxes every few months and must file a tax return. The income tax people usually treat these as potential criminals and audit them at the drop of the slightest suspicion.
Japan might have a better system, but, T.R. Reid, Israel should not serve as your model.
1
The Dutch Tax and Customs Administration, our I.R.S., is called "Belastingdienst" in Dutch. That agency has the slogan "Leuker kunnen we het niet maken. Wel makkelijker."
The government body mentioned, the Algemene Fiscale Politiek, isn't an agency but a part of the department of Finance. It assists in setting tax policy and creating/changing tax laws. As such, it is not comparable with the I.R.S.
The government body mentioned, the Algemene Fiscale Politiek, isn't an agency but a part of the department of Finance. It assists in setting tax policy and creating/changing tax laws. As such, it is not comparable with the I.R.S.
I've worked at the US for three years, and I was puzzzled about how complicated it was. I am a physics Ph.D, so I refused to "cheat" and get help from softwares or companies, that translated to a few hours of work.
Now I am back in my home country Brazil, and despite all the (many) wrong and bureeaucratic things our government does, tax return is one thing they got right. There is an (Receita Federal - brazilian IRS) software you install on windows, linux or mac, and it will guide you through the questions and fillings. Since it loads your last year return, usually 90% of the form is pre-filled. It offers you the go for the "simplified" japan-like filling or a more thorough return. Unless you a have numerous income sources, the simplified one is the way to go.
After finished, if you still owe some tax, it will generate a payment form that can be executed in my online banking.
It usually takes me about 30-45 minutes to complete my and my wife's tax return.
Now I am back in my home country Brazil, and despite all the (many) wrong and bureeaucratic things our government does, tax return is one thing they got right. There is an (Receita Federal - brazilian IRS) software you install on windows, linux or mac, and it will guide you through the questions and fillings. Since it loads your last year return, usually 90% of the form is pre-filled. It offers you the go for the "simplified" japan-like filling or a more thorough return. Unless you a have numerous income sources, the simplified one is the way to go.
After finished, if you still owe some tax, it will generate a payment form that can be executed in my online banking.
It usually takes me about 30-45 minutes to complete my and my wife's tax return.
2
Blaming the tax preparation companies for the tax morass is ridiculous. Please place the blame where it belongs.
The key point, as is always true in the USA, is that the lobbyists run Congress. Since the tax prep people don't want filing tax returns simple, they pay Congress to keep it stupid...and so it goes. The only way we will ever have sane governance is by eliminating the lobbyist factor and ban bribes to Congress.
We lost a pile of hours that we couldn't spare, and took on real stress, to a discrepancy in which they insisted we owed another $10K, in addition to the obscene amount we'd already paid. In a nutshell, they had the math worked out in a way that would have clawed back our mortgage deduction. It was wrong, and it was obvious, and they put us through hell for it. The best/worst part was that it stemmed from their own bafflement at their inscrutable forms. And, had we caved and paid it, they'd have just taken the money and kept it. Where it would have covered about two minutes' worth of endless weekend at Moral-Oggo, for the tacky klepto-clown who lied to idiots about how he would fix it all.
3
"...my friend Michael, a Dutch executive with a six-figure income, a range of investments and all the economic complications that come with an upper-bracket lifestyle.
An American in the same situation would have to fill out a dozen forms, six pages long"
Only six pages! You're kidding! Our tax returns are at least 18+ pages long and the bill for the CPA to prepare them is $1,000. However, congress won't do anything useful until we can convince them that all the $$ that would no longer go to the tax prep industry would go to another industry (or multiple industries) that could use the lift.
An American in the same situation would have to fill out a dozen forms, six pages long"
Only six pages! You're kidding! Our tax returns are at least 18+ pages long and the bill for the CPA to prepare them is $1,000. However, congress won't do anything useful until we can convince them that all the $$ that would no longer go to the tax prep industry would go to another industry (or multiple industries) that could use the lift.
1
Why do we let corporations tell Congress what to do? There are way more of us taxpayers than corporations - we need to remind Congress they work for us!
But....the Supremes told us that corporations are people too - they just have more money than we do!
But....the Supremes told us that corporations are people too - they just have more money than we do!
2
I may not be the perfect example since I'm mathematically minded, but I've done my own taxes all my life plus I double-checked my parents' returns for the last 25 years they were filing. I survived nicely without paying for tax software or consultants, and the fillable IRS PDF forms aren't hard to use. It sounds horrendously old school, but I mail the forms in & always get my refund within a couple of weeks.
Yes, it takes about 3 to 6 hours, but it's mostly spent reading the instructions patiently and checking my math. If you take the Standard Deduction you probably won't be filling out more than 3 or 4 forms (maybe Schedules B, C or D, for instance) & don't need to worry about the countless special-case examples that look scary in the instructions.
My advice to taxpayers who are disgusted with subsidizing the tax prep industry: If you've used 3rd-party preparers and if your finances haven't changed wildly this year, you can probably mimic your last 2 or 3 returns, fill out the same boxes (with the new numbers of course), and get it all done yourself.
For the first time, in 2017, I will need to itemize (new baby & mortgage) and I read through the Schedule A instructions on January 1st to know what scattered expenses to keep track of - it wasn't hard and the deductions (especially medical) really will add up. No software and no tax specialist can help reconstruct this info come April 2018.
So, if you want to cut the cord, it isn't as daunting as you might expect.
Yes, it takes about 3 to 6 hours, but it's mostly spent reading the instructions patiently and checking my math. If you take the Standard Deduction you probably won't be filling out more than 3 or 4 forms (maybe Schedules B, C or D, for instance) & don't need to worry about the countless special-case examples that look scary in the instructions.
My advice to taxpayers who are disgusted with subsidizing the tax prep industry: If you've used 3rd-party preparers and if your finances haven't changed wildly this year, you can probably mimic your last 2 or 3 returns, fill out the same boxes (with the new numbers of course), and get it all done yourself.
For the first time, in 2017, I will need to itemize (new baby & mortgage) and I read through the Schedule A instructions on January 1st to know what scattered expenses to keep track of - it wasn't hard and the deductions (especially medical) really will add up. No software and no tax specialist can help reconstruct this info come April 2018.
So, if you want to cut the cord, it isn't as daunting as you might expect.
1
I bought into TurboTax years ago but never cared for the "enter a number, next". I had used the 1040 form for years so it was difficult to get my brain to shift gears. Lo and behold a few years ago found a website where you can download all the forms in xle spreadsheet form. They appear just like the IRS form and it does all the calculations. Just absolutely neat and it's free. The individual that produced them appreciates donations but not required. I have the link but not sure NYT'S would post it. So if there's interest just reply to my comment and I'll post the link.
1
I have always done our families taxes as married join returns with income of several hundred thousand dollars until the past two years now that we are both retired. Paying 40 to 50 thousand dollars is significant and I needed to understand what I was doing and why. Using tax software I would spend weeks on this and it ends up at a certain point you hit diminishing returns and can't save due to what I consider bizarre requirements such as ATM. Also I was generally dealing with W2 income . Donald Trump can write off his billion dollar loss but when I sold my 3 decker in Dorchester Mass for a loss after fixing it up , the loss was limited to 3000 a year over two decades. Had one real detailed audit and the IRS worked with me and we split the disputed amount in half, they were reasonable vs their reputation. This year with 80 thousand in come was the first time I took the standard eduction . My points are when you have income as an employee in the low six figures you will take the biggest hits and they have it figured out you are paying x percent even if you try filing every different way that is allowed. If you want to keep the money you earn you need to work for yourself , own your own business , because Income is not desirable . The whole system is unfair. People making up to a minimal amount should pay no tax and then a progressive flat tax for everyone would eliminate most of this. People should roll up their sleeves and try it.
1
While we're at it, why can't we simplify the law so we can get rid of Attorneys?
Shouldn't civil, criminal and business law all be easy enough that anybody can understand it without having to pay high priced attorneys?
Contracts, schmontracts. We can get rid of the attorneys and just do everything with an app on our phone.
Shouldn't civil, criminal and business law all be easy enough that anybody can understand it without having to pay high priced attorneys?
Contracts, schmontracts. We can get rid of the attorneys and just do everything with an app on our phone.
H&R Block, TurboTax, and all CPAs will fight tooth and nail to keep the tax system as complicated as possible and this means huge donations to both parties not to change a thing. The solution to this problem, like most others in our system, is to replace contemporary capitalism with some more benign. Even feudalism produced less paperwork.
2
Let's be honest, folks, and admit that Americans really do like their tax system exactly the way it is. It's called 'privatization' and we wouldn't have it any other way. We have been conditioned to mis-trust our government, the very people we vote for and put into positions of power. We pay H&R Block between $300. to $400. to calculate our taxes...we feel that they are trustworthy because we pay them.
Another example of privatization: Our water system. We are perfectly content to pay the bottled water companies to 'mine' our water (part of our commons) and sell it back to us. We all know that our tap water is unhealthy (Flint, MI) but we would rather not pay to fix the system....easier to pay for the bottled water.
In conclusion let me cite our airline industry. We are all aware of how vicious and greedy our privatized airlines are. We are in desperate need of at least one government owned (oh-oh socialism/single-payer) airline to combat the out-of-control airlines. Easier to pay for all the extra charges and inconveniences heaped upon us than to fix the problem.
The good news......we are beginning to rouse ourselves.
Another example of privatization: Our water system. We are perfectly content to pay the bottled water companies to 'mine' our water (part of our commons) and sell it back to us. We all know that our tap water is unhealthy (Flint, MI) but we would rather not pay to fix the system....easier to pay for the bottled water.
In conclusion let me cite our airline industry. We are all aware of how vicious and greedy our privatized airlines are. We are in desperate need of at least one government owned (oh-oh socialism/single-payer) airline to combat the out-of-control airlines. Easier to pay for all the extra charges and inconveniences heaped upon us than to fix the problem.
The good news......we are beginning to rouse ourselves.
10
"I know everybody's income and what everybody earns,
And I cheerfully compare it with the income tax returns."
King Gama, Princess ida, Gilbert + Sullivan.
And I cheerfully compare it with the income tax returns."
King Gama, Princess ida, Gilbert + Sullivan.
My sense of it is that the complexity is simply another way for the uber rich to conceal that they are not paying their share. And over time shifting the tax burden to the middle class and the working poor. And of course no one in politics on either side of the isle wants to talk about the payroll tax. Just an interest free loan by working stiffs to keep the government up and running through the year.
As with the health insurance, the tax-preparation industrial complex has become too big to fail. Sad.
1
There are some significant things the IRS does not have reporting for, like how much your small business paid for office supplies, or whether you really have an area of your home that you regularly and exclusively use for business purposes. I do not know, but I suspect, the culprit is the other countries' sets of tax laws are far less complex than ours, so such issues are not relevant. I do believe the prefilled forms nirvana described in the article can be achieved, but the target is the social engineering legislation that created today's tax code which, if dealt with meaningfully, would take care of the tax filing problem.
2
I guess I don't understand how this reform would jive with American Exceptionalism? Our economy is based on companies whittling away at our [We the People's] income. The cable companies make us buy ESPN and Fox even if we are lefties uninterested in sports, for no apparent reason except corporate profit. Drug companies have somehow convinced the government that Medicare can't negotiate drug prices. Health insurance companies have insisted that America have the most bloated, expensive, and inefficient health care system in the world. Of course H&R Block can afford to hire MadMan Don Draper to sell us a product that is nothing but a redundancy since they have effectively bribed the government to be as inefficient and as byzantine as possible.
Heck. We hired a president who has made a career out of gaming our system for his own benefit. Three Card Monte is only illegal if you are poor. If you are rich, it's called Capitalism.
Heck. We hired a president who has made a career out of gaming our system for his own benefit. Three Card Monte is only illegal if you are poor. If you are rich, it's called Capitalism.
3
I see this as an example of highly efficient tax prep businesses operating in a free market to make tax filing inefficient. Somebody is getting rich off this and that's all it takes to make America great again.
Well, how does the government know someone's expenses and losses for a business? Real estate investors, for example, get to write off an array of expenses, including maintenance, repairs, and travel to oversee the property. How would the gov. Know about those?
1
Check out planet money #760. Professor in California tried this. EZ Return needs more support.
For two years in a row I've had to wrangle with insurance bureaucrats, because somebody copied my ID number wrong and they acted as if it was my fault. Do I think they can track down all my income properly? No -- particularly since rich people's accountants will probably think of clever ways to hide the money from the government so that it doesn't appear on those forms.
Fly United and get beaten bloody in the course of a few minutes. Filling out all the tax forms and getting it right is a longer term form of torture that can last for days or even years if the IRS decides to audit. We have these systems in the USA because in the land of the free, the real freedom is that the big dogs get to practice the second golden rule. That is, "Thems with the gold makes the rules." Yet another example of Corporate bottom line focus. The goal is NOT to serve customers, it's to maximize profit. Whether that means you get a bloody nose or are subjected to some perverse torture, you, as a person, are not as important as the Corporation "person". The voters keep selecting the sycophants who enable and benefit from this system, only minding the advertised electioneering pap, rather than dig to discover how to prevent getting screwed. How lazy, stupid and gullible can the American public be? Well, here's another example.
That we allow lobbyists to promote complexity for the sake of complexity is mind-numbing. What is wrong with us, that we have allowed corporate interests to whittle away our quality of life?
Special interests and greedy, ignorant politicians with no concept of the consequences of their decisions are the problem.
Americans are the some of the most patriotic people on earth but most of them also hate their government. I never will understand that. If they hate their government, they will never trust it with their taxes. Rush Limbaugh types will explode with anger.
The tax code is designed to help wall street and the rich. They can apply for many tax deductions you can only dream of. Many pay zero taxes.
3
The Republican Party is a cabal of con men, crackpots and plutocrats who keep the base obsessed with abortions and immigrants, while doing everything in their power to make doing taxes, and everything else in life, as difficult, expensive, and prone to corporate scams as possible, as they blame the government they run for your all your problems.
1
trolling and intellectual dishinesty trolling intellectual dishonesty.
Way to go Times. Digital Age we are here.
The tax code is a mess because that is how the rich avoid taxes.
Way to go Times. Digital Age we are here.
The tax code is a mess because that is how the rich avoid taxes.
America doesn't do things the efficient way, since Congress wishes to get involved. I am amazed that people who have nothing more than one W-2, no bank accounts or 401k contributions to account for, and take the standard deduction. And then, they feel "confused", and pay a tax-prepared to help them submit their form. You'd beet believe that the Tax-Preparation Industry--and I'm referring to the pop-up storefronts--make contributions to Congressional Campaigns!
https://thetruthoncommonsense.com
https://thetruthoncommonsense.com
Even in Spain (hardly an example of a functioning bureaucracy) the tax authority mails you a draft of your tax fillings every year. But here in the US, with a broken political system and lobbies that manage to distort every aspect of the economy and society, there appears to be no end to this madness. As history has taught us, empires don't fall until they have rotten from inside. So, America, will you manage to avert the downfall?
There is a reason elections are held as far away a possible from tax day. Six months apart. Can you imagine how voters would vote if elections were held the same day taxes were due?
1
How many Americans want the government to know all those things before they file their 1040? I know it is American to complain about filing taxes but unless you also have to calculate the alternative minimum tax is it really that complicated to file?
How about this option? Filing a return is optional. For the people who worry they are paying too much, they can have the tax prep industry. For others, they can just trust the IRS.
And how about this little idea: stop bothering us expats with US taxes. The US is the only country on earth, I believe, that forces expats to file returns and pay taxes if over certain thresholds, etc.. I haven't paid a penny in US tax (because of a treaty with Canada) in years but every stinnking year i have to file returns, tell the Treasury how much money I have in all my Canadian accounts, and worry that I'll be audited because I forgot about some stupid freelance invoice for 700 dollars that I neglected to report but for which I don't have to pay anything anyway. Maddening.
Canada is little better.
And how about this little idea: stop bothering us expats with US taxes. The US is the only country on earth, I believe, that forces expats to file returns and pay taxes if over certain thresholds, etc.. I haven't paid a penny in US tax (because of a treaty with Canada) in years but every stinnking year i have to file returns, tell the Treasury how much money I have in all my Canadian accounts, and worry that I'll be audited because I forgot about some stupid freelance invoice for 700 dollars that I neglected to report but for which I don't have to pay anything anyway. Maddening.
Canada is little better.
4
seriously? accountant and tax lawyers pay congress to keep it complex. Only two things matter in governing this country- conservative religion and money, and the latter is bigger. There is no god but Profit, and Conservative Religion is its Toady.
2
In America, we don't work to solve problems.
All of our policies are based on trying to satisfy the greed of the 1%, which in turn hurts the rest of the country.
All of our policies are based on trying to satisfy the greed of the 1%, which in turn hurts the rest of the country.
2
I'm a tax accountant who loves solving the mystery of taxes, but Mr. Reid is right -- tax prep should be much simpler. I keep picking the wrong industries.
Beware of anything that the US government does to make life easier for the common tax-payer. Hand them your wallet and they will return it to you empty. I'd rather see them 'simplify' it for corporations which would really mean eliminating all the loopholes that corporations use to avoid taxes.
The tax filing lobby, the airline lobby, the cable network lobby, and the health insurance lobby, and congresses service to them, is exactly why the people are angry, and nothing ever gets done to help the average citizen. This anger is easily channeled by extremists and this is why we have Trump, and France may soon have Marie Le Pen. Somethings gotta give at some point.
1
It's just like healthcare. Common sense and cost effectiveness are squelched by the existence of parasitical, profit-driven, obsolete middleman industries. But they have more clout with our elected representatives than we do.
4
Mr Reid gives the answer to his titular question in noting the size of the industry that has grown up to keep people in rough compliance with an intentionally Byzantine tax code. I do not hold out much hope for any tax “reform” by the current administration. If it is anything like their attempt to replace the ACA, “reform” will likely enhance the continuing shakedown of American wage earners by the financial autocrats and their servants that have been established in Washington.
By the way, it took me about 15 minutes to file my Swedish returns (largely because I had to install my BankID program on my new computer) whereas it took about 6 hours to prepare and file my US return. And I have very straightforward finances.
By the way, it took me about 15 minutes to file my Swedish returns (largely because I had to install my BankID program on my new computer) whereas it took about 6 hours to prepare and file my US return. And I have very straightforward finances.
3
It is the vaious loopholes and special "tax expenditures" that make our taxes so complicated. Some people make millions and pay next to nothing in income taxes, others pay through the nose.
Don't blame Block.
Don't blame Block.
There are too many people with a stake in the current wretched system- tax accountants, attorenys, preparers, whole industries that depend on right-offs, etc...why in the world should charitable donations be tax deductible ? Why should my taxes subsidize someone elses choices on who to donate money too- just madness. I voted for Hilary, all other choices being Republican, and have concluded that if the current administration, and with both houses being Republican, can't come up with a good rational tax reform package (oh, that also eliminates the nuttiness of 47% of filers paying no Federal taxes), then why the hell do we need a Republican party ??
1
another very important factor left out of this article contributing to tax preparation complexity involves the complicated tax code that congress has done such a good job at promulgating, in return for political contributions. This is the real crux of the problem.
The 'Dutch IRS' is called the 'Belastingdienst', not 'Algemene Fiscale Politiek' (which is not a government department, or anything, really). The article also neglected to mention that all tax returns in The Netherlands can be completed and submitted online - if the user so chooses - with tons of online calculation widgets to assist the submitter in case pre-filled tax data has to be corrected or supplemented. And all this operating on a tax code that is far from simple, in fact, one that is probably more complex than the US one. One other thing the Dutch tax filing system has going for it, both online and on paper, is the generally high quality of the form design. Having lived in the US for some years, I know from experience that US forms (tax or otherwise) are generally very poorly laid out, verbose, cramped, with little to guide the user to input data in the right places. I'm sure that some TLC in the IRS forms department could also be detrimental to H & R Block's bottom line.
3
My 6 year old son's birthday falls on April 13th. It's always a challenge to multitask the child's celebration with the undue pressure of layers of complexity with Uncle Sam.
It's the same with healthcare. If we had a true single payer system, then the whole billing industry and the hidden costs (including the time we all spend on this) would go away. But too many people earn their living through insurance and medical billing. I once asked my pharmacist, was on hold with the insurance company: 'How much time do you spend being a pharmacist, and how much fighting with the insurance companies?' His answer, after a few seconds thought, was 'Fifty-fifty.' I am currently spending many hours with my tax preparer trying to figure out how to enter what will probably be around $1000 in tax. I have no problem paying what I owe; but it seems absurd to spend $800 figuring it which line it goes on when the IRS knows already.
4
Question: what kind of regulations or laws are in place in countries like the Netherlands and Japan that prevent their governments from being beholden to lobbying by industries like tax preparers? This opinion is a prime example of D.C. politics being so awash in money that, naturally, corporations benefit while citizens continue to be taxed (pun intended.)
When I view our society from a macro-economic perspective I am reminded of that abhorrent Marine euphemism "Get Some". We have this huge chest of gold in the USA called the treasury. The goal, and this goal is common from literally millions of angles; good, bad, greedy, altruistic, you name it; this goal is to "get some" of that treasure via changes in the rules. If you can't change the rules via legislation, then do it thru jurisprudence. Failing those, amend the taxation process. And if you succeed, hang on to those rule changes like grim death by any means, legal, ethical, moral, or otherwise. The ultimate goal being a baked-in 'complex' which acts as an entitled extension of the government such as the old 'Military-Industrial' one we know of, now expanded to include the 'Pharma', 'Incarceration', 'Energy', etc., complexes. As I mentioned, you name it. This 'get some' approach results in hundreds of thousands of laws, court decisions, and of course, tax forms. And it has been going on for quite a while. You could almost call it the 'Complexity Complex'.
Japan has simple taxes b/c they are not a world military leader who rushes into a foreign conflict every time they elect a bozo president with no diplomatic skills, like happened in the US.
So they don't have a bloated mil budget with accompanying support structures.
Japan is also a racially homogeneous country with no troublesome immigrant agenda and accompanying race conflicts.
So they don't have a bloated mil budget with accompanying support structures.
Japan is also a racially homogeneous country with no troublesome immigrant agenda and accompanying race conflicts.
1
This has been my peeve for years. If the government can tell me that I forgotten to add add income from some source or that I have entered a figure incorrectly, why can't they just give me a pre-filled form with all the information they have. I'll still need to do work, like fix in the basis for stock sales (although that could be provided by the financial services companies as well), but it would make life so much easier. We would no longer be playing the game of did you make a mistake that could have been easily prevented by the government itself.
1
It would be great if done right (a big if). but I still dread the day when the government will do my taxes considering its record of botching everything it does. I will probably spend more time appealing overtaxation than I would spend preparing my own taxes however unpleasant and tedious it is.
I feel like the tax system in the United States is designed to punish the vast majority of us who are struggling and benefit the wealthy and super wealthy. Perhaps this system had merit when New Deal Era policies were stronger, when more people belonged to unions, when the middle class was stronger. But now, it's just a punitive system for the many and benefits system for the few at the top.
1
Quick solution, go from income tax to an estate tax.
Start with 3% for family estates over $3m
4% over $100m
5% over $1b.
That should replace all income tax and make more millionaires more quickly since high earners will be paying no income tax.
Start with 3% for family estates over $3m
4% over $100m
5% over $1b.
That should replace all income tax and make more millionaires more quickly since high earners will be paying no income tax.
2
Yes, I am equally very frazzled when the April deadline is approaching. It does'nt have to be this way. But as the Dutch, the Japanese, Bolivian or Israeli have no qualms about their taxes because the process is made simple. And that simplicity is achieved because these citizens are basically honest. Honesty leads to transparency so that their IRS can confidently, correctly estimate their taxes. But is true here? No! If a sitting President, a billionaire has not paid taxes in ten years, that shows not only the impotency of IRS due to myriad ways of tax evasion allowed and the dishonest ( legally honest! ) citizen to bend rules beyond comprehension to attain their goal of not paying taxes. Besides cut funding to the IRS so that it cannot do it's job. A perfect storm of confusion, impotency, inability and deceit brewing. Great for the wealthy oligarchs but horrible for those at the mid and bottom of the totem pole. Tax reform and increased funding for the IRS? Dream on! The oligarchs are not going to fix what ai'nt broke for them. We just don't have the basic honesty, decency and being a responsible citizen. Of course, we invoke God and Country at the drop of a hat to exhibit our patriotism. But we are just Hypocrites!
3
Americans are propagandized almost from birth to distrust and oppose their own government, whilst ironically also propagandized to believe they are part of it and that it is the best system on earth. How could they be convinced to allow that hated, untrusted entity to fill in their tax forms for them to check over? How could they be convinced to bother checking them over when it would be so easy to watch YouTube instead. Obviously what the author suggests would be a government plot to overtax by stealth.
1
This system works for those who get W-2 forms. How about businesses and the self employed? Someone has to add up the year's income and expenses before knowing exactly what would be owed in taxes.
This is an unfair comparison, like comparing the 1040 to the 1040 EZ.
This is an unfair comparison, like comparing the 1040 to the 1040 EZ.
2
Part of the problem is that even modest wage earners can get things like stock options and other plans, deferred compensation, taxable benefits, etc. - a very good thing. More and more people are receiving all sorts of non wage income, not just the rich. There almost seems to be limitless ways one can receive non wage income, and depending how you received it and when, it effects how it is reported, if it is taxed, and if so, how, and do you have options beyond this tax year to consider regarding that non wage income. The primary problem is not the lack of prefilled forms. The primary problem is the complexity of the tax code itself.
3
Clearly the author has never used a tax service. I have been using a national tax service for over 20 years. It takes 60 minutes in their offices to file the federal, state and local tax forms. I won't say which one I use as I am not promoting one service over another.
The federal government needs to fix the tax laws to simplify them. We have so many loop holes and exceptions that cause all the issues when filing. So if the author did some real research he would have writtten a different article.
The federal government needs to fix the tax laws to simplify them. We have so many loop holes and exceptions that cause all the issues when filing. So if the author did some real research he would have writtten a different article.
1
What infuriates me is that as soon as I earn $1 more than $64,000, I am required to pay to use software that is offered free to those who earn under that. Does the software suddenly become so prohibitively expensive to the IRS when I earn that extra dollar to justify that? Paying taxes is hard enough, and I'm glad to do it as the price of living in a civilized society, but having to PAY a fee to pay my taxes is an indignity I do everything in my power to avoid. This year I filed both my state a local taxes on paper and mailed it in to avoid paying Turbotax and their ilk. In doing so, I forced the IRS and NY State to bear the cost of processing my tax forms, but maybe I also saved some jobs of a few federal/state employees.
3
AARP does free tax preparation and filing across the United States for people with moderate incomes and relatively uncomplicated deductions/credits. Some senior citizens with low enough incomes (for example, Social Security only) may be told they don't even have to file any longer.
The only catch to this is you are helped on a space-available basis, which may take 2-3 hours. However, if you don't wait until the last minute, that may not even happen.
Go the AARP website to see what's available in your area. Try it out next year, as I doubt our tax code is getting simpler in the foreseeable future.
The only catch to this is you are helped on a space-available basis, which may take 2-3 hours. However, if you don't wait until the last minute, that may not even happen.
Go the AARP website to see what's available in your area. Try it out next year, as I doubt our tax code is getting simpler in the foreseeable future.
1
I suspect that, in addition to the tax preparers' lobby, the Grover Norquist wild bunch and corporations, wishing to recruit us voters as allies in their quest to rid themselves of a large tax burden, like the confusing and time-consuming system we now have.
1
In Sweden, most people file their taxes simply by sending a text message, confirming that the government has a record of everything. The U.S. is on the road towards this now, but they should visit some other countries to see how the process could be simplified.
The most striking difference is that in Sweden, the banks issue electronic IDs to people, which are then used to file your taxes. This cuts down on fraud, including tax fraud.
The most striking difference is that in Sweden, the banks issue electronic IDs to people, which are then used to file your taxes. This cuts down on fraud, including tax fraud.
1
If we truly care about transparency in government, then just having a fight over who the tax preparer will be doesn't really do much. Why is our tax filing like this - because the tax code is the best way for corporations and other groups to gain advantage. Simplification of the tax code would likely reduce the influence of lobbyists - it becomes obvious why politicians will never support simplification as their fates are tied together. Letting the government prepare our taxes without simplifying the code seems naïve.
1
No need to take repeated cries for tax reform too seriously. Adhering to the adage that there is opportunity in chaos, those who really count in this country are doing pretty well with the system as it stands. Always open, of course, to further reductions in liability and broader loopholes. And to be clear, 'those who really count' do not comprise most of us middle class chumps.
The flip side to make it work is the cost of compliance: every payment has to be registered and intercepted for withholding by both your state and the Feds, including payments to your landlord (good way to catch illegal immigrants, btw), eBay purchases, payments to your plumber, bookkeeper, vet, theatrical tickets to a street performer,and pretty much every electronic payment gets scooped up, reported to the government, and intercepted for tax, even if it is a gross sale. In Germany where prostitution is legal, you pay via tax kiosk to withhold the tax, but the government collects your payment information in the process.
The government doesn't know how much you spent on medical expenses, charitable contributions and many other items of deduction. The government doesn't know the net income of self-employed individuals - i.e., those who don't receive a W-2 form. So, the pre-filled postcard idea sounds great, but how can it work for all taxpayers under the current tax code? Throw out the existing code and start over many say, until they realize their special deductions and credits would go away. Real tax reform will never happen here as long as special interests are allowed to implement their agendas through tax policy.
Of course, everybody knows the answer to the question of why we can't have a rational tax reporting system like everybody else. It's just another lousy racket (like healthcare, the funeral industry, cable TV, for-profit colleges, etc.) protected by Congress and state legislators who are only too happy to bend over for lobbyists bearing gifts. Until such time as our elected representatives decide to put the public interest ahead of corporate profiteering, nothing will change.
2
Once again government works for corporations rather than for the people of this country. Ignoring treatment of airline passengers, removing safety measures for workers, polluting our air and water, selling our online information, reducing overseeing safety of the food we eat, trying to get rid of healthcare, Citizens United, not repairing infrastructure, and add several others, what is government doing for it's non corporate citizens.
I have been a volunteer tax preparer sponsored by AARP for 6 years. About 20% of my clients find they don’t have to file at all (below the income threshhold). Another 40% would benefit from a pre-filled form (but some wouldn’t trust it and would go to a tax preparer anyhow - hopefully a free one). The others have complicated dependency relationships, self-employment income with expenses attached, or medical deductions - none of which would be known to the government. The prefilled form is a nice idea but would only work for a pretty small percentage of taxpayers.
I wonder if there could be an opt-in system for Americans to have the IRS do your taxes, or have filled out most of the form? When I was a renter I could do the taxes myself, because I couldn't take any deductions beyond my child and daycare expenses. Once we bought a house, however, and had more than one job, it became much more complicated. I think the issue is that almost everything has a potential deduction, and as an average person, you're not sure what they all are and worried about overpaying, or not doing something correctly and being fined. Filing your taxes is nerve-wracking. I would welcome a simpler, but fair system. The perception is that the wealthy, with their army of lawyers and accountants, will milk the system, and like Donald Trump, essentially pay no taxes. There appears to be no accountability for the rich at the expense of everyone else. The IRS is not trusted for this reason, but could be, if there were more transparency for all classes.
3
America is definitely a weird place. I used to spend time working in Germany, and people there didn't feel that they were being taxed too much, rather they felt that their government gave them a lot for their taxes, especially in the area of health care. Nobody over there worries about being bankrupted by medical expenses. Another nicety is the 6 weeks vacation Germans receive. Here in exceptional America we can't even get a 2 week mandatory minimum. The lobbyists come crawling out of the woodwork proclaiming it will run business into the ground.
4
It's too bad that Congress is so much under the control and direction of corporations, who will not allow measures that would help the public if such measures threaten their profits. It does, however, show how completely Congress now answers to businesses and not to the public.
Public financing of election campaigns, with no contributions from businesses, might help, but the conservative court will not countenance that.
Public financing of election campaigns, with no contributions from businesses, might help, but the conservative court will not countenance that.
1
Filing taxes in Sweden is also a breeze whereas filing taxes in the US, even at a fairly low level is a nightmare.
I am about to file my 2016 Swedish "deklaration" OnLine and will do so in a computer even though filing can be done easily in a SmartPhone. The only difference is that it is easier for an 85 year old to use a real keyboard and see entries on a full size screen.
In contrast a US 1040 has all kinds of situations where you are told such things as multiply line 6 by some 4 place decimal and then multiply that result by yet another such. Where these factors came from defies imagination.
I do not expect any improvements to be made so just regard all such articles as places for us commenters to express ourselves, thus wasting some perfectly good time because we cannot restrain ourselves.
I close by noting that the same is true when one wants to use OnLine banking to pay bills or send money. In Sweden this can be done in a minute or two, at my US banks, each with its own strangely constructed system, nothing is that simple. Do something electronically and you will be told, your request will require 3 working days. Even worse at Bank of America, for example: File your request and we will send a PAPER check to the recipient! PAPER check!
Have a nice complicated day! Especially you, my long-absent Citizen friend from my very own little Rhode Island.
Only-NeverInSweden.blogspot.com
Dual citizen
I am about to file my 2016 Swedish "deklaration" OnLine and will do so in a computer even though filing can be done easily in a SmartPhone. The only difference is that it is easier for an 85 year old to use a real keyboard and see entries on a full size screen.
In contrast a US 1040 has all kinds of situations where you are told such things as multiply line 6 by some 4 place decimal and then multiply that result by yet another such. Where these factors came from defies imagination.
I do not expect any improvements to be made so just regard all such articles as places for us commenters to express ourselves, thus wasting some perfectly good time because we cannot restrain ourselves.
I close by noting that the same is true when one wants to use OnLine banking to pay bills or send money. In Sweden this can be done in a minute or two, at my US banks, each with its own strangely constructed system, nothing is that simple. Do something electronically and you will be told, your request will require 3 working days. Even worse at Bank of America, for example: File your request and we will send a PAPER check to the recipient! PAPER check!
Have a nice complicated day! Especially you, my long-absent Citizen friend from my very own little Rhode Island.
Only-NeverInSweden.blogspot.com
Dual citizen
1
As someone who has spent the last two weekends filling out my taxes and a 1041 Estate tax with its Schedule D and form 8949, (later the 706), I can attest to the stupidity, obtuseness, and ridiculousness of our tax code. I dare say, I don't even think the IRS understands the monster it's created. The forms make absolutely no sense, yet there are so many ways to game the system that has been designed to make the rich richer and the poor poorer. I can easily see how Trump and his buddies in real estate can pay $0 taxes for racking up debt based upon other people's money (OPM) they didn't earn, i.e., interest on loans, only to be "forgiven" when said loans go belly up.
The tax system is a tool of the fascist state to support the rich and corporations and keep the rest of us in the dark and the poor house.
The tax system is a tool of the fascist state to support the rich and corporations and keep the rest of us in the dark and the poor house.
We have many instances of arcane, complicated legalese in our old-fashioned laws that date back 300 years, It's great for the legal profession.
The same with our tax codes.
Other than the accounting industry, the big benefits go to Corporate taxation. The more complicated it is, the easier it is to sneak in exemptions and subsidies.
Don't hold your breath. Trump and our Congress are paid to keep it that way.
The same with our tax codes.
Other than the accounting industry, the big benefits go to Corporate taxation. The more complicated it is, the easier it is to sneak in exemptions and subsidies.
Don't hold your breath. Trump and our Congress are paid to keep it that way.
I think the main reason why it's more complex in the US is that here in The Netherlands where most financial services like banks, payroll services, pension system etc. are digitally linked to the government so most of your personal financial data is already available to the Dutch IRS. Looking at the kind of general distrust of Americans in federal government the changes needed in the US to get a more simple tax system seems more far off then ever. It's also the reason why there will not soon be a more federal European tax system in the near future.
1
Great to see a T.R. Reid op ed in the Times. He makes eye-opening, practical comparisons with other countries.
Besides taxes, the time is right for an op ed from his book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. And a re-run of his PBS documentaries on same. We need his input to the Gop’s irrational threats to our health care, with lessons in how to bring ACA up to international standards of access and cost. As well as to our unfair and complex tax system.
Parliaments around the world have done what the US congress and presidents seem unable to do. Passed health care for all citizens, as a right, at lower cost, generations ago. And with simpler systems than the over complicated ACA.
But also their voting systems are simpler. And so are their campaign finance systems.
The truth is the US tax system, health care, election financing, voting rules and our electoral college voting system, are all overly complex and confounding. And often downright crazy.
This is because they’re engineered to protect max profits and entrenched power centers—basically inequality---at the citizens’ expense, while still trying to run a modern democracy and sell it to voters. That is a complicated task, but they’ve been pretty successful at it, with both parties. Unfortunately the remedies are off the table for discussion.
Thus, what we have is “A Fine Mess” in all these areas, and in our politics. Keep writing, T.R. Reid.
Besides taxes, the time is right for an op ed from his book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. And a re-run of his PBS documentaries on same. We need his input to the Gop’s irrational threats to our health care, with lessons in how to bring ACA up to international standards of access and cost. As well as to our unfair and complex tax system.
Parliaments around the world have done what the US congress and presidents seem unable to do. Passed health care for all citizens, as a right, at lower cost, generations ago. And with simpler systems than the over complicated ACA.
But also their voting systems are simpler. And so are their campaign finance systems.
The truth is the US tax system, health care, election financing, voting rules and our electoral college voting system, are all overly complex and confounding. And often downright crazy.
This is because they’re engineered to protect max profits and entrenched power centers—basically inequality---at the citizens’ expense, while still trying to run a modern democracy and sell it to voters. That is a complicated task, but they’ve been pretty successful at it, with both parties. Unfortunately the remedies are off the table for discussion.
Thus, what we have is “A Fine Mess” in all these areas, and in our politics. Keep writing, T.R. Reid.
Wow, this is a column that actually compares the efficiency of a crucial function of our government to other nations- and actually suggests that many perform this function much, much more efficiently than the United States.
Shame on you! America is the shining city on the hill, the source of the world's inspiration for how government is supposed to function.
Next thing you will be suggesting that we should look at Canada for ideas to address our health care apparatus, probably pointing out that they spend little more than half as much money per Canadian for health care as we spend with our much, much more complicated system that leaves 10's of millions uncovered. And then you will comment on how much time people have to spend arguing with insurance companies to get what we pay for and researching the best company and plan to join.
While you are comparing us to our northern neighbors you might even point out that they manage to maintain peaceful streets while keeping 1/7th as many of their citizens in jail. Who knows where your critical comparisons will lead from there?
Your lack of patriotism is shocking. Our gross inefficiencies are proof of our greatness- we are so rich and powerful we can afford to leave half of our food on our plates. And we will always be this great- we are Americans!
Shame on you! America is the shining city on the hill, the source of the world's inspiration for how government is supposed to function.
Next thing you will be suggesting that we should look at Canada for ideas to address our health care apparatus, probably pointing out that they spend little more than half as much money per Canadian for health care as we spend with our much, much more complicated system that leaves 10's of millions uncovered. And then you will comment on how much time people have to spend arguing with insurance companies to get what we pay for and researching the best company and plan to join.
While you are comparing us to our northern neighbors you might even point out that they manage to maintain peaceful streets while keeping 1/7th as many of their citizens in jail. Who knows where your critical comparisons will lead from there?
Your lack of patriotism is shocking. Our gross inefficiencies are proof of our greatness- we are so rich and powerful we can afford to leave half of our food on our plates. And we will always be this great- we are Americans!
2
If the citizens trust their government, if they see their tax payments as providing benefits for everyone, and if the government sees taxation as only a way of funding government those easy systems work, and work quite well.
Americans generally don't trust the government, they don't see the world they live in as a product of their taxes and filling out all those forms makes you feel like you have some sense of control - even if you don't.
The real problem is that Congress likes to use taxation to move various socio-economic agendas. We want people to own their homes so, we use tax credits, we want businesses to do something and there is a tax credit for that, and then there are the favors to large donors. All of this makes the tax code more-and-more complex with provisions for tax credits buried in legislation on building roads and other illogical places. And of course, we sponsored an industry of tax accountants and lawyers all of whom profit with the status-quo.
Anarchism is part of American-DNA and it would not take a lot to shift the United States into 350,000,000+ independent states in total chaos. The basic premise of the article/book is logical and sensible. Unfortunately Americans are not.
Americans generally don't trust the government, they don't see the world they live in as a product of their taxes and filling out all those forms makes you feel like you have some sense of control - even if you don't.
The real problem is that Congress likes to use taxation to move various socio-economic agendas. We want people to own their homes so, we use tax credits, we want businesses to do something and there is a tax credit for that, and then there are the favors to large donors. All of this makes the tax code more-and-more complex with provisions for tax credits buried in legislation on building roads and other illogical places. And of course, we sponsored an industry of tax accountants and lawyers all of whom profit with the status-quo.
Anarchism is part of American-DNA and it would not take a lot to shift the United States into 350,000,000+ independent states in total chaos. The basic premise of the article/book is logical and sensible. Unfortunately Americans are not.
Our tax system is ridiculously complex. This complexity is big business for accountants, lawyers, and corporations, but a headache for everyone else.
However, rather than having the government pre-fill my ridiculously complex tax forms, I would rather have a simpler system.
Simple, fair, flat tax (or flatter tax than current system if we want to maintain something like 3 brackets)
No loopholes
No deductions
Just earnings times my tax rate.
Exempt the first $30,0000 or $50,000 of income.
File with one page. 15 minutes sounds about right.
However, rather than having the government pre-fill my ridiculously complex tax forms, I would rather have a simpler system.
Simple, fair, flat tax (or flatter tax than current system if we want to maintain something like 3 brackets)
No loopholes
No deductions
Just earnings times my tax rate.
Exempt the first $30,0000 or $50,000 of income.
File with one page. 15 minutes sounds about right.
I live and work in the Netherlands. I have investments. I own a house. I take deductions. I recently filled my Dutch tax return on my iPhone in about 15 minutes while sitting on a train on my way to Friday drinkies. My refund was automatically deposited into my bank account.
A few days later I filled my American tax return, which took about 3 hours sitting in front of a desktop computer filling out a slew of byzantine forms and answering irrelevant questions, essentially to prove to the government what it already knows and which should not require a tax return to begin with: I owe nothing. Filling the return was followed by 18 (yes, eighteen) rejection notices spread out over 4 days, with each rejection requiring me having to go through the entire return all over again to find some tiny irrelevant error. Errors ranged from the audacity of my filling in zeros in certain fields or using a comma. The only useful error was that I had dated the return incorrectly, but the explanation might as well have been in Mandarin. Errors such as the following:
Business Rule X0000-005 - The XML data has failed schema validation. cvc-complex-type.2.4.a. Invalid content was found starting with element 'WagesNotShownAmt'. One of '{"http://www.irs.gov/efile":WagesLiteralCd}' is expected.
Obviously.
For a country that claims to abhor taxes and despise government intrusion in our lives, how the voters permit such a system of fulfilling our tax obligations to exist is mind boggling.
A few days later I filled my American tax return, which took about 3 hours sitting in front of a desktop computer filling out a slew of byzantine forms and answering irrelevant questions, essentially to prove to the government what it already knows and which should not require a tax return to begin with: I owe nothing. Filling the return was followed by 18 (yes, eighteen) rejection notices spread out over 4 days, with each rejection requiring me having to go through the entire return all over again to find some tiny irrelevant error. Errors ranged from the audacity of my filling in zeros in certain fields or using a comma. The only useful error was that I had dated the return incorrectly, but the explanation might as well have been in Mandarin. Errors such as the following:
Business Rule X0000-005 - The XML data has failed schema validation. cvc-complex-type.2.4.a. Invalid content was found starting with element 'WagesNotShownAmt'. One of '{"http://www.irs.gov/efile":WagesLiteralCd}' is expected.
Obviously.
For a country that claims to abhor taxes and despise government intrusion in our lives, how the voters permit such a system of fulfilling our tax obligations to exist is mind boggling.
2
This is entirely analogous to what has happened with health care. Small government, free market fanatics insist that competitive businesses looking for profits will provide the most efficient mechanisms for keeping us healthy or computing our taxes. Not at all. Rather we have interest groups (insurance companies and tax providers) that have lobbied to keep the systems byzantine.
But, a LOT of people would loose their jobs and a lot of investors would loose their money were we to truly simplify health care and taxes, and in addition the free market, small government ideologues would be proven wrong - at least in these two cases. Lobbyists are well entrenched to defend these causes.
Nonetheless we should have Medicare-for-all health care and IRS-does-it-all tax collection systems. Our economy's productivity would increase dramatically were we not wasting our time on personal management of health and taxes and spending so much money on overly-expensive health care and tax preparation.
But, a LOT of people would loose their jobs and a lot of investors would loose their money were we to truly simplify health care and taxes, and in addition the free market, small government ideologues would be proven wrong - at least in these two cases. Lobbyists are well entrenched to defend these causes.
Nonetheless we should have Medicare-for-all health care and IRS-does-it-all tax collection systems. Our economy's productivity would increase dramatically were we not wasting our time on personal management of health and taxes and spending so much money on overly-expensive health care and tax preparation.
1
'Lobbying' is an American term for what is called bribery in other countries.
The results are just as pernicious. You have entire markets distorted by special interests. Anytime you see a system that doesn't make sense, you can trace it directly to a well funded lobbying group.
Prescription drugs 5x the price compared to anywhere in the world - check
Health insurance that costs 30% of a middle class income - check
College tuition that costs as much as a single family home - check
Highest rate of incarceration in the civilized world - check
Military expenditure more than next 8 nations combined - check
Guns easier to buy than life saving meds - check
The most complex tax system on earth - check
The list goes on - and it is not easy to see which lobby backs the status quo on each of the above.
The US system was based on a system of checks and balances - the problem is that the two opposing political forces are now so evenly balanced that nothing happens by political will any more. All it takes is a well funded lobby group to tilt legislation one way or the other.
It is good that the filibuster's days are numbered. We need to let political forces drive change and for that, elected representatives need to have the ability to make things happen - that's how a democracy gets things done - by trying, failing, retrying and succeeding.
It's almost like endless political gridlock was the desired outcome of the lobbying industry!
The results are just as pernicious. You have entire markets distorted by special interests. Anytime you see a system that doesn't make sense, you can trace it directly to a well funded lobbying group.
Prescription drugs 5x the price compared to anywhere in the world - check
Health insurance that costs 30% of a middle class income - check
College tuition that costs as much as a single family home - check
Highest rate of incarceration in the civilized world - check
Military expenditure more than next 8 nations combined - check
Guns easier to buy than life saving meds - check
The most complex tax system on earth - check
The list goes on - and it is not easy to see which lobby backs the status quo on each of the above.
The US system was based on a system of checks and balances - the problem is that the two opposing political forces are now so evenly balanced that nothing happens by political will any more. All it takes is a well funded lobby group to tilt legislation one way or the other.
It is good that the filibuster's days are numbered. We need to let political forces drive change and for that, elected representatives need to have the ability to make things happen - that's how a democracy gets things done - by trying, failing, retrying and succeeding.
It's almost like endless political gridlock was the desired outcome of the lobbying industry!
1
I guess I don't really understand how the government-generated tax information in some countries would work with the system that we and our Congress have adopted.
The IRS knows generally all of our gross income amounts because this is reported to the IRS by the payors. However, in order to calculate taxable income and tax, gross income has to be reduced by the many deductions taken by taxpayers who itemize, e.g., mortgage interest, charitable contributions, state taxes, medical expenses, bad debts etc. The IRS doesn't have that information and hence we have to figure it out.
I suppose we could eliminate all of those deductions, or drastically increase the standard deduction, but otherwise we're stuck with time-consuming gathering of numbers.
The IRS knows generally all of our gross income amounts because this is reported to the IRS by the payors. However, in order to calculate taxable income and tax, gross income has to be reduced by the many deductions taken by taxpayers who itemize, e.g., mortgage interest, charitable contributions, state taxes, medical expenses, bad debts etc. The IRS doesn't have that information and hence we have to figure it out.
I suppose we could eliminate all of those deductions, or drastically increase the standard deduction, but otherwise we're stuck with time-consuming gathering of numbers.
Many of the Byzantine systems, exceptions, alternatives, and twists that make up the complexity of our tax code are there to allow a variety of loopholes and exploits for the ultra-rich, allowing them to avoid paying even as much as the lower income brackets, much less their fair share. We need to bring back a simple system that taxes people on their increase in wealth each year, and doesn't tax people at all below a certain bracket.
"To whom much is given, much is expected", for those who have money to burn, we (incorrectly) expect they will pay more taxes, supporting those who barely have enough to survive.
"To whom much is given, much is expected", for those who have money to burn, we (incorrectly) expect they will pay more taxes, supporting those who barely have enough to survive.
The tax code has deliberately been made incomprehensible by certified public accountants who write it for the benefit of their professional colleagues. As a result, the U.S. has the most complex and time-consuming tax system in the world, and it has become nearly impossible for most taxpayers to do their taxes without help from an accountant. The CPA profession should be abolished.
Classic case of confusing cause and effect.
The Tax Prep companies arose *because* of our complex tax code and process, not the other way around. Various groups push for their favorite deductions, exemptions, and special interests; workarounds and adjustments like AMT are then crafted in an attempt to neutralize this or that result. And the ensuing unintended consequence then require further complications as adjustments/compensation.
That someone might then come along to capitalize on this absurdity is a blessing, and I would happily pay the modest fee to simplify my Aprils.
Sure, I would prefer that responsible adults in Congress to do the right thing here, but absent that, I want and need the tools.
The Tax Prep companies arose *because* of our complex tax code and process, not the other way around. Various groups push for their favorite deductions, exemptions, and special interests; workarounds and adjustments like AMT are then crafted in an attempt to neutralize this or that result. And the ensuing unintended consequence then require further complications as adjustments/compensation.
That someone might then come along to capitalize on this absurdity is a blessing, and I would happily pay the modest fee to simplify my Aprils.
Sure, I would prefer that responsible adults in Congress to do the right thing here, but absent that, I want and need the tools.
1
I agree with drspock - changing our tax system is easy, if our representatives would keep the wellbeing of the nation in mind rather than their own special interests.
When will taxpayers come to terms with representatives are “Elected Politicians” paying back contributors, often through the tax code, while running for their next office? Who’s wellbeing are they representing?
We have been paying for these wars through deficit spending - borrowing money and increasing our National Debt, and not through taxes. There is not enough annual tax revenue to cover the operations of the country, let alone pay for wars. Elected Politician’s self-interests and mismanagement of our country are major contributors to the complexity of our 75,000 page tax code and our $20 Trillion national debt, and increasing. We need to hold Elected Politicians responsible.
http://usdebtforum.com
When will taxpayers come to terms with representatives are “Elected Politicians” paying back contributors, often through the tax code, while running for their next office? Who’s wellbeing are they representing?
We have been paying for these wars through deficit spending - borrowing money and increasing our National Debt, and not through taxes. There is not enough annual tax revenue to cover the operations of the country, let alone pay for wars. Elected Politician’s self-interests and mismanagement of our country are major contributors to the complexity of our 75,000 page tax code and our $20 Trillion national debt, and increasing. We need to hold Elected Politicians responsible.
http://usdebtforum.com
The more simple and straightforward filing taxes becomes, the fewer opportunities to bury the facts. Two facts buried by
tax laws written by lobbyists:
1. There is not a graduated income tax in the United States, as a consequence of the type of complexity described in the article, written into the tax code by lobbyists.
2. Transparency, a feature of the functional tax codes described, necessitates a citizenry willing to not cheat, and to pay their fair share.
Consequently, the widespread delusion that government, and goveranance, including taxation, is the "devil", e.g. the enemy of the people, results in our current situation In the U.S. The real enemy of freedom (meaning governance that works for us), is our own paranoia, and our own insistence on the "freedom" to be irresponsible.
tax laws written by lobbyists:
1. There is not a graduated income tax in the United States, as a consequence of the type of complexity described in the article, written into the tax code by lobbyists.
2. Transparency, a feature of the functional tax codes described, necessitates a citizenry willing to not cheat, and to pay their fair share.
Consequently, the widespread delusion that government, and goveranance, including taxation, is the "devil", e.g. the enemy of the people, results in our current situation In the U.S. The real enemy of freedom (meaning governance that works for us), is our own paranoia, and our own insistence on the "freedom" to be irresponsible.
Pre-filling tax forms can be good for all of us, including individuals, businesses, tax preparers, software developers, and the government.
Tax preparers can still conduct business by cooperating with the IRS in a program of downloading the IRS records to the tax preparer, and then the preparer will conduct an interview with the tax payer to determine any additional information or to make corrections to the IRS information.
Tax software companies can provide the interface software for the IRS and the tax preparers, and the interview and update procedures. Tax preparers also must handle the preparation of state tax returns with software from the tax software companies. And don't forget all those corporate and estate tax returns and tax returns for trusts, etc.
The software companies can still profit from the supporting software for federal and other tax returns. And the services of tax preparers will still be required in many cases for preparation and verification of final returns. And, over time, the IRS will be able to accept much more information electronically, reducing dramatically the data entry workload for the government and for businesses and individuals.
All told, pre-filling tax forms can be a win, win, win for all of us.
Tax preparers can still conduct business by cooperating with the IRS in a program of downloading the IRS records to the tax preparer, and then the preparer will conduct an interview with the tax payer to determine any additional information or to make corrections to the IRS information.
Tax software companies can provide the interface software for the IRS and the tax preparers, and the interview and update procedures. Tax preparers also must handle the preparation of state tax returns with software from the tax software companies. And don't forget all those corporate and estate tax returns and tax returns for trusts, etc.
The software companies can still profit from the supporting software for federal and other tax returns. And the services of tax preparers will still be required in many cases for preparation and verification of final returns. And, over time, the IRS will be able to accept much more information electronically, reducing dramatically the data entry workload for the government and for businesses and individuals.
All told, pre-filling tax forms can be a win, win, win for all of us.
It's all part of how Corporate power has consumed government. Millions of small business, who could never afford to "bribe" their Congressmen, go out of business annually as the market place evolves. Market place evolutions can both drive change, such as the automobile making buggy whips obsolete, or take advantage of change, such as tax software.
No one on Wall Street or Capitol hill gives a fig leaf when Walmart comes to town and drives out the local butcher, the hardware store, and now even the pharmacist or optician. But let some upstart develop a new soft drink that takes market share from Coca Cola, and see how quickly Coke moves in to buy them out, anti-Trust regulations be damned.
Once upon a time, businesses either adapted or died once consumers lost interest in the products they marketed. Many corporations have grown so rich and powerful that their either first try to crush their competitors by using their market scale (presuming they have an equivalent product) or as is now more prevalent buying up new products rather than invest in research to bring new products to market.
This is what the "Free Market" has become. It's a dog eat dog world for those who can't afford Lobbyists, and an insulated and protected world for those who can.
No one on Wall Street or Capitol hill gives a fig leaf when Walmart comes to town and drives out the local butcher, the hardware store, and now even the pharmacist or optician. But let some upstart develop a new soft drink that takes market share from Coca Cola, and see how quickly Coke moves in to buy them out, anti-Trust regulations be damned.
Once upon a time, businesses either adapted or died once consumers lost interest in the products they marketed. Many corporations have grown so rich and powerful that their either first try to crush their competitors by using their market scale (presuming they have an equivalent product) or as is now more prevalent buying up new products rather than invest in research to bring new products to market.
This is what the "Free Market" has become. It's a dog eat dog world for those who can't afford Lobbyists, and an insulated and protected world for those who can.
1
The US tax code is very long and complicated. In order to fully take advantage of the many provisions you must be trained, maybe even certified. Why is that? Obviously, it isn't for the employed person with well documented and computerized income and expenses. It is for the people who count. Many Americans are entrepreneurs, with their own businesses, with all sorts of expenses that reduce their net income. I am confidant that those in Japan with similar situations have an army of accountants too. Nevertheless, it would be refreshing and fair to knock out all the loopholes and simplify the tax code to the point that an arithmetic competent person could do their own tax forms
Mr. Reid: if only the evil tax preparers would get out of the way, everything will be all right. However, this reader believes Mr. Reid has insulted his intelligence.
Of course, the tax preparers will resist the postcard 1040. They've become a major industry with all the special interest incentives and resources.
But there are huge problems with the Reid thesis.
First: he seems to imply that one should trust the IRS to calculate tax bills. Two problems with that: first, the IRS customer service line is notorious for inaccurate advice (although reportedly getting better). Second is stated in two words: Lois Lerner (poster child for doubting Reid's benevolent image of the IRS).
But more fundamentally, preparers are a symptom, not the cause. Suppose all the current tax preparation professionals were to decide to do something else. Then the average citizen would be left on his (or her) own to wade through the ridiculously complex tax code. ( Remember that in the early 1990s, two famous graduates of Yale Law successfully plausibly and successfully pleaded their inability to understand tax code complexities.)
Since markets work, there would be people stepping forward to act as guides through these mine fields. But if the tax code were to become postcard simple, the departed tax preparers who departed in our thought experiment above would not be replaced.
Clearly a necessary first step is to simplify the tax code (difficult), and keep it simple (more difficult).
Of course, the tax preparers will resist the postcard 1040. They've become a major industry with all the special interest incentives and resources.
But there are huge problems with the Reid thesis.
First: he seems to imply that one should trust the IRS to calculate tax bills. Two problems with that: first, the IRS customer service line is notorious for inaccurate advice (although reportedly getting better). Second is stated in two words: Lois Lerner (poster child for doubting Reid's benevolent image of the IRS).
But more fundamentally, preparers are a symptom, not the cause. Suppose all the current tax preparation professionals were to decide to do something else. Then the average citizen would be left on his (or her) own to wade through the ridiculously complex tax code. ( Remember that in the early 1990s, two famous graduates of Yale Law successfully plausibly and successfully pleaded their inability to understand tax code complexities.)
Since markets work, there would be people stepping forward to act as guides through these mine fields. But if the tax code were to become postcard simple, the departed tax preparers who departed in our thought experiment above would not be replaced.
Clearly a necessary first step is to simplify the tax code (difficult), and keep it simple (more difficult).
Flat tax, graduated by income level: no deductions, no credits, a dollar of income is a dollar of income and taxable at the same rate to me, to you, to Donald Trump. No mortgage interest deduction (an economic absurdity), no charitable or religious deductions--nearly every deduction has been shoved into the tax code to unfairly advantage someone with better access to a congressman than you or I have. Advantages: much lower tax rates, filing-on-a-postcard, far better compliance and resultant huge revenue boost, billions of hours and dollars saved. Disadvantages: tax preparers and tax attorneys with expensive lobbyists absolutely hate it. Prognosis: will never happen.
1
A wise businessman in 1871 provided this perspective to his state's governor, which applies just as much to nations as it does to states and cities and towns:
Never Tax Anything
That Would Be of Value to Your State,
That Could and Would Run Away, or
That Could and Would Come to You.
He was talking about how to collect revenue efficiently without damaging the economy or one's community.
Not a single acre of land will run away. Not a single hert of electromagnetic spectrum. Not an acre-foot of water or a gallon of oil. Every one of these revenue sources is easily valued, and there are many other like things, that are rightly our "commonwealth" not an individual's or corporation's privatewealth.
These are all sources of natural public revenue, and collecting their value, month in and month out, from those who "own" them, is administrable, just, efficient, equitable and all the other things that Adam Smith said a tax should be.
Milton Friedman repeatedly called the tax on land value the "least bad" tax. In fact, it is far better than "least bad." Certain things are rightly our common treasure, and thus the superior source for public revenue.
And April would no longer be so painful.
Never Tax Anything
That Would Be of Value to Your State,
That Could and Would Run Away, or
That Could and Would Come to You.
He was talking about how to collect revenue efficiently without damaging the economy or one's community.
Not a single acre of land will run away. Not a single hert of electromagnetic spectrum. Not an acre-foot of water or a gallon of oil. Every one of these revenue sources is easily valued, and there are many other like things, that are rightly our "commonwealth" not an individual's or corporation's privatewealth.
These are all sources of natural public revenue, and collecting their value, month in and month out, from those who "own" them, is administrable, just, efficient, equitable and all the other things that Adam Smith said a tax should be.
Milton Friedman repeatedly called the tax on land value the "least bad" tax. In fact, it is far better than "least bad." Certain things are rightly our common treasure, and thus the superior source for public revenue.
And April would no longer be so painful.
1
A good idea, but there are even better ones.
A two-tier national sales tax, replacing the income tax completely. Clothing under $50.00 per item, non-prepared food, and mortgage/rent on the taxpayer's primary residence are non-taxable purchases. Everything else is taxed at a single rate, collected at the store/website.
The poor spend most of their income on these items, and so do not pay as high a percentage of their income. Savings are encouraged, since every dollar not spent is not taxed. Those who make their living on finding loopholes and those whose wealth is protected by taking advantage of them are out of luck.
Collection is simple and automatic, there is no tax day, and the rate can be adjusted yearly as the budget needs change.
A two-tier national sales tax, replacing the income tax completely. Clothing under $50.00 per item, non-prepared food, and mortgage/rent on the taxpayer's primary residence are non-taxable purchases. Everything else is taxed at a single rate, collected at the store/website.
The poor spend most of their income on these items, and so do not pay as high a percentage of their income. Savings are encouraged, since every dollar not spent is not taxed. Those who make their living on finding loopholes and those whose wealth is protected by taking advantage of them are out of luck.
Collection is simple and automatic, there is no tax day, and the rate can be adjusted yearly as the budget needs change.
When I do my Illinois state taxes, each form is a webpage that automatically does the arithmetic and loads other forms when needed. Then I hit submit and the process is done. For my records, it gives me a PDF copy of all the forms with the fields filled in at the end.
When I do my Federal taxes, I have to download each form and fill in fields. Some basic fields are broken (e.g. the entry of social security numbers on the 1040). The arithmetic I have to do myself. There aren't even links on the form that take me to the relevant documentation. And the calculations are arcane in a bizarre way.
The point is, this is not something fundamental about the United States. It is just that the Federal government has chosen not to make it easier.
When I do my Federal taxes, I have to download each form and fill in fields. Some basic fields are broken (e.g. the entry of social security numbers on the 1040). The arithmetic I have to do myself. There aren't even links on the form that take me to the relevant documentation. And the calculations are arcane in a bizarre way.
The point is, this is not something fundamental about the United States. It is just that the Federal government has chosen not to make it easier.
2
Getting rid of the different classifications of income for tax purposes would make filing taxes much simpler. Making any dollar earned equal to any other earned dollar in terms of the applied tax rate would make filing not only much easier, but many say much fairer.
Giving each different classification its own separate tax rates, deductibility or expense quotient is akin to a game of Three-card Monte. Where the winners are the ones who know the intimacies of the byzantine tax code that allows them to move, shuffle, and disguise (classify) any income to always favor them.
Giving each different classification its own separate tax rates, deductibility or expense quotient is akin to a game of Three-card Monte. Where the winners are the ones who know the intimacies of the byzantine tax code that allows them to move, shuffle, and disguise (classify) any income to always favor them.
22
Yet another unrecognized tax on all of us brought to you by special interests, corporations and other self interest. Our system is not for the people in the correct ways. Overhauling the tax system is what Trump and his voters should be spending some of their time on.
3
I once read of newly minted Peace Corps volunteers in a country where women, now permanently stooped, spent hours sweeping with brooms that were just too short. However, that's the way it had always been done and no amount of education would have women change their broom sizes and young women would, like their elders, become stooped.
Every culture has its own craziness, ours just has lots of it.
Every culture has its own craziness, ours just has lots of it.
18
Don't forget about Grover Norquist and his anti-government zealot organization too. They're holding this up as well to make people hate government and create a neo-feudal system with corporations as our overlords.
7
As a small-potato independent preparer with decades of experience who is no friend of the national tax chains and their armies of come-and-go temps, I'm afraid this article overstates the case. What takes an individual who does taxes once a year hours or days to accomplish, I usually can prepare in under an hour. It's a rare event that clients receive a follow-up letter from the IRS. Experience does have a measurable value in terms of cost, quality, and time.
More than two-thirds of my clients have small side-businesses with cash receipts. No centralized, computerized data-collecting behemoth will ever get that income out from under the table. Many other clients receive 1099-B's which do not report cost-basis, or have rental properties of which the IRS would know nothing, or as clergy receive housing allowances, or as parents have day-care expenses. Just how much of the form should be filled out when the number of dependents can change frequently due to Jr. moving out or Granny moving in? What about your 1099-MISC box 7 income? Do you really want the IRS to presume that is all profit and pre-fill Schedule C and Schedule SE?
There certainly are areas of that tax code that could be refined. But simplicity comes at a price. A graduated tax code is inherently complex. In our era of increasing awareness of the vulnerability of our data-collection, we should be cautious.
More than two-thirds of my clients have small side-businesses with cash receipts. No centralized, computerized data-collecting behemoth will ever get that income out from under the table. Many other clients receive 1099-B's which do not report cost-basis, or have rental properties of which the IRS would know nothing, or as clergy receive housing allowances, or as parents have day-care expenses. Just how much of the form should be filled out when the number of dependents can change frequently due to Jr. moving out or Granny moving in? What about your 1099-MISC box 7 income? Do you really want the IRS to presume that is all profit and pre-fill Schedule C and Schedule SE?
There certainly are areas of that tax code that could be refined. But simplicity comes at a price. A graduated tax code is inherently complex. In our era of increasing awareness of the vulnerability of our data-collection, we should be cautious.
11
A long time ago an accountant I knew told me one of the strongest lobbies in DC was the tax prep industry. They NRA has nothing on these rotten scoundrels. Yes, thanks to Turbo tax I can file my taxes with about 2 -4 hours of work, which beats going to the, in my experience, incompetent tax prep people at H&R or Hewlitt Jackson who are mostly interested in selling more paperwork to jack up their fees. Whenever I hear "tax reform" tax simplification is what I desire. It will make the whole process not just easier and cheaper but it will help remove the idea that "the rich" are skipping out on paying their fair share.
3
I'd send this fine column to my CPA, but he wouldn't have time to read it.
Get rid of the corporate tax and increase the dividend and capital gains of stockholders. Get rid of all deductions except charity and maybe healthcare, depending on how that issue develops. Then come up with the right index formula, hopefully a bit lower...at least for me.
Canada is almost as bad as the US in this regard. Every year the very first question I'm asked by the TurboTax robot interviewer is "Were you in prison this year?" Me: "No!" TurboTax: "When did you get out?" Me: "I didn't". TurboTax: "Ah, still inside then. Figured as much". Me: "I've never been to prison! I'm a law-abiding citizen of good character (almost)" Turbotax: "Ah, now I get it. You're a fisherman" The conversation goes south from there and it generally takes best part of a day just to convince Turbotax I am neither incarcerated nor a lumberjack. Prefilled forms sound like a great idea.
8
Not sure if this is the appropriate medium to file corrections, but "Algemene Fiscale Politiek" is not the term you're looking for - "Belastingdienst", please ("tax service")
8
The American way is to make things complex. Simple and straightforward is unamerican....
7
Flat tax- 15%, done. Next.
5
Not true, Marc. There would still be the issue of how to define what is income that would be subject to the 15% tax. Proposals along the lines of yours have been made many times over the years, but have always stumbled over that issue. It can't just be what shows up on your tax statement from your employer or bank or broker. It it was just that, then many people who have other forms of income would be able to get away with paying no tax at all on that other income.
My sister lives on Social Security and an annuity she purchased with her 401K funds. Why does she need H&R Block?
Why do I have to file a US return at all? I don't live there. I pay plenty of Japanese tax, and in total, much more than the higher of the two. If I return to the US, I'll pay US tax. That's fine -- I believe in public services, but why two returns and two inconsistent sets of calculations? Only for American and Eritreans (literally). Why do I need to pay an accounting firm over $5000/year to prepare and reconcile two tax returns?
And enough already with FATCA and FBAR. I dutifully report my Japanese accounts on those forms and the interest on the 1040, but if I didn't, what is the fiscal impact? I receive at most a few dollars in interest per year. Treasury hassled a friend who failed to declare Yen interest that when rounded came to zero (less than fifty cents). We sorely need a same-country exception for bank accounts. The current approach is ridiculous.
If the IRS is worried about non-compliance and leakage (and they should be), please check Mitt Romney's gift tax avoidance strategy with his Cayman LP interests. Stop picking on middle clas Americans abroad.
Why do I have to file a US return at all? I don't live there. I pay plenty of Japanese tax, and in total, much more than the higher of the two. If I return to the US, I'll pay US tax. That's fine -- I believe in public services, but why two returns and two inconsistent sets of calculations? Only for American and Eritreans (literally). Why do I need to pay an accounting firm over $5000/year to prepare and reconcile two tax returns?
And enough already with FATCA and FBAR. I dutifully report my Japanese accounts on those forms and the interest on the 1040, but if I didn't, what is the fiscal impact? I receive at most a few dollars in interest per year. Treasury hassled a friend who failed to declare Yen interest that when rounded came to zero (less than fifty cents). We sorely need a same-country exception for bank accounts. The current approach is ridiculous.
If the IRS is worried about non-compliance and leakage (and they should be), please check Mitt Romney's gift tax avoidance strategy with his Cayman LP interests. Stop picking on middle clas Americans abroad.
21
The IRS tax return filing system is ridiculously complicated. But you don't know what complicated bureaucracy is until you've lived in a country like Bolivia, where I live.
3
It is tax time here as well, here being Finland. Like in earlier years,and like everybody else, I have received from the Tax Bureau a prefilled form with my incomes,taxes withheld and deductions on it. It is usually correct. For most taxpayers this is their 2016 tax return and they can ignore the matter. If you agree, you don't have to answer. Looking it through takes less than 15 minutes.
If you disagree, you may enter corrections in the space provided, and send the form back. Or you can make your corrections via the Internet (by a secured service), or make any additions (like rental income or unusual deductions) either by paper annex or via the net.
All very easy and simple now. It used to be complex.
If you disagree, you may enter corrections in the space provided, and send the form back. Or you can make your corrections via the Internet (by a secured service), or make any additions (like rental income or unusual deductions) either by paper annex or via the net.
All very easy and simple now. It used to be complex.
10
The author basically wants to make it easier for the government to collect revenue by allowing the IRS to pre determine how much you owe. The IRS employees want to collect as much tax as possible, as opposed to the tax preparation industry which have an incentive to help the taxpayer pay as little as possible.
And some technical points. How would the IRS determine whether a taxpayer wanted to take and standard deduction or itemized deduction? If your are self empolyed how would the IRS pre determine your business expenses? Finally, you want a government agency to pre determine your taxes and then you have to appeal/
Here is a statement about the quality of the IRS computers :" IRS says it's using technology from JFK's time " See http://money.cnn.com/2015/02/03/pf/taxes/irs-budget-cuts/index.html?iid=...
You want to trust them do estimate your taxes.
And some technical points. How would the IRS determine whether a taxpayer wanted to take and standard deduction or itemized deduction? If your are self empolyed how would the IRS pre determine your business expenses? Finally, you want a government agency to pre determine your taxes and then you have to appeal/
Here is a statement about the quality of the IRS computers :" IRS says it's using technology from JFK's time " See http://money.cnn.com/2015/02/03/pf/taxes/irs-budget-cuts/index.html?iid=...
You want to trust them do estimate your taxes.
Um... NO. It's not THEIR money to dole out to me then for ME to claw back. IT'S MINE. I GET first say over how much they get, NOT THEM. It's a COMPLETE inversion of how we America to do it the way Japan does. No.
No. No. No.
No. No. No.
3
What is your point?
1
The Algemene Fiscale Politiek ???
The Dutch name of the Tax Department is De Belastingdienst (The Tax Service). Whoever came up with The General Fiscal Politics???
The Dutch name of the Tax Department is De Belastingdienst (The Tax Service). Whoever came up with The General Fiscal Politics???
3
This statement "For most families, the I.R.S. already knows all the numbers — wages, dividends and interest received, capital gains, mortgage interest paid, taxes withheld — that we are required to enter on Form 1040." is not accurate. At least from a timing point of view.
For W2 income, the IRS doesn't know till Jan 31 when the W2 details are filed with the Government. Until then, the IRS only has the business quarterly form 940 filings which are lump sump figures for a quarter.
Similar deadline in play for 1099's. Brokerages take till mid-February.
So, it is not just the IRS, deadlines have to change, business filings have to change. Don't blame the Tax preparer - they are the last (optional) cog in the system. For most people, their direct import of W2 and 1099 will also make tax filing a breeze.
For W2 income, the IRS doesn't know till Jan 31 when the W2 details are filed with the Government. Until then, the IRS only has the business quarterly form 940 filings which are lump sump figures for a quarter.
Similar deadline in play for 1099's. Brokerages take till mid-February.
So, it is not just the IRS, deadlines have to change, business filings have to change. Don't blame the Tax preparer - they are the last (optional) cog in the system. For most people, their direct import of W2 and 1099 will also make tax filing a breeze.
2
"Until then, the IRS only has the business quarterly form 940 filings which are lump sump figures for a quarter."
Aren't you referring to 941 reconciliations? They are filed quarterly for each employee to account for social security and medicare taxes as well as income and witholding. Form 940 is for the Federal Unemployment Tax and has nothing to do with reporting employee income or taxes.
Aren't you referring to 941 reconciliations? They are filed quarterly for each employee to account for social security and medicare taxes as well as income and witholding. Form 940 is for the Federal Unemployment Tax and has nothing to do with reporting employee income or taxes.
I hate to give you another reason to hate landlords (I am one), but here it is: the system is complicated so that I can manipulate it to pay less, and you can't and make up the difference.
Thanks chummmmmmm-ps!
Thanks chummmmmmm-ps!
7
Simple answer to your question; special interests and lobbyists run the country.
You can write a similar article about our health care system. The countries, named in this article, most have a single-payer health care system.
For a country technically advanced as the United States, its mentality still operates in the 18th century.
You can write a similar article about our health care system. The countries, named in this article, most have a single-payer health care system.
For a country technically advanced as the United States, its mentality still operates in the 18th century.
18
Doing your own taxes means navigating a great many instructions even more convoluted than the one quoted in the essay's first paragraph. But most people don't realize this, precisely because they use a tax preparation person or software. If everyone were required to do their own taxes -- or better yet, if every member of Congress were required to do his or her own taxes -- things would get simplified real fast.
3
I am a tax preparer and completely agree that the system is more complicated that it needs to be. The article is correct when it says that the IRS has the information for most returns and filing the 1040 is really just a matter of consent and agreement.
What needs to be fixed is the tax code. For example I have many cases where there are two households with the same income and deductions but one may be entitled to a sales tax deduction and the other one is not. Sales tax information by taxpayer is almost impossible for the government to track so a return is required and that is just one of maybe 50 situations separating similar taxpayers.
We can only make tax filing simpler if we simplify the tax code.
What needs to be fixed is the tax code. For example I have many cases where there are two households with the same income and deductions but one may be entitled to a sales tax deduction and the other one is not. Sales tax information by taxpayer is almost impossible for the government to track so a return is required and that is just one of maybe 50 situations separating similar taxpayers.
We can only make tax filing simpler if we simplify the tax code.
4
I send an SMS to the Tax authority with a code written on the statement where everything is filled in. 15 seconds.
I just paid a tax preparer $915 to prepare the returns for my wife and I, and our two adult children. But even gathering up all the records is a nuisance. I hate it and I hold both political parties in contempt for their equally selfish and stupid actions.
3
Eliminate automatic payroll deductions for federal and state taxes, social security, medicare and unemployment. Make everyone write a check or charge their credit or debit card quarterly. It will make the tax amounts real money they are paying out and people will pay attention to how much tax they really pay.
3
Its simple. Those other countries are interested in efficiency. In the US we are interested in profit; making tax paying a profit center. In addition, us frontiersmen are used to being independent. There's a long history of cheating. Everybody wants to get away with stuff. Special exceptions, byzantine rules, wow! What a bonus! A complicated labyrinth. Surely there's a loophole here to be used!
4
A value-added tax makes the most sense. Any tax we have should not allow any loopholes to be legislated without voter approval.
We also need a war tax so that war is paid for as we go that way everyone knows the cost of war.
On the other hand is it any surprise our tax system is complicated when it serves the rich. Just like healthcare, we spend more public funds on healthcare than any other country yet do not have socialized medicine. If we want to lower health care cost there is only one logical thing to do, make it simpler that means removing the entities in the middle such as insurance companies. Like health care, we need to move all the stuff out of the middle of our tax code and make it simple.
We also need a war tax so that war is paid for as we go that way everyone knows the cost of war.
On the other hand is it any surprise our tax system is complicated when it serves the rich. Just like healthcare, we spend more public funds on healthcare than any other country yet do not have socialized medicine. If we want to lower health care cost there is only one logical thing to do, make it simpler that means removing the entities in the middle such as insurance companies. Like health care, we need to move all the stuff out of the middle of our tax code and make it simple.
1
I am not sure it is just to vilify only Intuite and H&R Block and their trade brethren. How can the wealthy benefit from myriad of loop holes if it weren't for super complicated tax code? How can politicians benefit if they do not pass laws that allow specific benefits (aka special deductions) for their donors (individually and industries).
A case in point: The tax loophole that allowed Trump to take almost a billion dollar in write off was intensely lobbied by Real Estate industry when GW was the president (when of course Trump taunted Hillary for not doing anything).
A case in point: The tax loophole that allowed Trump to take almost a billion dollar in write off was intensely lobbied by Real Estate industry when GW was the president (when of course Trump taunted Hillary for not doing anything).
8
Just think of the energy and creativity that reform could unleash--less anxiety and more hours for productive work, leisure activities, and sleep! Intuit, H&R Block, and their ilk may need to reinvent themselves, but I am sure the talented number-crunchers they employ would much rather use their skills for something other than second- or third-guessing the IRS.
All these wonderful things about Japan- Funny to think their constitution was written by the United States post WWII. Even their national healthcare system was an American concept and it thrives today- Hence 60% of Japan's population is over 80 years old.
The irony of the complexities of taxing our "MONEY" the mechanics of which are totally dependent on our elected representatives who are motivated, not by our interests, but by lobbyist "MONEY", is not only a flaw in the system, but an insult to each and every taxpayer. Yet we continue to vote for these hypocrites.
The complication and tediousness of our tax code and its thousands of provisions and exceptions result in billions of utterly wasted effort on the part of taxpayers and paid preparers.
Why not apply those talented people's efforts to solving real problems?
Watch your congressperson's actions as tax reform is debated. Are they acting for you, or their biggest donors?
Why not apply those talented people's efforts to solving real problems?
Watch your congressperson's actions as tax reform is debated. Are they acting for you, or their biggest donors?
4
I find this column a bit over the top about the complexities of filling taxes. First of all it sounds as if the tax structure in these foreign countries is a flat tax. Does the guy in the Netherlands pay 20% or more tax rate (that would be the amount here for people if there was a flat tax).
So if you disagree with the letter from the tax office (as in Japan) how much time do you spend at the tax office trying to get your taxes reduced. Probably the same amount as with HR Block.
Most people in the US file a EZ Income Tax form which is one page and very easy to do by yourself (if you can read). Most working class people do not have investments and assets that are taxable or deductible. Unfortunately tax prep companies have convinced (by creating fear of the IRS) average Americans that they are too dumb to complete these forms.
Even middle class Americans use only a Schedule A (deductions) along with their Form 1040. And if you need a tax preparer to fill that out then you are not as smart as you think you are.
So the only people that this column is about is the people with high incomes (250K and above) who have lots of investments.
Mr. Ried does a disservice to 90% of Americans who really do not have such tax headaches as he does but wouldn't mind that kind of problem if they actually made that much money.
So if you disagree with the letter from the tax office (as in Japan) how much time do you spend at the tax office trying to get your taxes reduced. Probably the same amount as with HR Block.
Most people in the US file a EZ Income Tax form which is one page and very easy to do by yourself (if you can read). Most working class people do not have investments and assets that are taxable or deductible. Unfortunately tax prep companies have convinced (by creating fear of the IRS) average Americans that they are too dumb to complete these forms.
Even middle class Americans use only a Schedule A (deductions) along with their Form 1040. And if you need a tax preparer to fill that out then you are not as smart as you think you are.
So the only people that this column is about is the people with high incomes (250K and above) who have lots of investments.
Mr. Ried does a disservice to 90% of Americans who really do not have such tax headaches as he does but wouldn't mind that kind of problem if they actually made that much money.
A multi-tier no deduction tax that treats all income the same would be both simple and fair. And that's why it would never work here.
3
Paraphrasing T.R, Reid on the News Hour last night, he said that the U.S. is 33rd of 35 nations in the OECD in the amount of taxes paid by its citizens. Government spending as a percentage of GDP is the lowest.
We get what we pay for.
We get what we pay for.
4
Well yes and no.
While Federal taxes may be a little lower you get less for your money. So your health care has to be paid for privately for example. Perhaps you pay $3,000 less in Federal tax but $10,000 more per year on health care.
Also local taxes are much higher in the USA. There is no such thing as state taxes in the UK for example.
Florida doesn't have state income tax on individuals but charges property owners about 2% of the value of their home every year in property taxes.
You can own a $5 million home in the UK and will pay about $1,500 per year in property taxes. Same home in Florida would be $100,000 per year.
While Federal taxes may be a little lower you get less for your money. So your health care has to be paid for privately for example. Perhaps you pay $3,000 less in Federal tax but $10,000 more per year on health care.
Also local taxes are much higher in the USA. There is no such thing as state taxes in the UK for example.
Florida doesn't have state income tax on individuals but charges property owners about 2% of the value of their home every year in property taxes.
You can own a $5 million home in the UK and will pay about $1,500 per year in property taxes. Same home in Florida would be $100,000 per year.
1
Tom, our national debt is almost $20 trillion. It boggles the mind..
How does the government know how much I sold one of my cows for? How does the government know how many miles I drove for my company that I own? How does the government know who didn't pay their invoices? How does the government know how much property tax I paid for my different ranches? I definitely don't want the government to be tracking all of these details - and I don't want to spend hours every month reporting these details to the central government.
Isn't the government supposed to work for the people? Why is it that in this country, the people seem to always end up working for the government that only works for corporations? Oh, I forgot. Citizens United.
7
Maybe we could get the IRS to do Trump's taxes for us.
One question: if I were a small business, how big a Big Data datebase would the IRS need to keep track of all my non-1099 type receipts? And so on?
One question: if I were a small business, how big a Big Data datebase would the IRS need to keep track of all my non-1099 type receipts? And so on?
Here's an idea :MAKE LOBBYING ILLEGAL!!!!! Have a system where businesses have ZERO influence over government, by law. A congressional/senatorial advisory committee composed of experts in business matters who are not in the employee of any specific business or special interest group, could represent the interests of both giant multinationals and mom and pop small enterprises, and the corrosive influence of vast amounts of lobbying money and other perks above, beside and under the table, would be minimized!!! Just a thought......its not quite as bad in CAnada, but still its no fun for an ordinary Joe Citizen to live in a Dollarocracy where the folks with the most bucks have their way at the expense of those that have the least.
7
The author could have added that for Americans who are "outlanders" the tax submission compliance requirements are more complex by orders of magnitude.
It is also worth noting that America and freedom loving China are the only two countries in the world that do not allow their citizens the right to end their tax reporting requirement and maintain citizenship.
Again, the reporting requirements are onerous. A dual citizen Canadian-American is being sued by the IRS for nearly one million dollars for non compliance. And I am here to tell you that nobody moves to Canada to avoid paying taxes.
Children of non citizens born in the US who left the US as infants are liable for reporting taxes until such time that they renounce their American "citizenship."
This is why people are renouncing by the thousands each year.
It is also worth noting that America and freedom loving China are the only two countries in the world that do not allow their citizens the right to end their tax reporting requirement and maintain citizenship.
Again, the reporting requirements are onerous. A dual citizen Canadian-American is being sued by the IRS for nearly one million dollars for non compliance. And I am here to tell you that nobody moves to Canada to avoid paying taxes.
Children of non citizens born in the US who left the US as infants are liable for reporting taxes until such time that they renounce their American "citizenship."
This is why people are renouncing by the thousands each year.
2
Another day, another column explaining why we Americans are at the mercy of powerful forces that use watchwords from the Constitution to thwart social and economic progress.
Freedom. Freedom of religion. Freedom of expression. Second amendment rights. Right to life. Right to work.
Now corporations are people with the freedom to speak through money. A Catholic or evangelical employer can deny contraceptive coverage to a working woman. Guns are proliferating in classrooms and bars and churches. The self-professed religious can discriminate, is making inroads into your bedroom or your doctor's office, and will see you at the end of your life making sure you hang on through the pain and indignities to suit their religious liberty over yours.
The right has co-opted the grand notions of our founding, turning them into slogans to impose a system in America the majority of us don't believe in.
OMG. Government interference in the business of paying taxes? Keep your hands off my tax returns, I'd rather stew in my own juice?
Freedom. Freedom of religion. Freedom of expression. Second amendment rights. Right to life. Right to work.
Now corporations are people with the freedom to speak through money. A Catholic or evangelical employer can deny contraceptive coverage to a working woman. Guns are proliferating in classrooms and bars and churches. The self-professed religious can discriminate, is making inroads into your bedroom or your doctor's office, and will see you at the end of your life making sure you hang on through the pain and indignities to suit their religious liberty over yours.
The right has co-opted the grand notions of our founding, turning them into slogans to impose a system in America the majority of us don't believe in.
OMG. Government interference in the business of paying taxes? Keep your hands off my tax returns, I'd rather stew in my own juice?
1
This of all the jobs this make-work creates! Go USA!
Sounds great, but I don't know how you could handle self-employment income in half an hour. You still have to tell the IRS what your expenses are and keep track of them. There's no way they're going to be able to fill that out for you.
1
A big word missed in the article is "Loopholes". If you study the tax code it is a big series of loopholes for the ones with more money(investors,"job creators" like Trump and Romney) to keep it for themselves. And they are the ones who make the laws of the land.
1
I don't think that going "to the tax office to work it out" is a big improvement on filing out the forms online, at home, in my pjs. Thanks for trying to make me wish we had a different system.
My main gripe with H&R Block and their ilk is that they don't just let you fill out the forms! They make you go through a prolonged process of answering queries-- maybe to make it appear that they are adding value to the exercise? Who knows.
My other gripe is the amount of taxes I'm expected to pay on a very modest income. Now that I've paid off my mortgage and my kids are no longer deduction, it's open season on my wallet, thanks to the IRS and NYC & NYS.
Japan has a simpler system-- good for them. How does it help US?
My main gripe with H&R Block and their ilk is that they don't just let you fill out the forms! They make you go through a prolonged process of answering queries-- maybe to make it appear that they are adding value to the exercise? Who knows.
My other gripe is the amount of taxes I'm expected to pay on a very modest income. Now that I've paid off my mortgage and my kids are no longer deduction, it's open season on my wallet, thanks to the IRS and NYC & NYS.
Japan has a simpler system-- good for them. How does it help US?
Now that Trump, Inc., occupies the White House and corporate money has now officially taken over the government, what are the chances that Congress will do something to improve the lives of ordinary citizens, if it involves putting H&R Block out of business? Don't hold your breath. This is another obvious good idea that will go nowhere.
I always do my own taxes, and I always have. Even when my taxes were complicated, I did them myself. I am as smart as someone who works for H&R Block. I can read instructions. I know how to do math. I do not need Turbo Tax either; I use FreeFileFillableForms, and they work fine.
Yet another textbook example of how "american exceptionalism" now needs to be taken in its most literal sense -- "US of A, the egregious exception" -- a once-vaunted term coming increasingly to connote "backward, lagging behind the rest of the developed world."
Consider: the state of health insurance, teacher-training, and so the bulk of our schools, the (legal!) proliferation of assault weapons, the non-existence of high-speed rail, domestic airline service, obsolete systems of measurement, ... The list may be extended, almost ad libitum.
Is there anything we're managing to get right any more?
This is the way that world ended
Not with a bang but a -- twitter.
Consider: the state of health insurance, teacher-training, and so the bulk of our schools, the (legal!) proliferation of assault weapons, the non-existence of high-speed rail, domestic airline service, obsolete systems of measurement, ... The list may be extended, almost ad libitum.
Is there anything we're managing to get right any more?
This is the way that world ended
Not with a bang but a -- twitter.
2
Interesting that TR Reid, who has also looked at our medical system in detail, is now looking at tax prep through the same lens. They both have the same goal and the same result. First, make the system so complicated that you need intermediaries to get through the system, whether it's Turbo Tax or H&R Block or your local CPA in the case of taxes or your friendly local insurance company, doctor's office or hospital in the case of medical care. Secondly, after you have created a system so complex that ordinary people need a way to navigate the system, then hire the people most capable of making it worse for their "customers." Here's my most recent experience. This week I got two bills for my annual eye exam, one from the doctor and one from the hospital that owns my doctor's practice. The hospital kindly pointed out they bill separately for hospital services and office services. The problem is that I was fifty miles away from the hospital and the entire exam was done in the doctor's office. No worry, their coders have found a new way to extract money from patients. There are no services that clever people can't find a way to monetize so they can more successfully pick our pockets. It's the American Way.
3
How do they know in Japan how much you contributed to charity? Do the charities report it to the government? Ditto for out-of-pocket health care. Or are these not deductible in Japan and other countries mentioned in this article? That would be a real disaster for the non-profits in this country.
Yeah, well, it's even easier NOT to file them there.
Just another instance where companies dictate what government does.
1
How would this work for the self-employed without a W-2?
Imagine if every month you needed to figure out how much you owned your credit card company, the electric company, etc. and if you got it wrong you had to pay a penalty and interest. That would make about as much sense as the way most of us pay our taxes.
Calvin Coolidge was supposed to have said, "the business of America is business." Well, now we know, once again, the business of America these days is lobbying as many of the 535 gate keepers in Washington it takes to rig the system to your company's advantage. Have a nice day, voters.
Think about all the out of work people besides accountants, all the lobbyists jockeying for their industry special tax treatment.
Mr. Reid also wrote a fine book about the different health insurance and health care systems around the world entitled "The Healing of America". It should be required reading for anyone in government who is involved in deciding America's health care and health insurance policies. It wouldn't hurt the President to take some time to read it. We can learn from the successes of the many other nations who successfully solve their health care/health insurance issues long, long ago.
It takes me days to prepare the information for my accountant to do my tax returns and I have a relatively easier job than most. It seems as if our tax code is designed to perpetuate its own confusion. I look forward to reading Mr. Reid's book and again, hope the policymakers will also examine his proposals, move a way from their ideological strait jackets and put into place reforms that enhance both the public interest and the national interest.
It takes me days to prepare the information for my accountant to do my tax returns and I have a relatively easier job than most. It seems as if our tax code is designed to perpetuate its own confusion. I look forward to reading Mr. Reid's book and again, hope the policymakers will also examine his proposals, move a way from their ideological strait jackets and put into place reforms that enhance both the public interest and the national interest.
1
This is the story of this era:
The services provided by the [........] industry are infuriatingly [pick one or more: complex, obnoxious, expensive, usurious, time consuming, reprehensible, infuriating, dangerous], it wouldn't be that way if it weren't for the [........] lobby.
The services provided by the [........] industry are infuriatingly [pick one or more: complex, obnoxious, expensive, usurious, time consuming, reprehensible, infuriating, dangerous], it wouldn't be that way if it weren't for the [........] lobby.
This is one more example of what's wrong with our government procurement process and why awarding Federal computer and software contracts to Senator so and so's brother in law instead of a company that could get the job done makes dealing with our our own government such a burden. It is the same issue with veteran's affairs, welfare cheats and fraud in general.
K.I.S.S. - Keep it simple stupid. The amount of money wasted on bean counters working for the IRS and bean counters working for tax payers is hugely wasteful. The same can be said for the army of coders that work for insurance companies and health care providers. The hidden cost and waste needs to be exposed and confronted. Once again, Europe and Japan showing us the way. All we have to do is learn by their example (and resist the lobbyists who are defending thier turf).
I wouldn't trust this President to do anything that would benefit anyone other then himself.
1
Nothing diminishes our nation more than the replacement of Constitutional democratic goals such as the pursuit of happiness with the plutocratic objectives of making America great again.
Overturning Citizens United is s first and essential step in toppling moneyed special interests such as our grubbing tax leashes and their fabricated complexity.
Overturning Citizens United is s first and essential step in toppling moneyed special interests such as our grubbing tax leashes and their fabricated complexity.
This article only scratches the surface of the factors that make the US income tax system so unnecessarily complicated, expensive, and frustrating.
The most significant is the increasing tendency of politicians to use the income tax system as a vehicle for social engineering through a complex system of tax brackets, deductions, and tax credits. It creates vast unnecessary complexity and results in a great deal of tax evasion and expense in tax planning and filing. It is estimated that US Treasury loses half a trillion dollars a year in tax evasion. This is not surprising when the tax code is so complicated that not even professional tax lawyers fully understand it.
The second factor is that every deduction and credit in the income tax code now has a vast army of lawyers, accountants, and lobbyists who make handsome livings in Washington DC protecting their line in the code and will fight to the death to defend it. This makes the IRS and the US income tax code the primary vehicle of corruption of the US government.
The US would be vastly better off if the IRS were abolished by making it unnecessary. Have a simple flat tax with no deductions, no exemptions, and no credits. As simple to pay as property taxes. It would increase tax compliance and tax revenue and reduce cost of compliance by hundreds of billions of dollars. It would give more Americans an ownership stake in the government, rather than pitting people against one another by tax bracket.
The most significant is the increasing tendency of politicians to use the income tax system as a vehicle for social engineering through a complex system of tax brackets, deductions, and tax credits. It creates vast unnecessary complexity and results in a great deal of tax evasion and expense in tax planning and filing. It is estimated that US Treasury loses half a trillion dollars a year in tax evasion. This is not surprising when the tax code is so complicated that not even professional tax lawyers fully understand it.
The second factor is that every deduction and credit in the income tax code now has a vast army of lawyers, accountants, and lobbyists who make handsome livings in Washington DC protecting their line in the code and will fight to the death to defend it. This makes the IRS and the US income tax code the primary vehicle of corruption of the US government.
The US would be vastly better off if the IRS were abolished by making it unnecessary. Have a simple flat tax with no deductions, no exemptions, and no credits. As simple to pay as property taxes. It would increase tax compliance and tax revenue and reduce cost of compliance by hundreds of billions of dollars. It would give more Americans an ownership stake in the government, rather than pitting people against one another by tax bracket.
We are socializing taxes (and rightfully so), but privatizing the method of filling them, so that HR Block and Intuit can make money. The same principle is being advocated by Trump regarding infrastructure, namely let private developers restore our public roads and bridges (and they will be the ones collecting the tolls.)
The principle is always the same: private interest comes before public good.
The principle is always the same: private interest comes before public good.
2
I am a retired person with a decent pension from the state teachers retirement system in Ohio. I also receive a very small amount of social security and I have to pay taxes on part of that because of my other income. The IRS provides a "system" for figuring out how much of it is taxable and it involves going through a bunch of complicated calculations and "if, then" decision points. I finally realized after wading through this a few times that it always came out the same - I pay taxes on 85% of the social security income. Filling out just one line on my 1040 was taking me a good half hour of computation when the IRS could easily have pre-computed it for me. What a drag!
1
As a middle-class U.S. citizen living in the U.K. earning income only from the U.K., I don't have to spend any time completing my U.K. taxes, but it takes me at least thirty hours a year to do my U.S. taxes and financial reporting. I told a fellow U.S. citizen who didn't know about citizenship-based taxation that he needed to do the forms and the filing was so complicated that his wife was really angry at me even though they got a $500 refund.
This is anecdotal, but, in my experience he's right about Japan. In the years I lived there it took me less time to file my Japanese taxes -- in Japanese! -- than it took me to file the US tax forms saying that I received foreign income but it was under the threshold so I didn't owe any US taxes.
Ronald Reagan proposed tax reform that would allow almost everyone to file their taxes on a post card size return. When congress got through with his 'tax simplification' we got the benefit of more special interest deductions and more forms to fill out. Each president and congress since then has allowed further complications depending on their particular 'populist' benefit whether it be fuel efficiency, vehicle depreciation or charitable contributions. Simplification is what we desperately need. Personally, I favor scrapping the income tax and replacing with a value added tax. The get paid with each transaction - no waiting until April 15 for the government to collect, steady cash flow throughout the year, and NO INCOME TAX TO FILE FOR INDIVIDUALS!!! Life could be so much simpler. But then there would be no need for the tax preparation industry or probably 75% of the accounts.
If the GOP continues to blockade pre-filled forms, then the Librarian of Congress has a duty to make sure that tax-prep programs receive no privileges under the Digital Millennium Copyright Act (DMCA), and thus can be shared between users without having to pay the Intuit piper.
Forcing the tax-prep cartel to release them to the public domain or adopt the GNU (A)GPL3 or later for them would be better still, but I doubt even a hundred-Bernie Senate would seek that...
Forcing the tax-prep cartel to release them to the public domain or adopt the GNU (A)GPL3 or later for them would be better still, but I doubt even a hundred-Bernie Senate would seek that...
Congress alone is responsible for tax law. It is simply what they and the people who lobby them want. Just as our founding fathers wanted. What could be more perfect?
1
The current system makes no sense, since as the article points out, the government in effect calculates your taxes for you. But I am more ripped off by the complexity of the system--by missing deductions, paying preparers, and being overly cautious--than I would be by the IRS doing my taxes. The system is perpetuated by the preparerers and software lobby, by government inertia, and by that American tendency to want to get every last cent in deductions and tax avoidance it can.
As always, in the US, it is always about big business, aided by their minions in the government. Just think: if we handled tax returns like other more enlightened countries, we would actually know Donald Trump's tax returns.
Wouldn't that be something?
Wouldn't that be something?
1
Somehow I don't think that helping us out by prefilling the forms is the reform the Trump people have in mind. With prefilled forms, we could dramatically reduce the time (and software) money we spend. It would be easy to add charitable contributions and the few other exceptions there would be.
But here in the US everything has to be market driven! Don't you understand? If the government streamlined how government taxes were collected the government would be effecient and that would disprove the rightness of the private sector being the most effecient mechanism for everything.
The author tells us in the opening sentences... tax preparation companies and tax accountants. Nearly all would be out of a job, nkt to mention thousands at the IRS. The sad thing is, there are no other jobs that these people could retrain for because they would potentially displace foreign work visa holders and Facebook and Google would howl, which would cause the can to get kicked further down the road.
The author leaves out the most important reason why the US tax system is the way it is, people feel they can win bigly if they scam or cheat the system with the goal of paying zero dollars in taxes.
The US is a backwards country moving towards 3rd world status because that is what voters are demanding.
The author leaves out the most important reason why the US tax system is the way it is, people feel they can win bigly if they scam or cheat the system with the goal of paying zero dollars in taxes.
The US is a backwards country moving towards 3rd world status because that is what voters are demanding.
The US tax system is an example of the collective character of the country towards its government - paranoid and complex. Afraid to give the IRS too much information, the taxpayer is willing to fight, waste time, worry, pay a service and grumble incessantly.
The relationship evolves to one of antagonism to where today we even have a president that hates and distrusts his own government.
The only exception seems to be a general love of the military and it's pretty arsenal of bombs - all paid for by the taxes so torturously filed.
The relationship evolves to one of antagonism to where today we even have a president that hates and distrusts his own government.
The only exception seems to be a general love of the military and it's pretty arsenal of bombs - all paid for by the taxes so torturously filed.
3
I think it says a lot that I am a chartered accountant (not a US CPA) and even I have a lot of trouble with the IRS forms/instructions. Although our foreign income is minimal, we are still required to fill out a sheaf of forms related to it. The worst is that you can't even get help from the IRS. I called about a form two years ago and was told by the automated response that the IRS does not provide help with that form, and the system hung up after that. I do my best to fill out these forms but truly it does not have to be this hard.
We could simplify our tax filing just by having flat rate tax. It won't happen because of the vested lobbies. The root cause our problems is not number of pages, it is deductions and loopholes.
Trump is going to change his mind and do nothing about tax reform also.
Trump is going to change his mind and do nothing about tax reform also.
I find it maddening that Intuit charges TurboTax users for electronic filing of state tax returns. I refuse to pay Intuit's $24.99 e-filing fee for my state return, and instead print and mail the return -- surely costing the Massachusetts Department of Revenue (and, by extension, me) a fortune to deal with paper handling and data entry. Apparently individual states don't have the will or the bargaining power to get Intuit to end this fee.
1
In a country where politics is powered by money, this is what you get. Big insurance companies who lobby for a continuation of a health care system other countries gave up decades ago or never had in the first place; a tax system purposely made complex by lobbying from the people who charge Americans to uncomplicate it; a capitalistic system of higher education made difficult to rationalize by the efforts of financial interests who benefit from the status quo.
There is so much more than simple corruption that would be eliminated from our lives if we could get money out of politics. It's a crying shame -- we have so much, and we do so much to spoil the fun of having so much.
There is so much more than simple corruption that would be eliminated from our lives if we could get money out of politics. It's a crying shame -- we have so much, and we do so much to spoil the fun of having so much.
1
Yet again, the needs of private industry supersede the Public Good. Only in the US are corporations allowed to have rights that far exceed the rights of countless millions of Americans.
Look at all the areas (such as healthcare) where corporate profits either hold the nation back, or at least impede progress!
What an obscenity!
Look at all the areas (such as healthcare) where corporate profits either hold the nation back, or at least impede progress!
What an obscenity!
3
IRS knows how much I paid my gardener or how much I paid my doctor or how much charitable deductions i made?
Only way, is if all these transactions are known to govt, ie no financial privacy, if every transaction goes through some govt agency
Versus:
I regard turbotax as close to penicillin in human betterrment and better than sliced bread
Only way, is if all these transactions are known to govt, ie no financial privacy, if every transaction goes through some govt agency
Versus:
I regard turbotax as close to penicillin in human betterrment and better than sliced bread
Well when you get the same letter in the mail I did in 2015 asking for the receipts for 2012 be happy you have them and they add up exactly as mine did for 33 k for dental implant work I took under medical deductions. Eventually you will have to provide this information, although year per year odds in your favor.
It shows just how corrupt our government is when politicians in both parties are taking payoffs from tax preparation companies in return for making tax forms more difficult to fill out.
Specific to the author's international comparisons: I have lived and paid taxes in 5 foreign countries (Hong Kong, Singapore, China, Austria, and the U.K.) EVERYWHERE I have lived, filing taxes takes 5-15 minutes, maybe a few minutes longer if I want to contest something.
Every year, I still have to file my US taxes. Unlike all other countries, the US requires its citizens abroad to file and pay taxes. In fact, both filing requirements and applicable penalties for citizens abroad dwarf those for residents. H&R Block has spent a few of its lobbying millions specifically to achieve this bit of government backed extortion.
Example: I once made two small 1040 errors; one reduced and the other increased my taxes. The net effect was that I overpaid by about $100. Nevertheless, without even trying to contact me first, the IRS 'levied' a $20,000 fine for 'misstatements' from my US saving acct. When I called the IRS to find out what happened, the IRS told me they have no obligation to talk to non-resident citizens, and my only resource would be to hire a tax preparation firm to represent me.
Bought and sold, courtesy of the US Congress.
Specific to the author's international comparisons: I have lived and paid taxes in 5 foreign countries (Hong Kong, Singapore, China, Austria, and the U.K.) EVERYWHERE I have lived, filing taxes takes 5-15 minutes, maybe a few minutes longer if I want to contest something.
Every year, I still have to file my US taxes. Unlike all other countries, the US requires its citizens abroad to file and pay taxes. In fact, both filing requirements and applicable penalties for citizens abroad dwarf those for residents. H&R Block has spent a few of its lobbying millions specifically to achieve this bit of government backed extortion.
Example: I once made two small 1040 errors; one reduced and the other increased my taxes. The net effect was that I overpaid by about $100. Nevertheless, without even trying to contact me first, the IRS 'levied' a $20,000 fine for 'misstatements' from my US saving acct. When I called the IRS to find out what happened, the IRS told me they have no obligation to talk to non-resident citizens, and my only resource would be to hire a tax preparation firm to represent me.
Bought and sold, courtesy of the US Congress.
3
Oh common Americans love complexity.
It is almost a hundred years since Rube Goldberg began to make fun of American love of overly complicated ways of doing simple things. a century making simple things ever more complicated an art form in American Politics. Did you look at the Japanese health care system and compare it to the American healthcare payment "model"?
Complex systems are very useful they hide or obfuscate many sins. They also create job opportunities for millions of Americans. If the Europeans adopted the American tax and healthcare systems they would solve their unemployement problems in an instant and be begging for refugees to come to Europe to fill job openings.
It is almost a hundred years since Rube Goldberg began to make fun of American love of overly complicated ways of doing simple things. a century making simple things ever more complicated an art form in American Politics. Did you look at the Japanese health care system and compare it to the American healthcare payment "model"?
Complex systems are very useful they hide or obfuscate many sins. They also create job opportunities for millions of Americans. If the Europeans adopted the American tax and healthcare systems they would solve their unemployement problems in an instant and be begging for refugees to come to Europe to fill job openings.
It's a wonder the corporations even allow us to go through the charade of voting.
1
If any lobbyist is against this, nothing will happen. It is not government for the people and by the people. It is government for the donor class by bought politicians.
Well..that might mean the government would need more workers. We never want that, you know. Must have all we can in private hands so it will cost us more.
1
Ah Capitalism! Simplifying the process is going to be easy as long as no one's ox gets gored. To whit, some simplifications and those who stand to get harmed by it:
Mortgage deductions--the middle class and THE HOME BUILDER AND MORTGAGE INDUSTRY
Child Tax Deductions--People with children and Everyone selling overpriced consumer goods to them
...................................................
Well you get the point, we have become completely Nimby-ized which will make tax simplification almost impossible.
Mortgage deductions--the middle class and THE HOME BUILDER AND MORTGAGE INDUSTRY
Child Tax Deductions--People with children and Everyone selling overpriced consumer goods to them
...................................................
Well you get the point, we have become completely Nimby-ized which will make tax simplification almost impossible.
1
Maybe we should start by making sure our president pays taxes like everybody else.
1
One small correction.
The equivalent of the I.R.S. in the Netherlands is not called 'the 'Algemene Fiscale Politiek' but the 'Belastingdienst'.
The equivalent of the I.R.S. in the Netherlands is not called 'the 'Algemene Fiscale Politiek' but the 'Belastingdienst'.
Because we have the best congress money can buy, that's why not.
1
You’re funny. You last lines say, “[T]he president and Congress have pledged a thorough reform of American’s absurdly complex tax system.” They also ‘pledged’ to give us medical insurance for all, “and cheaper, too.” I refer you to previous lines in this article where you reference “Industry lobbies” are against it. Until there is campaign finance reform and the removal of Citizens United, we’ll get nothing.
1
Please do not link to Forbes ("the tax complexity lobby") and other sites that deny entrance to those of us protecting our security by using ad blockers. They block all sorts of malware, including malware on sites such as Forbes.
As long as lobbyists rule the roost you can forget any magical thinking about tax simplification. For that matter and the same reason, forget also a single payer healthcare system, lower drug costs or rational gun laws. Thanks to our brilliant Supreme Court Citizens United decision things have only gotten worse....money talks louder than rationality and common sense.
3
As a tax practitioner for over thirty- five (35) years, I have read this article with interest. After reading, I have come to one conclusion: Frankly, Mr. Reid should know better.
For those of you scoring at home, our tax system (as twisted and inept as it sometimes may be) is based on the Constitutionally-driven principles of “self-assessment”, meaning, that rather than having government tell a citizen what liability may be, the citizen (under penalty of perjury) makes that statement as his own free act and deed. The system is based on freedom and personal responsibility for one’s affairs, and an understanding of one’s obligations to a free government, (and from what I remember about high school history, had its roots with a bunch of Colonialists throwing tea into a river in protest of government’s right to tax them without their input).
Secondly, blaming the “tax complexity lobby” for this complex situation is frankly, stupid. Is there such a lobby? (You had better believe it). But the lobby developed to play the role of Ginger Rogers to the Fred Astaire of the true government-lobby game, (with charities, banks, hospitals, local governments, and insiders as the players).
In conclusion, I respectfully state that the only way our tax system could be simplified would be to eliminate the influence of real lobbies on government (and to never forsake the principles of self-assessment of tax liability). I am doubtful that I will see such a change in my lifetime.
For those of you scoring at home, our tax system (as twisted and inept as it sometimes may be) is based on the Constitutionally-driven principles of “self-assessment”, meaning, that rather than having government tell a citizen what liability may be, the citizen (under penalty of perjury) makes that statement as his own free act and deed. The system is based on freedom and personal responsibility for one’s affairs, and an understanding of one’s obligations to a free government, (and from what I remember about high school history, had its roots with a bunch of Colonialists throwing tea into a river in protest of government’s right to tax them without their input).
Secondly, blaming the “tax complexity lobby” for this complex situation is frankly, stupid. Is there such a lobby? (You had better believe it). But the lobby developed to play the role of Ginger Rogers to the Fred Astaire of the true government-lobby game, (with charities, banks, hospitals, local governments, and insiders as the players).
In conclusion, I respectfully state that the only way our tax system could be simplified would be to eliminate the influence of real lobbies on government (and to never forsake the principles of self-assessment of tax liability). I am doubtful that I will see such a change in my lifetime.
45
Sorry, but many of us who do our own taxes are smart enough to know better. Our tax system is nothing but a complex accumulation of special interests carving out their but. That absolutely includes the tax preparation industry that is now manned by low knowledge workers entering your personal information into computer software programs.
Thank you Tony, well said. A couple added thoughts as a former IRS auditor & agent:
1) Messy and scary as audits are, I have more than one immigrant tell me how proud they were to pay taxes and that there was law that determined it rather than a thug showing up at the door trying to get as much for the government and his pocket as he could.
2) Every few years we get substantive changes to taxes and a new Tax Act is declared with a silly name like "Tax Investment and Improvement Act of 20XX". We would always refer to them as the "Accountants, Lawyers and Tax Software Developers Full Employment Act".
1) Messy and scary as audits are, I have more than one immigrant tell me how proud they were to pay taxes and that there was law that determined it rather than a thug showing up at the door trying to get as much for the government and his pocket as he could.
2) Every few years we get substantive changes to taxes and a new Tax Act is declared with a silly name like "Tax Investment and Improvement Act of 20XX". We would always refer to them as the "Accountants, Lawyers and Tax Software Developers Full Employment Act".
It seems like a large percentage of taxpayers could use a system Mr. Reid has described. It would not work for everyone and we would not have to wait for tax reform or simplification to implement it.
Wall Street plays a role in this. Financial lobbies pressure Congress to pass more tax breaks involving investments. The way for most people to have a share of capital growth in the US is for capital gains and dividends to be taxed for Social Security, not force wage- and salary-earners to rely on small tax-break retirement accounts that pay huge commissions and fees.
Of course the more complicated the tax code the more opportunities for high earners to exploit loopholes. It is futile to exhort Trump and Republicans to fix the situation - it is up to Democrats to lay out plans for reform that truly benefit the 99%, not big corporate and financial interests. Failure to do this in general is one reason Trump won the election.
Of course the more complicated the tax code the more opportunities for high earners to exploit loopholes. It is futile to exhort Trump and Republicans to fix the situation - it is up to Democrats to lay out plans for reform that truly benefit the 99%, not big corporate and financial interests. Failure to do this in general is one reason Trump won the election.
4
Even getting our hands on the forms and instruction booklets has become a chore. I resent the fact that NY tells me that if I make over a certain amount of money I have to pay to use their software to e-file. Why should I when they are literally forcing us to e-file by providing a very limited number of forms and instruction booklets?
If we fill out the forms correctly when we start our jobs it should be a simple matter for the IRS and our state governments to send us our earnings information at the beginning of or middle of January. It should be equally simple for us to check everything out to see that it is correct and make any changes we need to make. What we need, and what is apparently impossible for our federal, state, and local governments to provide, are clear instructions and examples of how certain taxes work. Then accountants can be freed to do the more complex tax returns and we, the taxpayers, can save our money. What we have now is an octopus of a system that costs more than its worth and, for all we pay, doesn't return much thanks to our refusal to acknowledge the fact that taxes are the price of living in a working country.
If we fill out the forms correctly when we start our jobs it should be a simple matter for the IRS and our state governments to send us our earnings information at the beginning of or middle of January. It should be equally simple for us to check everything out to see that it is correct and make any changes we need to make. What we need, and what is apparently impossible for our federal, state, and local governments to provide, are clear instructions and examples of how certain taxes work. Then accountants can be freed to do the more complex tax returns and we, the taxpayers, can save our money. What we have now is an octopus of a system that costs more than its worth and, for all we pay, doesn't return much thanks to our refusal to acknowledge the fact that taxes are the price of living in a working country.
1
The author makes a good case for simplifying tax returns. But tax isn't just one issue that corporate lobbies control--most of the US economy, polity and society is beholden to corporate interests. No matter it is education, agriculture, manufacturing, services sectors, even marriage and divorce laws, or laws that ban marijuana--everywhere corporate lobbies reign supreme. Tax reform is of course on people's mind now--as deadline is approaching fast, but the mother of all reforms should be freeing the economy, politics, and society from the clutches of the mosquitoes called lobbyists. Literally we have to reinvent the art and science of governing in a pro-friendly manner in all spheres of life. By the way, isn't lobbying just another name for licensed handling of corrupt practices? In many other countries, people bribe lawmakers, here in the USA, lobbyists/corporations contribute to their re-election--isn't it basically the same? Doesn't the difference lie only in how you do it, not in what you do?
10
This is so frustrating. A parent died last year. Not enough of an estate to warrant probate, but she wanted to make sure that I filed her tax return. Of course, I never got her SSA 1099. I could see how much she received in Social Security benefits, but, from past SSA 1099s, which I had, I could see that there was an allocation that varied each year. So, I called the Social Security Administration. Someone told me I had to go to my local office and to bring my birth certificate. Because there were no appointments for this type of visit, I went it, waited 90 minutes, spoke to someone, who told me, due to a minor discrepancy in how we spelled our names, he could not release the SSA 1099 for 2016 to me, even though I showed him SSA 1099s for the preceding 10 yrs. I returned home, got more paperwork, and returned the next day. After another 90 minute wait, a different rep said the original documentation was sufficient and gave me the SSA 1099.
Believe me, in the 3 hrs of waiting time, I thought a lot about how I was going to all this trouble to get information that the IRS already had and would not make available to me. Shame on the tax preparers and Congress for making our lives unnecessarily harder.
Believe me, in the 3 hrs of waiting time, I thought a lot about how I was going to all this trouble to get information that the IRS already had and would not make available to me. Shame on the tax preparers and Congress for making our lives unnecessarily harder.
23
If the GOP really wanted to get government out of our lives, making the tax code simpler and fairer would be a good start.
3
The ideological position that government can do no good is refuted by this article on taxes, extending health coverage to 20+ million thru the ACA, the entire military, police and firefighting infrastructure, the education system, and more. Indeed, it is long overdue to put the burden of proof on the free market and corporations, to show it is not their fault that citizens are paying too much for too little in return. Cons say our middle class is eroded by ineffective and corrupt government or a flood of illegal immigrants. Wrong. The right villain is the corporation, which has shed its social responsibilities in favor of maximizing shareholder value. Whose lobbyists corrupt our legal system. Whose unbounded political contributions distort our political processes. Who shipped our jobs overseas. Who stagnated our wages for 2 generations. Next election, get the villain right, and vote it out!
20
I'm just waiting for trump to say, "Nobody knew taxes were so complex."
Sad to say but the USA! USA! USA! has never been as "great" as we've always been told. While there has been greatness at times, we are discovering that many of our beliefs and institutions have been a sham.
Tax advantages for the uber wealthy and a crooked Congress have always been in the way.
Sad to say but the USA! USA! USA! has never been as "great" as we've always been told. While there has been greatness at times, we are discovering that many of our beliefs and institutions have been a sham.
Tax advantages for the uber wealthy and a crooked Congress have always been in the way.
11
Well..whaddya know!!!! There are PRIVATE COMPANIES involved! And these companies all make profits! Guess thats America folks!
3
it's not a country. it's just a business
What many people fail to understand is that it is not a "TAX CODE." It is a "SPECIAL INTEREST CODE."
For example, the tax preparers are one special interest that like the complicated code. They can make a lot of money off of filling out complex forms.
For example, the tax preparers are one special interest that like the complicated code. They can make a lot of money off of filling out complex forms.
The president and his wonderful Congress don't intent to "reform" the tax code to make it easier to file but rather to make it easier for people like the president, billionaires and corporations to avoid paying their fair share! The rest of us will continue to pay more and more and get less and less. We will have to pay more taxes to support war and trips to the golf course and special privileges for congress members and churches among other things. Our roads will continue to crumble and our health care will wither away.
I expect nothing good for the average American human to come from anything this current President and Administration do.
I expect nothing good for the average American human to come from anything this current President and Administration do.
5
Joseph Bankman, a Stanford Prof had an idea to make taxes so simple:
https://www.youtube.com/watch?v=8f-BUt0Eywg
Then he encountered Intuit, the maker of Turbotax.
Another segment of our economy has been captured by The Corporation.
https://www.youtube.com/watch?v=8f-BUt0Eywg
Then he encountered Intuit, the maker of Turbotax.
Another segment of our economy has been captured by The Corporation.
I heard Mr. Reid promoting his book on the radio. He recommends lowering the tax rate for the top earners from 39% to 20%. He also claims the mortgage interest deduction could be eliminated because it doesn't deter home ownership. I found both of those recommendations to be in a word glib.
1
It is a corporate government, rather than a citizen government.
2
A national sales tax takes care of the problem if we tax absolutely everything we buy. After all, that is where your income goes. It is even progressive. The millionaires buy expensive houses, boats, restaurant meals etc. and the poor buy fewer and much less expensive things. This way black market, criminal and under the table income gets taxed just like traditional income.
1
A progressive sales tax is a tax where the higher your income or expense the higher percentage you pay, not just the higher actual amount you pay. A flat tax, by definition, is not progressive.
1
If you own property, your local assessor's office prepares your property tax and it is up to the property owner to challenge the assessed value and property tax. If you live in a state with high property taxes (e.g. NH & NJ), your property taxes may be higher than your federal income taxes. One is involuntary while the other is voluntary. Why not treat income taxes like property taxes - involuntary and prepared for you by our local, state and federal governments?
I suggest it would be better to replace the word "tax" with "shared responsibility payment" to make citizens think that that is what it is - our shared responsibility for the cost of our government, our civilized society, that pays for educating our children, protecting our lives and property (police & fire), roads & bridges, court system, etc. etc.
I suggest it would be better to replace the word "tax" with "shared responsibility payment" to make citizens think that that is what it is - our shared responsibility for the cost of our government, our civilized society, that pays for educating our children, protecting our lives and property (police & fire), roads & bridges, court system, etc. etc.
3
Why does the government force me to pay a private service to compile with federal taxes but my state (Pennsylvania) allows me to file taxes online with the PA Department of Revenue with no major problems? Congress, please "nationalize" the processing and paying of taxes. I am sick and tired of having to pay some go between to comply with the law of the land.
7
Direct deposits, automatic withdrawals and now pre-filled tax forms...do I even personally exist anymore??
1
i lived in japan off and on from 1993-2012.
i moved there in april and in december, i noticed my bank account had a deposit of about $150 that baffled me.
i talked to the company and was told it was a deposit for my income tax return.
when i expressed surprise, i was told they'd done it.
my only income was from the company tho i'd made several hundred dollars extra teaching private english lessons.
i moved there in april and in december, i noticed my bank account had a deposit of about $150 that baffled me.
i talked to the company and was told it was a deposit for my income tax return.
when i expressed surprise, i was told they'd done it.
my only income was from the company tho i'd made several hundred dollars extra teaching private english lessons.
2
The average American does not trust the IRS to accurately pre-fill their forms. It's that ludicrous mentality that also wants to "drain the swamp" and eliminate environmental protections. Government agencies are not the enemy; the enemy is ignorance and the resistance to change. Contact your Representatives and tell them you want a simple method for paying your taxes and while you are at it demand that wealthy corporations start paying a fair share.
7
"tax-preparation industry lobbies strenuously against them"
Oligarchs win again. What a surprise!
Oligarchs win again. What a surprise!
1
The American tax system has become a problem that ought to transcend partisan politics.
The right wing seems to have a monopoly on complaining about the IRS, but COME ON! All the so-called "socialist" countries of Europe don't treat their taxpayers with nearly as heavy a hand as our exalted IRS. And look how much we have to show for our tax dollars!
The right wing seems to have a monopoly on complaining about the IRS, but COME ON! All the so-called "socialist" countries of Europe don't treat their taxpayers with nearly as heavy a hand as our exalted IRS. And look how much we have to show for our tax dollars!
America! Freedom! Free to spend meaningless hours on inanity that is. I am guilty of buying Intuit software too.
I so wish to see meaningful progress in my adopted country, especially as wealthy and incredibly resource rich as America. But all I see these days are stories of useless conflicts like this, where companies exist just to squeeze out money from the poor public.
Shame on H&R Block and Intuit. And even bigger shame on the politicians for allowing this to happen.
I so wish to see meaningful progress in my adopted country, especially as wealthy and incredibly resource rich as America. But all I see these days are stories of useless conflicts like this, where companies exist just to squeeze out money from the poor public.
Shame on H&R Block and Intuit. And even bigger shame on the politicians for allowing this to happen.
2
IRS was established;ished to calculate taxes and collect the money owed. Why have the functions been dumped on taxpayers? Why do people have to pay preparers and accountants hundreds of dollars to do IRS' job? Why isn't the tax preparation deducted from tax due? IRS rolls it into "miscellaneous" where most people do not even qualify to take the deduction.
3
Of course it's a business and industry—
So is the perpetual election machine which keeps the US in election mode year round . . . we're already underway with 2018 midterms.
So is the perpetual election machine which keeps the US in election mode year round . . . we're already underway with 2018 midterms.
2
Well, yes, filing returns in Japan is easier…if you're employed full-time by a company. In that case, the company's accounting department withholds all the taxes you owe and you can basically forget about it unless you want to apply for certain deductions. But if you're part-time worker with multiple jobs, self-employed or an independent contractor things start to get complicated real fast and you'll have to spend hours on the computer trying, among other things, to figure out what is and isn't taxable. And if you own an investment account that you manage by yourself the process can get downright ugly.
67
It appears Mr. Reid did not do enough research on filing taxes in Japan. Mr. Naka's post seems to suggest that. It might well be that the percentage of Japanese who have to file complicated taxes could be comparable to that in the US. Keep in mind our taxes are complicated because of the various deductions and tax credits, and so, if one chooses the standard deduction, when that is permissible, tax filing is simple. According to the Tax Foundation quoting the IRS, 68.5% of filers opt for the standard deduction.
This is also what is not addressed in the article regarding the American system. Emily R above claims she spends only 30 min. filing taxes. Pretty easy, nothing to complain about, even though it's unnecessary, since the gov. already knows what she owes and could simply issue a refund or an invoice. I, on the other hand, spend about 2 weeks filing taxes. Last year's return was 73 pages long. That's just stupid for a guy who earns less than 50K/yr. Today is my angry day. I don't ask my customers to bill themselves. And then threaten them if they get anything wrong. My boobie prize is that my costs for tax prep are also tax deductible. Big wow. The hours wasted on doing the government's invoicing for free should instead by billable, not deductible.
1
The United States is unparalleled when it comes to making things complicated and costly. Taxes, higher education, health care, even in some places, going to the bathroom if you're transgendered!
19
We should make taxes truly easy and adopt a VAT or national sales tax. It makes far more sense to tax consumption than it does income. The typical complaint is that such a tax is regressive. If that is a problem, there are easy fixes for it, including having people who make below a certain amount eligible for a refund. To preserve simplicity, that refund could be based on the number of people covered by the return.
Beyond simplicity, this would eliminate much of the tax evasion accomplished by off-the-books employment, which some estimate at a trillion dollars per year. Almost certainly none of that gets reported.
Beyond simplicity, this would eliminate much of the tax evasion accomplished by off-the-books employment, which some estimate at a trillion dollars per year. Almost certainly none of that gets reported.
2
I disagree. ALL people should pay some amount of taxes for the privilege of living here. When I was 12, I had a temp job as a dishwasher in a greasy spoon. I earned $1.15 an hour and they WITHHELD TAXES!
VAT is an alternative to sales tax, not income tax. The Netherlands, for example, has both.
VAT does simplify life because the price you see is what you pay; there's no need for a separate sales tax payment.
VAT does simplify life because the price you see is what you pay; there's no need for a separate sales tax payment.
1
I don't even live or work in the US but I spend a couple of days filing my US return each year - which I shouldn't even be filing save for the terrible treatment of US expats overseas. And yes, after paying my local income taxes I get to pay more taxes to the US on my income earned over here (!). Then there are the prying additional bank account declarations each June.
Meanwhile my French tax return takes no time at all.
The tribulations and costs required to be able to say Trump is my President... Depressing
Meanwhile my French tax return takes no time at all.
The tribulations and costs required to be able to say Trump is my President... Depressing
14
My (Japanese) wife and I lived in Japan for many years. Filing taxes for us was stressful and time-consuming every year. My wife had to take time off from work to collect and file the necessary documents at various offices. Banking is also famously time-consuming. A number of documents must be completed by hand and be free of all errors. In some cases bureaucrats can be extremely helpful and kind, but normally these sorts of processes involve a significant amount of time.
1
Yes, similar experience in the Middle East for me. You can do nothing without the consent of your sponsor/employer.
The common thread that runs though all efforts to improve the lives of Americans via legislative reform is big business and it's influence. Tax preparation reform, the expansion of healthcare, reduction in a bloated military. They all have lobbyists that literally bribe our representatives to vote against our interests in favor of their own.
1
Look up the one page 1040 schedule from 1913. 1% tax on net income up to $20,000 going up to a max of 6% on income over $500,000. What would be so hard about a one pager with no tax up to $40,000 of net income graduated up to 10% for income from all sources (not just earned) in excess of $200,000.
What they have to do is sew up all the holes in the net income net. Needless to say our hard working Congress has identified the most egregious give away: the mortgage interest deduction. Way to go Congress. Always tapped in to the pulse of the nation.
I don't like paying taxes but how could we afford MOAB's if we didn't pay taxes.
What they have to do is sew up all the holes in the net income net. Needless to say our hard working Congress has identified the most egregious give away: the mortgage interest deduction. Way to go Congress. Always tapped in to the pulse of the nation.
I don't like paying taxes but how could we afford MOAB's if we didn't pay taxes.
1
My guess is the other industrialized countries manage this because: (I) they fund their tax agencies appropriately, and (ii) their tax structure is simpler. We would also need to provide more information to more agencies.
We would probably need to give any charity we contribute anything to our SSN at the time of contribution. Deductions for energy efficiency improvements? no more, unless we want to give Home Depot our SSN whenever we buy insulation. Buying some long term care insurance? Same deal. We'd need to make the entire health care reimbursement account structure much simpler as well.
We would probably need to give any charity we contribute anything to our SSN at the time of contribution. Deductions for energy efficiency improvements? no more, unless we want to give Home Depot our SSN whenever we buy insulation. Buying some long term care insurance? Same deal. We'd need to make the entire health care reimbursement account structure much simpler as well.
1
They also fund their elections publicly.
The large tax preparation industry is an important lobby on this, but so are anti-tax zealots. They want people to hate taxes.
Since the reality is that many people like living somewhere with decent physical infrastructure, rule of law, education, and at least some level of social safety net, a key anti-tax zealot strategy is to maintain an onerous system for filing taxes so that people dislike taxes as much as possible.
We need to confront both the tax preparation industry and anti-tax zealots to achieve reform.
Since the reality is that many people like living somewhere with decent physical infrastructure, rule of law, education, and at least some level of social safety net, a key anti-tax zealot strategy is to maintain an onerous system for filing taxes so that people dislike taxes as much as possible.
We need to confront both the tax preparation industry and anti-tax zealots to achieve reform.
2
There's too much money in this industry for Intuit and the other players to ever make a substantial change. There is very clearly no technical or logical reason why we couldn't have simplified or pre-filled forms. It seems obvious to me that it would increase participation and IRS revenues. Opponents will cite that providing pre-filled forms will allow taxes to be raised or introduced without much consideration from constituents, because people would just pay the bill to be done with it. I'm can't speak to how impactful that would be, considering the scrutiny it would take to amend taxes.
1
Add this to the list of things we can't have in America because we have lobbyists, which are illegal in many of the countries cited by the author. Lobbying could easily be outlawed in America, and not run afoul of the First Amendment, by mandating that elected officials may not have private meetings with any constituents. Lobbyists would be welcome to attend public forums and express their free speech along with the other citizens, but no back-door meetings, lunches, golf outings, etc. I know, good luck with that.
18
The reason is quite simple. The United States has over 560 billionaires, at the end of the Bush administration $13 trillion was siphoned out of the country by the one percent, during the Obama administration some $1 trillion was flowing out every year, the IRS at last report stated $600 billion goes uncollected every year from tax dodging corporations. For every one tax break the middle class receives, the one percent gets 10 loopholes. If we simplified tax collection and removed all loopholes we would over night solve the Congressional manufactured budget problems. But, we can't because that would mean the Oligarchs of this country would have to pay their taxes.
Remember it was Trump who famously and proudly said during the Presidential debates with regards to tax avoidance "make it difficult for me to avoid paying my taxes".
Remember it was Trump who famously and proudly said during the Presidential debates with regards to tax avoidance "make it difficult for me to avoid paying my taxes".
10
This may not matter. With the cuts to the IRS, they won't have the funds or personnel to do audits.
Here in Australia we have pre-filled forms. First the government knows nothing about the deductions side of things. Here we don't have a standardized deduction so every deductible expenditure saves tax. Second, they actually miss a lot of income even from mutual fund companies who supposedly report all the info to the government.
Perhaps our government keeps this horrible system because it worries that we are cheating and that not enough taxes are being paid. If that's the case, they should focus their attention on the underground economy, i.e. the businesses who deal all or mostly in cash. Does anyone believe that cash receipts yield the same percentage of taxes that the rest of us pay? How many billions in taxes go unpaid every year? To as great an extent as possible, we need to create a cashless economy. Then there could be a flat tax at a much lower rate than we currently are afflicted with.
Good Lord! The article misses the burning issue which more than any other should be a move to the equalization of taxes between low and high incomes.
For over a decade I have used a commercial tax software to prepare my individual 1040, which not only transfers prior years' data to the current return, but, if one has organized his or her materials, takes less than an hour to prepare, make payment and refund arrangements, and e-file federal and state. The cost, about $50.00.
The two major commercial software companies offer a basic "free" service and at least a half dozen no-charge services are to be found on line.
This year it took about 45 minutes to enter the data, "audit" using the software, and file. Ten minutes later I received an email informing me that my returns had been transmitted to Fed and state, and less than an hour later another informing me that both had been accepted by the respective tax authorities.
The first year was a bit time consuming, but since then it's been breeze.
For over a decade I have used a commercial tax software to prepare my individual 1040, which not only transfers prior years' data to the current return, but, if one has organized his or her materials, takes less than an hour to prepare, make payment and refund arrangements, and e-file federal and state. The cost, about $50.00.
The two major commercial software companies offer a basic "free" service and at least a half dozen no-charge services are to be found on line.
This year it took about 45 minutes to enter the data, "audit" using the software, and file. Ten minutes later I received an email informing me that my returns had been transmitted to Fed and state, and less than an hour later another informing me that both had been accepted by the respective tax authorities.
The first year was a bit time consuming, but since then it's been breeze.
I suspect there is a perverse incentive here that goes beyond protecting the taxation-industrial complex. Spending all this time and effort on taxes builds awareness and resentment, leading to an increase in anti-government sentiment. The more complex your situation, the more you dread it. Even if you outsource the bulk of it to an accountant, which I do as much to minimize the angst as the bottom line, you then add the cost of the accountant into the increasingly distasteful stew.
So, how likely is it that simplification will come from those fanning the "government is the problem" flames?
So, how likely is it that simplification will come from those fanning the "government is the problem" flames?
88
Planet Money did a fascinating podcast recently that includes role of anti-tax interests when California tried to provide pre-filled / pre-populated forms for most people, as is done in most other industrialized countries. The "Tax Hero" they mention is an accounting professor who champions tax simplification. http://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero
As Mr Reid knows, all these other industrialized countries have adopted the view that tax policy should operate by broadening the base and lowering the rates. That is, the expectation is that all citizens of a country must pay taxes, and they must pay proportionately a fair tax, according to their means. In return, all taxpayers can expect a robust safety net that provides a level of human dignity to all. In other words, they still believe in the social compact that every individual has enormous worth, and every person should look out for the welfare of their neighbor as much as they care for themselves.
The convoluted tax system in the US is resilient against change for many reasons, not just because the tax preparation industry wants it so. Every deduction, every exclusion serves some industry or individual. Every line in the 1040 and the subsidiary forms is a potential bonanza to those who know the arcane provisions of the IRS code. But at the base of all this is the philosophy that citizens of this country shouldn't have to pay taxes, that they are the masters of their own destiny, that every dollar they save in tax will be made up by their neighbor who isn't so smart. (We have a president who boasted that because he paid little or no tax, that made him smart.) Bottom line: the rest of the world lives in a humane society; we on the other hand live in a Malthusian jungle, struggling to survive.
The convoluted tax system in the US is resilient against change for many reasons, not just because the tax preparation industry wants it so. Every deduction, every exclusion serves some industry or individual. Every line in the 1040 and the subsidiary forms is a potential bonanza to those who know the arcane provisions of the IRS code. But at the base of all this is the philosophy that citizens of this country shouldn't have to pay taxes, that they are the masters of their own destiny, that every dollar they save in tax will be made up by their neighbor who isn't so smart. (We have a president who boasted that because he paid little or no tax, that made him smart.) Bottom line: the rest of the world lives in a humane society; we on the other hand live in a Malthusian jungle, struggling to survive.
205
Exactly - well said - Americans are socialized to dislike Government - we are taught to actually resist community in the name of fake individual freedom.
Here's an idea: The government already pays farmers to leave their fields unplanted. Why not agree to pay HR Block and Intuit to close their offices and stop producing software, in return for them ordering the congressmen they've bought to allow pre-filled forms?
Everybody wins!
Everybody wins!
62
I've got an idea...how about not paying dinosaur fossil companies to do nothing and let them go the way of Blockbuster video stores? Those businesses and industries that do not live up to the times should not be buying off my elected officials. Campaign financing and the ruling by our Supreme Court on donations has led to the ruination of the country.
I hope liberals are fighting mad about the things we arent getting for our tax dollars, because I for one don't want cuts to the EPA sacrificing clean air and water in exchange for more bombs and artillery. The boogey man is sittting right here in Washington, not the Middle East. it's long past time our representatives spoke and acted for the good of the nation and its people (AKA representation) and not the 1% and electing pathological liars isn't going to get us there.
I hope liberals are fighting mad about the things we arent getting for our tax dollars, because I for one don't want cuts to the EPA sacrificing clean air and water in exchange for more bombs and artillery. The boogey man is sittting right here in Washington, not the Middle East. it's long past time our representatives spoke and acted for the good of the nation and its people (AKA representation) and not the 1% and electing pathological liars isn't going to get us there.
Sounds absolutely wonderful. Somehow missing in this opinion piece is any mention of all those folks who may not be wage earners — freelancers, gig economy workers, independent contractors and business owners. How would the IRS counterpart in Japan or the Netherlands or Peru keep track of what a self-employed person's gross revenue and business expenses might be?
68
No one suggests it would work for every taxpayer, but it would for tens of millions of them. Tens of millions!
They don't. Those groups don't benefit as much as regular wage earners, but I suspect they still have a lot of an easier situation than their American counterparts. In Norway I often dont bother to check my assessment as I have never found any mistakes. To accept and submit takes two minutes.
Freelancers and "independent contractors" receive 1099s from their payors; the income side is not a problem in the least. Income from the general public (like in retail) and expenses would have to be provided by the filer. You'd get a 1040 with prefilled lines and the math done, and you'd add the bits and pieces not provided by the IRS - with backup documentation of course.
It's only sensible, but sensible anything has become an endangered species in the last few decades, since the corporate takeover of everything.
It's only sensible, but sensible anything has become an endangered species in the last few decades, since the corporate takeover of everything.
All of those other countries are places where people get something in return for their tax money - healthcare, education, good roads, high speed rail, airports that are not like cesspits.... Here in the US what do we get? Military hardware, endless war, ever richer rich people, crumbling infrastructure.
Maybe there's a correlation?
Maybe there's a correlation?
165
Good comment and observation!
I think Citizen hit the nail on the head. Our problem isn't the IRS it's that congress (both Dems and Reps) cowtows to pretty much every special interest. The only time something actually happens for the benefit of the people is when 2 or more special interests disagree on an issue and the more powerful one agrees with the people (or sometimes we get lucky if it's close).
16
The government in the United States has been sold to corporate America.
I consider myself independent and vote. The people need more education, reasonable (affordable) healthcare. We should decriminalize all drugs,but with extreme regulation and taxes. This works in other countries, but this is a ploy to keep jails full. The budget in Ohio is in trouble and if you look at incarceration for drug offenses alone it may shed light on this problem. One mistake a young person makes ruins lives, and the streets are flooded with literately tons of narcotics. Many times leaving parents to pay student loans. The big pharmacy lobby is the problem, and if they privatize tax collection billionaires will be owning the companies that collect the taxes. Wealthy are legally medicated by the same drugs but they get theirs at the local pharmacy.
I consider myself independent and vote. The people need more education, reasonable (affordable) healthcare. We should decriminalize all drugs,but with extreme regulation and taxes. This works in other countries, but this is a ploy to keep jails full. The budget in Ohio is in trouble and if you look at incarceration for drug offenses alone it may shed light on this problem. One mistake a young person makes ruins lives, and the streets are flooded with literately tons of narcotics. Many times leaving parents to pay student loans. The big pharmacy lobby is the problem, and if they privatize tax collection billionaires will be owning the companies that collect the taxes. Wealthy are legally medicated by the same drugs but they get theirs at the local pharmacy.
3
I do my mother's taxes. Last year, I inadvertently combined her estimated tax payments with her RMD withholding. Same total, but wrong lines. They reduced her refund and I had to file an amended return to claim the rest. Not a big deal. This year, I was super-careful and got everything on the right line. They refunded twice as much as I had calculated even though their numbers were exactly the same as mine. I checked the tax tables and the number they had entered for total tax due doesn't even exist in the tables. You would think that would be automated, wouldn't you?
1
In Liechtenstein it is also incredibly simple. The government provides a free downloadable program that adds and subtracts everything automatically. All you have to do is fill in the numbers. Assembling my backup docs takes a few hours. Doing the tax itself, minutes.
6
The tax prep lobby is not the only thing holding us back from 15 minute tax filings. The complexity of the tax code is another. Even if the government fills in a hundred pages of forms for you, you would still struggle to understand their accuracy.
I don't know what alternate universe the author lives in, but the culprit for the time spent preparing and filing tax returns is the tax system itself, not the lack of prepopulated forms, not that this would not provide a benefit.
I work as a volunteer for VITA, an IRS sponsored program for helping low and moderate income people do their taxes. We have to go through a training program to be certified to be volunteer tax preparers. AARP does a similar program, as do probably other groups.
Tax prep is much more than just pre populated figures. The US injects social programs into its taxes along with all the rules. Are you single or head of household if you have a child dependent? Well, it depends. Did the child live with you for more than half the year? If 18 years old, was he/she a full time student? How abut the earned income tax credit? Lots of rules to see if you qualify. Then there are child car expenses, child credits, and credits for retirement savings. All with lots of rules about what qualifies. And the mother of them all for moderate income earners; Obamacare. If you got your insurance through the marketplace, was your income higher or lower than had,been projected for subsidies through the year, did you have insurance all year, etc? If you did not, you may have to make a shared responsibility payment (tax) unless you meet one of the exceptions. They are quite complicated.
None of these issues are in place to provide income to the tax prep firms.
I work as a volunteer for VITA, an IRS sponsored program for helping low and moderate income people do their taxes. We have to go through a training program to be certified to be volunteer tax preparers. AARP does a similar program, as do probably other groups.
Tax prep is much more than just pre populated figures. The US injects social programs into its taxes along with all the rules. Are you single or head of household if you have a child dependent? Well, it depends. Did the child live with you for more than half the year? If 18 years old, was he/she a full time student? How abut the earned income tax credit? Lots of rules to see if you qualify. Then there are child car expenses, child credits, and credits for retirement savings. All with lots of rules about what qualifies. And the mother of them all for moderate income earners; Obamacare. If you got your insurance through the marketplace, was your income higher or lower than had,been projected for subsidies through the year, did you have insurance all year, etc? If you did not, you may have to make a shared responsibility payment (tax) unless you meet one of the exceptions. They are quite complicated.
None of these issues are in place to provide income to the tax prep firms.
19
Excellent idea. As Henry David Thoreau famously said, "Simplify, simplify, simplify."
8
If simplifying tax filing means big businesses will lose money, rest assured, nothing will change, not with Trump in charge.
Too bad the DEMs don't seem interested in taking this on either.
Too bad the DEMs don't seem interested in taking this on either.
6
Another extremely sad case of how deep pocket lobbyists thwart the public good. An entire tax prep industry keeps us hogtied!
Other nations have also managed to do a much better job with providing health care to their populous. We, however, have the insurance lobbyist and the medical coding industry that makes it virtually impossible to make significant progress.
What, pray tell, has become of the government that is supposed to be "... of the people, by the people, for the people...?"
Other nations have also managed to do a much better job with providing health care to their populous. We, however, have the insurance lobbyist and the medical coding industry that makes it virtually impossible to make significant progress.
What, pray tell, has become of the government that is supposed to be "... of the people, by the people, for the people...?"
1
Reformers have long advocated zero-based budgeting where expenditures have a lifespan and must be reviewed and reauthorized periodically to continue. One reason our taxes are so complex is the tsunami of itsy-bitsy exemptions and deductions which, over time, have swelled to devastating size. Even now, Mr. Ryan's health care "plan" and Ivanka's proffered child care credit would use the tax code to rebalance the scales. Enough with depreciation tables, oil depletion allowances and the like.
No snowflake feels responsible in an avalanche.
No snowflake feels responsible in an avalanche.
6
The simplicity desired in proposed tax return preparation almost always results in flat tax proposals that decrease the income tax obligations of the wealthiest taxpayers and increase the tax burden on those individuals in the $75,000 to $200,000 taxable income range, which equates to a political non-starter.
According to the IRS's own data over 50% of the Form 1040s filed in the most recent tax year with data available resulted in -0- federal income tax liability or, whose for the paying crowd, net refundable credits ( many credits are not limited to merely reducing one's tax liability but actually are "refundable" as if these credits were tax withheld or paid- which incidentally is one of the reasons why fraudulent tax returns are filed because fraudulently claimed refundable tax credits on bogus returns result in tax refunds, enabling prisoners in federal minimum security prisons to use their free time to file fraudulent tax returns to generate income tax refund checks for their non-incarcerated friends and family.....) and as long as we are going to use federal tax returns to distribute cash to taxpayers that have little or no tax liability we are going to have a system that is complicated.
I do agree that if the average taxpayer merely told the IRS what their charitable contributions and miscellaneous deduction amounts were the IRS could calculate tax liability based on electronically submitted data from other sources and some relief from record gathering is there.
According to the IRS's own data over 50% of the Form 1040s filed in the most recent tax year with data available resulted in -0- federal income tax liability or, whose for the paying crowd, net refundable credits ( many credits are not limited to merely reducing one's tax liability but actually are "refundable" as if these credits were tax withheld or paid- which incidentally is one of the reasons why fraudulent tax returns are filed because fraudulently claimed refundable tax credits on bogus returns result in tax refunds, enabling prisoners in federal minimum security prisons to use their free time to file fraudulent tax returns to generate income tax refund checks for their non-incarcerated friends and family.....) and as long as we are going to use federal tax returns to distribute cash to taxpayers that have little or no tax liability we are going to have a system that is complicated.
I do agree that if the average taxpayer merely told the IRS what their charitable contributions and miscellaneous deduction amounts were the IRS could calculate tax liability based on electronically submitted data from other sources and some relief from record gathering is there.
In addition, the IRS may charge you interest [10% or more, compounded monthly] on what they claim you owe. If they have made a mistake - such as losing a quarterly payment - it may take months to resolve. Also, it may be 6 months before they get around to notifying you, with the shortage of personnel. During that time, the interest accrues. If I overpay, they certainly don't pay me 10% interest for the use of my money.
2
The current interest rate on federal tax underpayments is 4% per year.
It is absurd to blame tax preparation services for complicated tax returns. Congress could fix the problem if it chose to.
3
It's absurd. But it's how our government works: special interest lobby. It's how the entire GOP is bought off to say climate change is not human caused because of massive amounts of dollars from Big Oil. And the list goes on.
His point is clearly stated: Congress chooses not to take the simple step of prefilled forms because the tax prep corps object. The tax code itself is a different animal.
Just imagine how many people would lose their jobs if you make tax filing simple.
If Trump can fix this then in my opinion he can go from worst to first that quickly.
If Trump can fix this then in my opinion he can go from worst to first that quickly.
1
How would things like cost of home improvements and charitable contributions both of which are unknown to the government until we fill out tax forms be handled?
Speak for yourself. I, like many people, enjoy the challenge of filing taxes in the U.S. Sure, the IRS already knows what I earned, but they don't fully know what I can deduct, and it requires skill and intelligence to create a tax return that both a) minimizes - legally of course - what I owe the government and b) conforms to what the IRS deems "acceptable" enough for them not to question it.
Wouldn't have it any other way.
Wouldn't have it any other way.
And if these broad fixes don't get implemented there are other steps that could be taken (others should list their ideas):
1) The IRS could simply send everyone in a timely manner a letter that lists all the info they have received on forms provided by employers, investment firms, banks, etc.
2) The IRS should provide one standard tax preparation software free to all.
3) The IRS should provide tax preparing persons in local communities who can help folks use the software.
I'm sure there are other simple partial fixes. Standardizing things --- like tax prep software, electronic W2 forms that can be easily downloaded -- would help the vast majority of people. Once people learn to use them they will get faster at filing taxes. Once those reforms are made and most are able to take advantage of them, more personal services for those with complex tax issues could be handled with help from the IRS.
And, of course, business taxes are another matter and require different solutions -- and should not be confused with personal federal tax issues.
If we wait for "real" comprehensive tax reform that benefits not just the lobbyists' employers, we will reach our inevitable demise before we reap the benefits. Some issues with taxes do require complex answers. Itemized deductions are necessary for some -- maybe raising the standard deduction would help a sizeable group avoid using these, but some people's lives are filled with necessary costs that others of us just don't have.
1) The IRS could simply send everyone in a timely manner a letter that lists all the info they have received on forms provided by employers, investment firms, banks, etc.
2) The IRS should provide one standard tax preparation software free to all.
3) The IRS should provide tax preparing persons in local communities who can help folks use the software.
I'm sure there are other simple partial fixes. Standardizing things --- like tax prep software, electronic W2 forms that can be easily downloaded -- would help the vast majority of people. Once people learn to use them they will get faster at filing taxes. Once those reforms are made and most are able to take advantage of them, more personal services for those with complex tax issues could be handled with help from the IRS.
And, of course, business taxes are another matter and require different solutions -- and should not be confused with personal federal tax issues.
If we wait for "real" comprehensive tax reform that benefits not just the lobbyists' employers, we will reach our inevitable demise before we reap the benefits. Some issues with taxes do require complex answers. Itemized deductions are necessary for some -- maybe raising the standard deduction would help a sizeable group avoid using these, but some people's lives are filled with necessary costs that others of us just don't have.
2
Yes, of course paying taxes is more rational in other countries. The same is true of health care.
The reason our is so complex is because wealthy people game the system so they can fleece the rest of us. The wealthy are the ones who can afford the accountants to do this work. The rest of the American public either spends hours doing the work themselves, or they get fleeced by tax preparation services who are becoming payday loan operations in disguise.
I'm skeptical that any so-called 'tax reform' will ever happen. There's too much campaign cash flowing in to stop any progress from happening. Thanks Citizens United.
The reason our is so complex is because wealthy people game the system so they can fleece the rest of us. The wealthy are the ones who can afford the accountants to do this work. The rest of the American public either spends hours doing the work themselves, or they get fleeced by tax preparation services who are becoming payday loan operations in disguise.
I'm skeptical that any so-called 'tax reform' will ever happen. There's too much campaign cash flowing in to stop any progress from happening. Thanks Citizens United.
10
How about taxing something more measurable? Like petroleum rather than income. Petroleum is easily measured as it comes out of the refineries. Income tax, we know there are a lot of tax cheats when it comes to reporting cash.
The taxes on petroleum would be passed through in every product in the country because it is the cost of doing business. Oh, yes... and if you want to see initiatives to get off of fossil fuels that would do it. Then we move to toll roads, same effect, much less useless driving, more car pooling.
Rely on the government to prepare your taxes ? You mean with people like Lois Lerner deciding such things. No thank you.
The taxes on petroleum would be passed through in every product in the country because it is the cost of doing business. Oh, yes... and if you want to see initiatives to get off of fossil fuels that would do it. Then we move to toll roads, same effect, much less useless driving, more car pooling.
Rely on the government to prepare your taxes ? You mean with people like Lois Lerner deciding such things. No thank you.
So, other countries around the world have figured out how to make tax filing easier for their citizens.
This is like our health care "conundrum."
When it comes to public policy, why can't we simply take a look around the world and learn from best practices elsewhere? In a competitive, globalized economy, it's imperative that we do so.
This is like our health care "conundrum."
When it comes to public policy, why can't we simply take a look around the world and learn from best practices elsewhere? In a competitive, globalized economy, it's imperative that we do so.
11
Most of the tax complexities are where we lie, cheat, and steal.
I would guess that 95% of the people cannot take advantage of the complexities which were inserted into the tax law in order to benefit the few. That complexity is where the wealthy, the high income, the business owners get to do their creative accounting. Like Mr. Trump, there are people who have hundred page returns full of loopholes, capital gain/loss/carry-forward, carried interest, complex trust and retirement structures, investment categories with special tax breaks, business deductions for lunch and golf outings, what part of my home is my business office and can I deduct that new driveway if I have customers come to my house, and that private/business jet..... and other creative shenanigans.
I spend most of the tax prep time gathering two categories of itemized deductions. These are where the government does not know how much I contributed to charity or how many medical deductions I had this year. But I have a simple solution; eliminate both. Single payer health care would take care of the bulk of the work because I would present my "Medicare for All" card when getting any health care or covered medical supplies or drugs. And elimination of charitable contributions would take care of the rest. Will they ever check whether I give 10% of my income to my church, or donate my used Gucci loafers to a resale shop and claim a $200 charitable value?
I would guess that 95% of the people cannot take advantage of the complexities which were inserted into the tax law in order to benefit the few. That complexity is where the wealthy, the high income, the business owners get to do their creative accounting. Like Mr. Trump, there are people who have hundred page returns full of loopholes, capital gain/loss/carry-forward, carried interest, complex trust and retirement structures, investment categories with special tax breaks, business deductions for lunch and golf outings, what part of my home is my business office and can I deduct that new driveway if I have customers come to my house, and that private/business jet..... and other creative shenanigans.
I spend most of the tax prep time gathering two categories of itemized deductions. These are where the government does not know how much I contributed to charity or how many medical deductions I had this year. But I have a simple solution; eliminate both. Single payer health care would take care of the bulk of the work because I would present my "Medicare for All" card when getting any health care or covered medical supplies or drugs. And elimination of charitable contributions would take care of the rest. Will they ever check whether I give 10% of my income to my church, or donate my used Gucci loafers to a resale shop and claim a $200 charitable value?
4
Despite what any politician says NOTHING will be done. Oh they will tinker on the edges and they will say they are giving everyone a tax break, but ultimately they are bound and determined to help those who need it the most, the wealthy who aren't interested in paying taxes. And the more complicated, the easier it is to hide your money. But think about it: if it was a simple tax code, with no deductions, everyone would pay taxes. Even our poor,poor president. And no one would care if he releases his return. The other side of this, of course, is the Republican mantra that government is always evil. No government agency can be trusted. These other countries you mention: their citizens trust the government and feel paying taxes is an obligation, something they SHOULD do. Government services like healthcare are very popular in these places and no one would think of taking it away from the people. America on the other hand feels it's every person for themselves. And services are evil. Not a good formula for a simplified tax code. Always remember: whatever the politicians do: who are the winners and who are the losers?
2
Mr. Reid's argument, although rooted in considerable common sense, causes me considerable discomfort, because it plays so easily into the specious arguments of the "flat tax" people: "Taxes are so complicated! They have to be simplified! Let's adopt a single tax rate!"
But the complexity of the tax code is not in tax rates. They're simple: Calculate taxable income, go to a chart, there's your tax. The complexity is in the astonishing number of rules potentially applicable to computation of the taxable income itself--and a flat tax will do nothing to solve that. A flat tax is just a Trojan Horse for further reduction of taxes on those currently in upper brackets.
U.S. tax forms and instructions are complex because the tax code itself is also spectacularly complex, larded with almost every imaginable special interest accommodation--although you can be sure there are lobbyists and legislators trying to imagine still more.
I've long imagined a constitutional amendment requiring that the entire tax code cannot exceed 25 pages, must be written in plain English, and must be sufficient on its face, without further interpretive regulations, for the preparation of all individual and business tax documents.
I guess we'd also have to specify the font size on the 25 pages.
But the complexity of the tax code is not in tax rates. They're simple: Calculate taxable income, go to a chart, there's your tax. The complexity is in the astonishing number of rules potentially applicable to computation of the taxable income itself--and a flat tax will do nothing to solve that. A flat tax is just a Trojan Horse for further reduction of taxes on those currently in upper brackets.
U.S. tax forms and instructions are complex because the tax code itself is also spectacularly complex, larded with almost every imaginable special interest accommodation--although you can be sure there are lobbyists and legislators trying to imagine still more.
I've long imagined a constitutional amendment requiring that the entire tax code cannot exceed 25 pages, must be written in plain English, and must be sufficient on its face, without further interpretive regulations, for the preparation of all individual and business tax documents.
I guess we'd also have to specify the font size on the 25 pages.
1
America is the land of the constitution.
And the land of the constitution is the land of lawyers.
And the land of the lawyers is the land of the pointless complications in the simplest matters.
The total number of lawyers in Japan is less than the number of lawyers which graduate each year from our law schools.
Of course our obsession with the law is just one factor. The constant fights between the left and the right is another.
These kinds of troubles are deeply embedded in our souls. I doubt there is an easy cure. For a cure would have to include a change in the way we see the world.
And the land of the constitution is the land of lawyers.
And the land of the lawyers is the land of the pointless complications in the simplest matters.
The total number of lawyers in Japan is less than the number of lawyers which graduate each year from our law schools.
Of course our obsession with the law is just one factor. The constant fights between the left and the right is another.
These kinds of troubles are deeply embedded in our souls. I doubt there is an easy cure. For a cure would have to include a change in the way we see the world.
3
Another make-work project, for the government, the countless agencies that work in the tax industry, the taxpayers themselves, and, ironically, the scammers and cheats who make huge profits on all the confusion.
Since I moved to the US my paperwork has been done by a reputable firm in California. Not the state I live in, but when it comes to money it's best to avoid areas where 'faith' is big. I used to live in Canada, where I did my own taxes. One year I had a frustrating problem so I bundled all the papers up unfinished, signed the form, and mailed everything to Revenue Canada with a note saying I couldn't believe I owed them money. Then I waited. A refund check (cheque) arrived a few weeks later. That's what you call public service.
Since I moved to the US my paperwork has been done by a reputable firm in California. Not the state I live in, but when it comes to money it's best to avoid areas where 'faith' is big. I used to live in Canada, where I did my own taxes. One year I had a frustrating problem so I bundled all the papers up unfinished, signed the form, and mailed everything to Revenue Canada with a note saying I couldn't believe I owed them money. Then I waited. A refund check (cheque) arrived a few weeks later. That's what you call public service.
3
Alas, the author answers his own question. The US tax preparation industry employs an estimated one million Americans and is one of the most entrenched and effective lobbies in the nation. Congress will never approve pre-filled forms as long as this powerful lobbying force exists.
1
I have long suspected a vested interest of the tax-form-preparation industry in the migraine-inducing complexity of US tax returns.
I'm a UK citizen, and former partner in a New York law firm (London office). So I have until recently had to file US tax returns (Federal and state) as well as my (single) tax return in the UK.
My UK tax return is something my 10-year old daughter will be able to complete in a few years' time (and when she's 14, I'm going to get her to do it for me). By contrast, the US tax returns are nothing short of waterboarding for the intelligence. In Europe, we have laws against the imposition of cruel and inhumane punishment. I thought you did too. We also have laws against punishment without conviction of a crime. You?
I'm a lawyer with 38 years' practice under my belt, almost all of them spent doing high-end complex commercial transactions, financings and regulatory litigation. I regard myself as probably smarter than the average, and my clients certainly did. But despite all that, I find US tax returns the government-created equivalent of a seven-by-seven Rubick's cube. Some characters in the IRS and its state equivalents are, as we say in London, having a laugh.
Could it be that tax-form complexity is something so entrenched in vested interest resistance in the US its reform comes second only to America's inability to enact sensible gun-control laws?
My last US filing was 2015. I'll long remember the relief I felt that happy day.
I'm a UK citizen, and former partner in a New York law firm (London office). So I have until recently had to file US tax returns (Federal and state) as well as my (single) tax return in the UK.
My UK tax return is something my 10-year old daughter will be able to complete in a few years' time (and when she's 14, I'm going to get her to do it for me). By contrast, the US tax returns are nothing short of waterboarding for the intelligence. In Europe, we have laws against the imposition of cruel and inhumane punishment. I thought you did too. We also have laws against punishment without conviction of a crime. You?
I'm a lawyer with 38 years' practice under my belt, almost all of them spent doing high-end complex commercial transactions, financings and regulatory litigation. I regard myself as probably smarter than the average, and my clients certainly did. But despite all that, I find US tax returns the government-created equivalent of a seven-by-seven Rubick's cube. Some characters in the IRS and its state equivalents are, as we say in London, having a laugh.
Could it be that tax-form complexity is something so entrenched in vested interest resistance in the US its reform comes second only to America's inability to enact sensible gun-control laws?
My last US filing was 2015. I'll long remember the relief I felt that happy day.
3
If the US tax system was less focussed on social engineering and limited in scope to collecting revenue in the most efficient fashion, this would be more feasible.
I just knew there was a Scrooge in here some place....social engineering as you call it is the basis of a safe, sane civilized society based on, you know, wait for it, "...a government of the People, by the People and for the People."
See?...it's those damn People that always get in the way of Lobbyists, Congressmen and Pirates.
So Sad, Too Bad...Bye-Bye Miss American Pie
See?...it's those damn People that always get in the way of Lobbyists, Congressmen and Pirates.
So Sad, Too Bad...Bye-Bye Miss American Pie
Pre filled tax returns should be a no-brainer bi-partisan issue. Instead it is a non-starter because our politicians are bought and paid for by tax preparation company lobbyists.
It is a scandal that the government cannot do something as simple and helpful to people of all political persuasions.
It is a scandal that the government cannot do something as simple and helpful to people of all political persuasions.
It's not the income that complicates tax filing, it's the deductions and credits, especially line items that are only partially deductible, e.g., business and healthcare expenses. Eliminate those and . . . why, where could ordinary people cheat in their taxes? What fun would that be? Just another dreary engagement with a soulless government
2
I was a freelancer in Japan, so I didn't get the pre-figured paper. Instead, I took all my papers down to my local tax office and the tax people figured it right in front of me.
A couple of times, when I hadn't written down everything the preparer considered deduction-worthy (like figures for electricity), he would exhort me to do better in the future, so that he could give me all the deductions.
Interesting that doing my Japanese taxes—IN JAPANESE, without even the ability to read most of the form—was always easier than doing my US taxes.
A couple of times, when I hadn't written down everything the preparer considered deduction-worthy (like figures for electricity), he would exhort me to do better in the future, so that he could give me all the deductions.
Interesting that doing my Japanese taxes—IN JAPANESE, without even the ability to read most of the form—was always easier than doing my US taxes.
2
Using Turbotax, it still takes me hours to complete my taxes. I am more than willing to get this simplified. Not only would I save the hours, I would save the $150 I paid for Turbotax.
Lobbyists have been running the country for a long time. Legislators are more concerned with pleasing them than with serving their own constituents. That's why our schools, hospitals and prisons are a mess.
1
I have been arguing this for several decades. The tax should be based on what you make, with no deductions. We could have the same tax brackets as today but the tax rate would be less than 50% of what it is today.. Those in Congress should be forced to do their own taxes for once and at the very least they should need to deal with a K-1 form from KKR. Then they would understand how truly stupid the income tax system has become.
The advantage of such a simple tax system would be higher tax revenue since it will be much easier to find tax cheats. It is much simpler to prove income versus dealing with a complicated set of deductions. If the IRS did not need to expand so much staff power writing and interpreting the arcane tax laws they could spend more time going after the underground economy and that, in itself would allows us to reduce our debt.
The advantage of such a simple tax system would be higher tax revenue since it will be much easier to find tax cheats. It is much simpler to prove income versus dealing with a complicated set of deductions. If the IRS did not need to expand so much staff power writing and interpreting the arcane tax laws they could spend more time going after the underground economy and that, in itself would allows us to reduce our debt.
1
Do I have this right? Under this system the IRS wouldn't need to conduct tax audits and Donald J. Trump would be free to release his returns for all to see. Sounds like a plan to me. Probably not to DJT, though.
I've read T.R. Reid's new book and it's really worthwhile. We used to be a nation that generated inspired ideas to benefit our communities and raise our standard of living. Public libraries, anyone? Now look at us. The main dynamic that drives seemingly everything about American society, tax policy included, is for the haves to hold onto what they have, with no regard for society at large. Where's the vision? Certainly not in the tax code.
I believe that tax laws have become complicated because income tax has been used to encourage or discourage certain economic policies at the time with different sets of decuctions and preferential rules. For example, I just filed my return using TAXACT. It was a breeze because my investmen firms provided me with 1099s that summarized lots of things for me (I do not own any business). But I have no clue what is the difference between Ordinary dividends and other dividends and why thre is preferential treatment. Or why should there be any tax deuction for cost owning ahome (interest and real estate) and oworse, owning more than one home. This was introducd to encourage hoe ownership after the WWII (I think) and not by tax preparers. I learned a lo more about the discussions on depreceiation and R&D ci=osts (I used to teach that at a university). Reagan got rid of many deductions. Let us not make Tax system as a social policy maker. No tax deductions for child care or other such items. Let the MARKET take care. Society will adjust.
Yes, and US health care is held hostage by companies with the same lack of public interest. Under the auspices of 'deregulation' and 'small government' our 'representatives' have put us in the chains of corporations. Corporations grab at any flow of cash...tell the public they can do it better, and end up performing poorly and being far more expensive. Mergers and acquisitions are a bad joke that have robbed workers of their pensions. Privatized prisons are an example. Deregulated utilities are costing us as much for their Enron styled pirated financial schemes as for the cost of the seevicservice. Any flow of cashDeVos is doing the same
1
Another point, made in a great interview by Brooke Gladstone last week on NPR, is that the IRS actually holds on to a huge amount of money owed to taxpayers each year who don't file their taxes and therefore don't get the refund they're owed. This seems like a no-brainer, as long as there is a good appeals process if you disagree with your bill/ refund. Although I anticipate that won't be enough to placate those who assume the government is the root of all evil.
Who actually believes that Trump and our bought and paid for Congress will do anything to enhance the welfare of average Americans? They will do whatever their big donors and lobbyists demand.
Sadly, I don't think this is the sort of tax reform Trump was talking about. Instead of making taxtime easier for the average American, expect big tax cuts for businesses and the wealthy.
1
Prefilled forms make too much sense and are too simple and straightforward. Our government officials, and the lobbyists they represent, prefer to keep things complicated and mysterious so they can wield their power over us and keep us guessing. If the process was simplified and the government provided it's information to the taxpayer, that would lessen the likelihood and the threat of an audit. What would become of the poor IRS and the tax attorneys? Efficiency cuts out the middle man and benefits the taxpayer and that is simply not the American way!
IRS pre filled forms would not prevent anyone from hiring an accountant (or Turbo Tax, or H&R Block or...) to check it. Pre filled forms would be beneficial to most of us though. I have no reason to believe that my "representatives" would put my interests above the interests of Turbo Tax and H&R Block.
I spent hours assembling medical bills, donations, real estate info and other evidence for deductions. Only then to be told I qualify for the AMT and none of it matters.
Please make this easier. I support my country by paying taxes and find that patriotic. But the process can be so much easier.
Please make this easier. I support my country by paying taxes and find that patriotic. But the process can be so much easier.
91
Under the AMT medical expenses are treated the same as under regular taxation Under both they are deductible if they exceed 10% of AGI. Charitable deductions are fully deductible under AMT. Investment real estate is treated the same except investment expenses which are not deductible in AMT.
Donations and medical bills are not subject to AMT.
I wonder if filing tax returns is only one of many compliance-related bureaucratic burdens that a "well-run" government can lift from the people. Can something similar be done for doctors who have to file insurance claims via Medicare/Obamacare? Can EPA help file environmental compliance documents? Does the list go on?
4800 changes to the tax code in the last few years to benefit specific companies. Get rid of all of the loopholes and deductions - broaden the base and lower the tax. But that is what corporate America is trying to stop because they do really love that special treatment and our Congresspeople love the campaign donations.
1
Don't think of the Tax Code as government rules and regulations. It's more akin to a religion with millions of adherents including accountants, actuaries, lawyers, politicians, and myriad lobbyists, to name a few. The Code is more resistant to change than other religions because more is at stake. I think we'll sooner see the Catholic church admit women to the priesthood, than any major changes in income tax law.
It's an interesting idea, but the countries listed in this article all have excellent safety nets and protections in place for their citizens. I wonder whether their citizens donate to charities and whether these contributions are tax deductible. I also assume that they pay higher percentages of taxes anyway. The quote about not pleasant but simple probably rings true in this respect.
For those people filling out 1040-EZ, I think it would be totally worth it. Perhaps you could opt in or out. I imagine when my house is paid off and I'm retired, that I might consider such an option, but I cannot imaging the IRS knowing about all of my deductions now.
For those people filling out 1040-EZ, I think it would be totally worth it. Perhaps you could opt in or out. I imagine when my house is paid off and I'm retired, that I might consider such an option, but I cannot imaging the IRS knowing about all of my deductions now.
American tax laws are myriad, devious, and complex. They are enacted and continually amended by the US Congress, an unruly assemblage of self-serving hypocrites who are incapable of budgeting federal expenses and writing sensible legislation.
Until the tax laws are rationalized, filing and paying taxes will continue a nightmare for Americans.
Until the tax laws are rationalized, filing and paying taxes will continue a nightmare for Americans.
1
My household is diverse enough to appreciate this article. My spouse is Japanese and has lived in America for over 35 years. It is not just a tax code issue it is how individuals view themselves as a contributor to the overall well-being of the nation.
Paying ones taxes is not only an obligation in Japan, it is an honor. It transcends beyond the individual self. One of the most bizarre issues to come out of the 2016 election in our family was how an American president can be a leader of his country when he will not release his own tax returns. It is mind blowing and not very honorable of a leader
Paying ones taxes is not only an obligation in Japan, it is an honor. It transcends beyond the individual self. One of the most bizarre issues to come out of the 2016 election in our family was how an American president can be a leader of his country when he will not release his own tax returns. It is mind blowing and not very honorable of a leader
292
I don't think anyone anywhere ever used the name "Trump" and the word "honorable" in the same sentence.
Hello djc,
How did you get the idea that it is an honor for the Japanese to pay one's taxes? Just curious.
I am Japanese and have lived here in the US for the past 20 years. I respectfully disagree with you. Actually I think it's opposite. Often, people in Japan get away from the tax obligations, especially if you are self-employed, because Zeimusho (Japanese IRS) is not as powerful as the IRS here.
How did you get the idea that it is an honor for the Japanese to pay one's taxes? Just curious.
I am Japanese and have lived here in the US for the past 20 years. I respectfully disagree with you. Actually I think it's opposite. Often, people in Japan get away from the tax obligations, especially if you are self-employed, because Zeimusho (Japanese IRS) is not as powerful as the IRS here.
A long time friend and very successful CPA in Colorado, swept his arm around the vista his home in the mountains afforded him. "Thank you, US Congress!" That was in 1993, and Congress has only increased his wealth since then.
I have no problem with the need for paying taxes. I just want it painless. NPR, just a few days ago, did a much more in depth discussion than this article. Inutuit and Block alone spend $6M together on lobbyists to keep the code complex.
Welcome to America. Where corporations like your internet provider and your health insurance providers are given authority to pick your pockets as they see fit vs. every other advanced democracy. I have truly grown to hate America. I wish I could emigrate.
I have no problem with the need for paying taxes. I just want it painless. NPR, just a few days ago, did a much more in depth discussion than this article. Inutuit and Block alone spend $6M together on lobbyists to keep the code complex.
Welcome to America. Where corporations like your internet provider and your health insurance providers are given authority to pick your pockets as they see fit vs. every other advanced democracy. I have truly grown to hate America. I wish I could emigrate.
1
It would be interesting to know whether the tax codes in Japan and the Netherlands are as heavily used to effect social policy as is our own. The myriad of deductions, credits, penalties, etc. American taxpayers navigate are the result of decades of tinkering with the tax laws and regulations by Congress at the behest of whoever or whatever happens to have influence there. While we may be critical of the write-offs given to large corporations and the One Percent, most of us like the deductions and credits we ourselves receive. Tax-time frustration is part of the price we pay for them.
"....the president and Congress have pledged a thorough reform of America's absurdly complex tax system". Right. And health care insurance will be better and cheaper and available to all.... How did that work out? If Congress "reforms" the tax code like they want to "reform" health care, expect big profits for industry, tax cuts for the rich, and another jab in rear for the rest of us.
I have been using TurboTax since my tax accountant retired a few years ago. I studied at a PhD level and am super organized. I use accounting software. I keep all the necessary documents neatly. Still, it is not simple for me to figure out how to enter all the data into TurboTax. It takes days to finish. This year's tax filing was particularly frustrating. At the end of all the data entry to TurboTax, I tried to e-file. Then my e-file got rejected because someone had already used my SSN. Therefore, I had to file by paper in addition to filing the Form 14039, Identity Theft Affidavit. I had never filed paper returns. So I printed it out. Wow. That was a lot of paper. Glad I had a laser printer. I mailed to both Federal and the state in priority mail with signature confirmation. That costed $10 each, $20 total. Oh, by the way, I am from Tokyo. So you know how I feel. I'm not feeling gooooood.
2
I addition to my other comment denouncing the general lack of care by congress. I really don't think filling out taxes is that hard for most people and don't think pushing the narrative that it is is really that helpful. All some one would have to do is have a basic understanding of their income and go to a tax tax-preparer once and then save a copy of the return and the info they took to the tax-preparer and then put the numbers in the same place. There are also several online programs similar to turbo-tax that you just put your info in and they calculate your tax. For these programs federal is free for most people and states aren't that much (though at least for my state filling manually is just a simple adjustment to your adjusted gross income from your federal return).
I filed my return early in March. It was rather confusing, due to... I forget what, and took several hours over a few days. (I find it best to do a bit at a time, and double-check it later as I go along.)
Anyhow... I was supposed to get a $629 refund. Instead, I got almost $70 more. (I'm still not sure what "mistake" I made.) But the IRS seems to be honest. And it was prompt. The refund check came about 10 days after I mailed the forms.
But the article is correct. Income tax needs a major reform. Not only to simplify things, but to recover a big chunk of the money the wealthy steal from society.
Anyhow... I was supposed to get a $629 refund. Instead, I got almost $70 more. (I'm still not sure what "mistake" I made.) But the IRS seems to be honest. And it was prompt. The refund check came about 10 days after I mailed the forms.
But the article is correct. Income tax needs a major reform. Not only to simplify things, but to recover a big chunk of the money the wealthy steal from society.
Why not here? Because Congress is lobbied by special interests to pile on more and more and more exemptions and burdens.
A flat tax works perfectly. Liberals hate it because it would force them to restrain their binges. Conservatives hate it because it would force them to restrain their binges. But individual Americans would love it.
So long as our Congress and Executive are guided by the philosophy of Altruism - the philosophy that dictates sacrificing yourself for others - a flat tax will never happen, because it forces the Players in the Federal government to stick to inflexible rules. And politicians hate that.
A flat tax works perfectly. Liberals hate it because it would force them to restrain their binges. Conservatives hate it because it would force them to restrain their binges. But individual Americans would love it.
So long as our Congress and Executive are guided by the philosophy of Altruism - the philosophy that dictates sacrificing yourself for others - a flat tax will never happen, because it forces the Players in the Federal government to stick to inflexible rules. And politicians hate that.
1
Why are American taxes so miserable?
1. One political party wants taxes to elicit nothing but feelings of misery, so that Americans support cutting them.
2. Tax preparation companies want misery so we'll pay for them to do the work. And they are willing to spend a lot of money on lobbying to keep it that way.
3. American values won't allow for a European system of simple regressive taxation and progressive government spending. The only way for government to be at all progressive in it's allocation of money is to do so through the tax code. Wealth is how Americans know a person is worthy, and rewarding behavior through the tax code is how we make sure that the rewards don't go to the undeserving poor. Those myriad, complicated deductions are how we keep regular working families afloat, and hide the massive cuts for the rich. There is no way a simplification of America's tax code would be paired with direct gov't spending on daycare, healthcare, education, etc.
So I will continue to see these stories about the great tax systems from other countries every April, but I'm not going to hold my breath. There is no real constituency for change on this issue. Taxpayers may hate the current system, but both parties have reason to dislike a different one.
1. One political party wants taxes to elicit nothing but feelings of misery, so that Americans support cutting them.
2. Tax preparation companies want misery so we'll pay for them to do the work. And they are willing to spend a lot of money on lobbying to keep it that way.
3. American values won't allow for a European system of simple regressive taxation and progressive government spending. The only way for government to be at all progressive in it's allocation of money is to do so through the tax code. Wealth is how Americans know a person is worthy, and rewarding behavior through the tax code is how we make sure that the rewards don't go to the undeserving poor. Those myriad, complicated deductions are how we keep regular working families afloat, and hide the massive cuts for the rich. There is no way a simplification of America's tax code would be paired with direct gov't spending on daycare, healthcare, education, etc.
So I will continue to see these stories about the great tax systems from other countries every April, but I'm not going to hold my breath. There is no real constituency for change on this issue. Taxpayers may hate the current system, but both parties have reason to dislike a different one.
1
Once more we read of citizens of other nations have better quality of life than Americans, due to the pernicious influence of industry lobbyists on the Congress. Whether it's income tax legislation, prices for pharmaceuticals & medical devices, healthcare benefits for working (& retired) Americans, or even simple pensions, we seem to always read we can't "afford it". Yet, for some reason, however, the rest of the Developed Nations appear to be able to "afford" these things without defaulting or incurring almost $14 billion in debt.
According to OECD statistics, only Mexico & Ireland have lower government revenues, while US general government debt is exceeded by only Portugal, Italy & Greece. Once we were ranked at or near the top in similar statistics,; now we suffer in comparison unless it's to "weak sister" nations.
Once more I find myself asking why Americans don't enjoy the same quality of life as the other developed nations of the world, whether it's in terms of working hours, vacation time, healthcare, pharmaceutical prices, infrastructure, etc. Where are the lobbyists for American citizens, working to improve our lives? They certainly aren't in the House or Senate. They're more interested in informational junkets or "seminars" paid for by lobbyists, while they legislate exorbitant pensions & perquisites for a job where they are in session & working for a third of a year or less. This madness must stop!
According to OECD statistics, only Mexico & Ireland have lower government revenues, while US general government debt is exceeded by only Portugal, Italy & Greece. Once we were ranked at or near the top in similar statistics,; now we suffer in comparison unless it's to "weak sister" nations.
Once more I find myself asking why Americans don't enjoy the same quality of life as the other developed nations of the world, whether it's in terms of working hours, vacation time, healthcare, pharmaceutical prices, infrastructure, etc. Where are the lobbyists for American citizens, working to improve our lives? They certainly aren't in the House or Senate. They're more interested in informational junkets or "seminars" paid for by lobbyists, while they legislate exorbitant pensions & perquisites for a job where they are in session & working for a third of a year or less. This madness must stop!
1
I completely disagree. Look at the 1040, and you'll find line after line for which the government can't pre-fill the form for us beleaguered taxpayers:
Filing status - Has there been a marriage, a legal separation, a divorce, a death? Married Filing Jointly or Married Filing Separately? Head of Household or just Single?
Dependents - Any births? Anyone leave the home? Did divorced parents sign an agreement regarding who can claim dependents? Did a newly poor adult sister move in and qualify as a dependent? What about parents who are no longer competent and supported by the family but don't live in the household?
If you can't pre-fill either of these, you can't come close to completing the tax return. But there's more:
Business, Farm and Rental Income - The government doesn't have records of expenses, and often doesn't have records of income. 1099-MISC income might be self-employment income, and might not.
Capital gains - What about sales for which the investor (but not the investment firm issuing the 8949) knows the basis? No basis info, no Schedule D, no capital gains entry.
And that's just income. There are problems in the Adjustments to Income section (Tuition and Fees - is the IRS going to decide for taxpayers whether to take that deduction, or one of the education credits?), Itemized Deductions (charitable contributions), and a variety of credits. And I'm not even considering the Affordable Care Act.
Only Congress, which created this mess, can fix it.
Filing status - Has there been a marriage, a legal separation, a divorce, a death? Married Filing Jointly or Married Filing Separately? Head of Household or just Single?
Dependents - Any births? Anyone leave the home? Did divorced parents sign an agreement regarding who can claim dependents? Did a newly poor adult sister move in and qualify as a dependent? What about parents who are no longer competent and supported by the family but don't live in the household?
If you can't pre-fill either of these, you can't come close to completing the tax return. But there's more:
Business, Farm and Rental Income - The government doesn't have records of expenses, and often doesn't have records of income. 1099-MISC income might be self-employment income, and might not.
Capital gains - What about sales for which the investor (but not the investment firm issuing the 8949) knows the basis? No basis info, no Schedule D, no capital gains entry.
And that's just income. There are problems in the Adjustments to Income section (Tuition and Fees - is the IRS going to decide for taxpayers whether to take that deduction, or one of the education credits?), Itemized Deductions (charitable contributions), and a variety of credits. And I'm not even considering the Affordable Care Act.
Only Congress, which created this mess, can fix it.
Our healthcare system is outrageously expensive, yet has middling outcomes. Our tax code is horrendously complicated, time consuming, and inefficient. Our industries are dominated by large, consolidated monoliths (big agriculture, big pharma, big retailers) that receive huge subsidies and discourage independent competition.
In all these cases, it's private power run amok that has hollowed out our country from the inside. Late stage capitalism is the problem, not government, yet somehow the people who call the shots have convinced a huge part of the populace that if we removed every regulation in the nation and dramatically defunded all civil institutions, our problems would magically be solved. Unbelievable.
People are turning to these "far right" candidates because they instinctively are sick of impersonal, huge, capitalist economic forces hollowing out their lives. Once they find the right words, there will be a supermajority - composed of those who previously followed such disparate candidates as Sanders and Trump - that will be ready to vote for whoever is smart enough to tap into this space.
In all these cases, it's private power run amok that has hollowed out our country from the inside. Late stage capitalism is the problem, not government, yet somehow the people who call the shots have convinced a huge part of the populace that if we removed every regulation in the nation and dramatically defunded all civil institutions, our problems would magically be solved. Unbelievable.
People are turning to these "far right" candidates because they instinctively are sick of impersonal, huge, capitalist economic forces hollowing out their lives. Once they find the right words, there will be a supermajority - composed of those who previously followed such disparate candidates as Sanders and Trump - that will be ready to vote for whoever is smart enough to tap into this space.
1040EZ for all people, all the time... sounds great. What about all those folks who may not be wage earners — freelancers, gig economy workers, independent contractors and business owners. How exactly do the IRS counterparts in Japan or the Netherlands or Peru keep track of what a self-employed person's gross revenue and business expenses might be?
1
Because of the nature of the american political system where the political power is divided between the Congress, Executive and the Judiciary nobody is really accountable and nobody is fully empowered and everybody can be bought off by lobbyists. In most of the other countries, the political party in power is fully accountable and fully empowered so it is not that easy to form cartels and stymie reforms as the people know whom to blame if things are not working out. In America, any politician, administrator or judge can put a spoke in the wheel of reform and get away without consequence.
Our tax returns are complicated. H&R Block (the software AND the people) messed up our taxes so many times, that we finally went with a CPA firm this year. It cost a lot more, but then I don't have to worry about the dreaded pre-audit letter that I'd be sure to get in 3 years otherwise.
Yes, the IRS gets the reported income right every time. If there were a box to add your charitable deduction on the pre-filled form, I'd sign up in a millisecond!
Yes, the IRS gets the reported income right every time. If there were a box to add your charitable deduction on the pre-filled form, I'd sign up in a millisecond!
Again, it's a matter of empowered middlemen paying off legislators, plus propaganda campaigns the likes of which haven't been seen since dictatorships. If facts and logic ruled, we'd have a system like Japan's.
I don't want pre-filled forms as much as just a much much simpler tax code to begin with. Its absurdly complicated.
So, all my budding young tax experts, riddle me this.
How would the government prepare your taxes if you are self employed, keep your own set of books with income and deductions that are not directly reported to the IRS?
If you owned a rental home, how would they know beforehand the income received and expenses incurred for that?
We'll just write it all down on two lines on a post card and call it a day, right?
I'm not saying that the "5 minute tax prep" wouldn't plausible for some taxpayers, it actually could be for simple scenarios.
But the "tear down" of the tax code, regulations and rulings that comprise the current system would actually come pretty close to rocket science. The system is so huge, byzantine and convoluted that basically scrapping the entire thing and starting over would make more sense than to try and carve away pieces of it.
The code isn't just for individuals, you are talking about corporations, partnerships, trusts, non-profits. It's mind blowing stuff.
I work over 100 hours a week during tax season doing this stuff, and I understand the frustration that people feel with this stuff. I do to.
But don't hold your breath that next year will be the year that you can send in a postcard with your taxes on it to Ted Cruz after he abolishes the IRS.
Hey, if it happens, great, I can retrain to do something else.
How would the government prepare your taxes if you are self employed, keep your own set of books with income and deductions that are not directly reported to the IRS?
If you owned a rental home, how would they know beforehand the income received and expenses incurred for that?
We'll just write it all down on two lines on a post card and call it a day, right?
I'm not saying that the "5 minute tax prep" wouldn't plausible for some taxpayers, it actually could be for simple scenarios.
But the "tear down" of the tax code, regulations and rulings that comprise the current system would actually come pretty close to rocket science. The system is so huge, byzantine and convoluted that basically scrapping the entire thing and starting over would make more sense than to try and carve away pieces of it.
The code isn't just for individuals, you are talking about corporations, partnerships, trusts, non-profits. It's mind blowing stuff.
I work over 100 hours a week during tax season doing this stuff, and I understand the frustration that people feel with this stuff. I do to.
But don't hold your breath that next year will be the year that you can send in a postcard with your taxes on it to Ted Cruz after he abolishes the IRS.
Hey, if it happens, great, I can retrain to do something else.
Always, if a law or absence of a law makes no sense, look for the interest group protecting its turf. We had a fine example of this truism in NY with the ridiculously complicated and laborious effort to approve Uber for the rest of the state. Taxicab companies and unions fought mightily to protect their monopoly, and it worked for a long time, especially after they brilliantly co-opted a few gullible legislators. Turbotax, H&R Block and their kind need a labyrinthine tax code to justify their existence. For them, the battle to simplify the tax code is existential. And so, no change, even if on the merits, the lobbyists are defending the indefensible.
When we lived in Italy and Sweden (1968-1974) we filled out four-page forms for those countries' taxes. And then we had to at least fill out a two-page form for the U.S. But we didn't have much investment income then.
I have tried tax software, but their question format takes longer than doing my own spreadsheet. I tried the Free-Filer that the IRS site links to, but it doesn't provide instant recalculations like my spreadsheet does.
Maybe I shouldn't say this because some lobbyist will get Congress to take this benefit away: the IRS does provide fillable PDF forms that you can fill out offline instead of handwriting the data.
I have tried tax software, but their question format takes longer than doing my own spreadsheet. I tried the Free-Filer that the IRS site links to, but it doesn't provide instant recalculations like my spreadsheet does.
Maybe I shouldn't say this because some lobbyist will get Congress to take this benefit away: the IRS does provide fillable PDF forms that you can fill out offline instead of handwriting the data.
1
Granted, my life isn't complicated. I have a mortgage and some minor investments - but it doesn't take me more than 30 minutes to do my taxes online. I usually do them the day my W2 becomes available. All the paperwork I need is available online. I've never considered this a difficult task.
37
You are lucky. My tax situation is more complex and it takes me two hours at least just to organize my paperwork. I also have K-1s that don't arrive until well into April, so I can't do it in January when the W2 arrives, or in February, when the 1099s come in. Last year our return was an inch thick, including the worksheets. We are comfortable but are not close to the 1%.
Yeah. The software available today walks you through it step by step and does all the calculations. I know there are some perfectly lovely people who have trouble with even simple things that put them in front of a computer screen, but for the majority of Americans who don't own a business or several rental properties, it's not all that hard. I think that even if you have a small business and use QuickBooks or similar accounting software, you can upload a lot of your business information into the tax program.
1
Each year I spend several hours gathering documents and pay my accountant $800 to $1000 to prepare my returns.and that's after paying the accountants throughout the year to keep my books in good order. Our tax system is insanely complex and expensive. Especially if you are a small business owner.
Changing our tax system is easy, if our representatives would keep the wellbeing of the nation in mind rather than their own special interests. Behind the opposition to every proposal to simplify our tax system are groups that benefit from its complexity.
Right after WWII most Americans paid about 5% of their income to the federal government. If you add state and local taxes it came to 7%. Today those same voters from the ranks of the middle class pay around 28%.
So what happened? First, personal income taxes went up to compensate for corporate taxes going down. Why? We had a growing economy in the 1950's including our corporate sector. But with that growth came more political clout and they used it for themselves at our expense. Today the official corporate tax rate is 35%, high by international standards. But don't be fooled. The actual rate that corporations pay is between 12-14%. Some pay nothing.
Those tax savings go to the investors and 1% of the population owns almost 70% of all corporate stock. So our tax system is deigned to make the rich richer.
The second problem is war debt. Taxes bumped up during WWI and WWII for obvious reasons. But after the war they declined. But since the Vietnam war we have amassed trillions of dollars in military expenses and the average voter has been paying for all these undeclared wars.
In Europe and Japan voters get real services for their taxes like universal medical care. We only get more wars to pay for. Wake up America.
Right after WWII most Americans paid about 5% of their income to the federal government. If you add state and local taxes it came to 7%. Today those same voters from the ranks of the middle class pay around 28%.
So what happened? First, personal income taxes went up to compensate for corporate taxes going down. Why? We had a growing economy in the 1950's including our corporate sector. But with that growth came more political clout and they used it for themselves at our expense. Today the official corporate tax rate is 35%, high by international standards. But don't be fooled. The actual rate that corporations pay is between 12-14%. Some pay nothing.
Those tax savings go to the investors and 1% of the population owns almost 70% of all corporate stock. So our tax system is deigned to make the rich richer.
The second problem is war debt. Taxes bumped up during WWI and WWII for obvious reasons. But after the war they declined. But since the Vietnam war we have amassed trillions of dollars in military expenses and the average voter has been paying for all these undeclared wars.
In Europe and Japan voters get real services for their taxes like universal medical care. We only get more wars to pay for. Wake up America.
225
I don't quarrel with most of your points. However, the idea that a reduction in corporate taxes benefits the shareholders is a fallacy. Corporations don't really pay taxes. Their customers pay the taxes in the form of the revenue they generate for the corporation. If corporate taxes are lower, then prices to consumers would also be lower. Businesses have to compete, after all.
I am wide awake, but wondering what can we do about it? I am afraid it is too late.
1
All else aside, in many years the computation of our itemized deductions only slightly exceeds the "standard" deduction, but it is the enumeration and calculation of the itemized deduction components that takes by far the most time in doing one's taxes. All this could be avoided if the "standard" deduction were modestly increased. On a related point, the necessity of listing and detailing every single charitable contribution (and especially non-cash contributions), no matter how modest, is a real pain.
17
Well no one forces you to itemize or track potential deductions. You could just take the standard deduction and it would likley be some of the best money you ever "spent" if you always come out just a bit over the standard deductio when you itemize.
2
The differing approaches in other countries could never work here, simply because we are so superior to all others on the planet. Is this not immediately obvious? Likewise, we could never have single-payer health coverage, a reasonably-sized military, a decent passenger train network, paid time off for raising infants, a living wage, affordable higher education, and so on. We are so superior, well-educated, thoughtful and compassionate that we are a beacon to the world when it comes to interpersonal relationships and an economy organized to share our great wealth equitably and effectively.
303
Bill, you forgot to mention our superior system of weights and measures. The decimal system and Celsius temperature scales discourage entrepreneurial thinking by allowing just anyone to do calculations.
Give me a richly configured system where one bushel equals four pecks, or 32 quarts, over those simplistic kilograms.
Give me a richly configured system where one bushel equals four pecks, or 32 quarts, over those simplistic kilograms.
1
So well stated ! And it is a shame !
As citizens we're expected to independently carry out certain basic civic duties such voting, serving a jury and filing our taxes. What does it say when the tax code has become so complex that the average citizen is required to hire outside help to fulfill a basic obligation? I wonder what would happen with the following experiment: every member of Congress is required to calculate and file their own taxes alone and the only material they'd have access to is a copy of the tax code, a pocket calculator and a No. 2 pencil. After that experience perhaps we would have tax simplification.
251
it says Congress is prostituting itself to special interests in return for political contributions. It cannot even legislate in this narrow context. No wonder our democratic system is so dysfunctional. It gives parliamentary Democracy a bad name.
The time and effort we spend preparing our tax forms is yet another cost of being American that is not paid by citizens of many other countries. The biggest such costa, of course, are those of our health care system, including the costs paid by millions of not having coverage. The big question this raises is what is it about our political system or culture that produces such costs for our people. Has anyone taken a comprehensive look at why other countries' systems seem to work better than ours in resisting the likes of the tax complexity lobby (and the health care complexity lobby)? I suspect campaign financing has something to do with it, but there must be other factors. I know it's a foreign concept to many Americans, but we really need to look beyond our borders to find solutions to many of our problems.
48
A reasonable argument. The prospect of completing one's taxes in half an hour seems utopian ... a dream of heaven on earth. It would change April.
But I'm sort of American, grew up near the Mississippi River, and am weirdly uncomfortable with that prospect. Does the government know how many clothes I dropped off at the Salvation Army (including a favorite blue dress), and did it register the small honorarium I received for giving a talk about women and guns at a local college?
No doubt the tax-prep industries have employed lobbyists to rig the system in their favor. But it's also likely that Americans' habitual distrust of the central government would prevent Congress from passing legislation modeled on systems prevalent in Japan or Europe, and thereby grant the government even more "oversight."
Wouldn't a couple of guys from Montana, with good shotguns, just shoot down the computer?
I support the Affordable Care Act, Meals on Wheels, Medicare, Medicaid, Social Security, subsidized school lunches for children, the EPA, and a strong social safety net. But I'm not quite sure I want the government to do my taxes. Completing that task requires me to review our household's recent history.
Yeah it's silly. The forms make no sense, even for practiced readers. And yet ....
But I'm sort of American, grew up near the Mississippi River, and am weirdly uncomfortable with that prospect. Does the government know how many clothes I dropped off at the Salvation Army (including a favorite blue dress), and did it register the small honorarium I received for giving a talk about women and guns at a local college?
No doubt the tax-prep industries have employed lobbyists to rig the system in their favor. But it's also likely that Americans' habitual distrust of the central government would prevent Congress from passing legislation modeled on systems prevalent in Japan or Europe, and thereby grant the government even more "oversight."
Wouldn't a couple of guys from Montana, with good shotguns, just shoot down the computer?
I support the Affordable Care Act, Meals on Wheels, Medicare, Medicaid, Social Security, subsidized school lunches for children, the EPA, and a strong social safety net. But I'm not quite sure I want the government to do my taxes. Completing that task requires me to review our household's recent history.
Yeah it's silly. The forms make no sense, even for practiced readers. And yet ....
Why would Republicans want to simplify tax preparation? Taxes on the wealthy will always be too complex to be fully automated, so there's little benefit for them. Republicans' main goal is to lower taxes on the rich. If that means long tax forms for the middle class, it's a price they're willing to pay.
83
The closing Trump advertisement in the election railed against a supposed cabal of international elite financial figures who were claimed to be causing America's decline. It pictured financier George Soros, Federal Reserve Chair Janet Yellen, and Goldman Sachs CEO Lloyd Blankfein as the prime villains. Trump's inaugural address also reiterated the populist theme that the day of revenge against financial elites has arrived. Despite this, the one certain thing that can be predicted is that the Republican-controlled congress will enact and President Trump will sign is the elimination of the estate tax. This literally could be called taking from the millionaires to give to the billionaires. Estates under $5.49 million are now totally exempt from the estate tax. Billionaires are not as able as mere millionaires to employ various strategies to avoid estate taxes. Repealing the estate tax will give $billions to a fraction of the top 1%, which will ultimately have to be made up by the rest of the taxpayers.
Warren Buffett said, "Through the tax code, there has been class warfare waged, and my class has won, It's been a rout."The forces driving inequality through the class warfare that Warren Buffett points to are cumulative. It is the compounding effect of shift away from taxes on capital income such as dividends, capital gains and inheritances each year as the rich get proverbially richer which is the prime generator of inequality..."
http://seekingalpha.com/article/4047608
Warren Buffett said, "Through the tax code, there has been class warfare waged, and my class has won, It's been a rout."The forces driving inequality through the class warfare that Warren Buffett points to are cumulative. It is the compounding effect of shift away from taxes on capital income such as dividends, capital gains and inheritances each year as the rich get proverbially richer which is the prime generator of inequality..."
http://seekingalpha.com/article/4047608
I bet the countries mentioned in this column have wealthy people too. I think the real reason that the republicans wouldn't support this is because it's harder to hide things if the government's filling out the form.
More accurately: "Republicans' main goal is to lower taxes on the rich. If that means long tax forms for the middle class, it's a price they're willing to *make us* pay."
If Trump drains the swamp of the "Tax Complexity Lobby" and makes filing in the U.S. as easy as in Holland, I promise that in four years I will vote for him - even though it will be hard. (Assuming he's still around by then). That's how awful the situation is - particularly for expats.
11
This will go nowhere because the Congress, in addition to being owned by special interests like H&R Block and friends, is also being held hostage by the likes of Grover Norquist, the anti-tax zealot, who argues that an automated system would allow Govt to easily raise the rates and take away all "control" from the taxpayer. Thus, the GOP has pledged not to cross the revered Norquist and support tax simplification. So much for tax reform. Once again, the United States and its corrupt elected representatives are bought and paid for by, and for, big business. We'll be filling out forms for a long time to come.
44
The greater the degree of computerization of the relevant data, the easier it will be for the government to do this. However, opposition will also come from compulsive people who want to deduct the cost of the postage to mail the charitable contribution and the conspiracy theorists who fear that the government is counting the money in their wallets. Far greater benefit could come from simplifying the tax code itself rather than simply totaling the numbers at hand.
12
simplifying is the key, as you point out. But then legislatures will have to give up political contributions. Unlikely.
Given the antiquated state of computer systems of most government agencies I would hesitate to put the responsibility totally in their hands.
1
The millions of Americans who live abroad are also required to file tax returns. We must declare our foreign-earned income, and then fill out yet another form to exclude it. It is the height of stupidity.
I've lived abroad for 29 years, have never owed tax to the U.S. during those years, and yet must set aside a day each spring to fill in the forms -- plus a detailed report of foreign bank accounts that is sent to a different IRS address. It is infuriating.
As far as I know, Eritrea is the only other country that requires its citizens to file tax returns no matter where they live.
My Swedish tax return, on the other hand, can be filed just by confirming the numbers that the tax agency compiles. I timed myself this year: It took 6 minutes to compare the numbers on the forms and submit my confirmation.
I've lived abroad for 29 years, have never owed tax to the U.S. during those years, and yet must set aside a day each spring to fill in the forms -- plus a detailed report of foreign bank accounts that is sent to a different IRS address. It is infuriating.
As far as I know, Eritrea is the only other country that requires its citizens to file tax returns no matter where they live.
My Swedish tax return, on the other hand, can be filed just by confirming the numbers that the tax agency compiles. I timed myself this year: It took 6 minutes to compare the numbers on the forms and submit my confirmation.
45
This is why I support the flat tax concept. I realize it has some regressive unfairness, but the real problem it solves isn't tax payment complexity but making tax *reform* a direct, simple goal. You can't horse trade complex deductions and tax structures when the bill on the table is 10% of income, no deductions.
Any other "tax reform" ends up being cosmetic -- horse trading of deductions and industry-specific giveaways by influential lobbyists willing to give up obsolete tax deductions for new schemes that support their latest business models. Maybe the percentage shifts a few points one way or the other, but by and large there ends up being no real changes for most people, and what changes are buried in thousands of pages of byzantine law very few people can understand.
Even if on the surface a flat tax is slightly regressive, it probably ends up being less regressive in the long term if it closes countless loopholes and special giveaways exploited by corporations and the very rich. Plus it has the benefit of greatly streamlining the tax payment process, cutting out vast amounts of lost productivity and overhead that the current system drains out.
Any other "tax reform" ends up being cosmetic -- horse trading of deductions and industry-specific giveaways by influential lobbyists willing to give up obsolete tax deductions for new schemes that support their latest business models. Maybe the percentage shifts a few points one way or the other, but by and large there ends up being no real changes for most people, and what changes are buried in thousands of pages of byzantine law very few people can understand.
Even if on the surface a flat tax is slightly regressive, it probably ends up being less regressive in the long term if it closes countless loopholes and special giveaways exploited by corporations and the very rich. Plus it has the benefit of greatly streamlining the tax payment process, cutting out vast amounts of lost productivity and overhead that the current system drains out.
3
Since the government would fill out the form, does that mean they would do away with itemized deductions like medical expenses, charitable deductions, etc.? The government would not have that information to put on a return.
3
Ah, yes, medical expenses. That is why we need Universal health care.
1
It shouldn't be that difficult. The IRS could send out a form pre-filled and a link to their website for your personal return. Then any adjustments could be made and sent back or done online.
Charity donations, changes in dependents etc. could be dealt with and online the adjustment would be automatically calculated and you know where you stand. If paper, mail it in and let the IRS send you an amended return.
That being said, as someone who does tax preparation for others, it's not the federal return that is time consuming, but state returns - especially if you've moved or work in one state and live in another.
Charity donations, changes in dependents etc. could be dealt with and online the adjustment would be automatically calculated and you know where you stand. If paper, mail it in and let the IRS send you an amended return.
That being said, as someone who does tax preparation for others, it's not the federal return that is time consuming, but state returns - especially if you've moved or work in one state and live in another.
1
Perhaps I'm just cynical, but I suspect that any "reform" this year will mean tax breaks for the rich, not simpler returns for everyone.
59
Tax reform would only affect tax-payers. Something like 48% of all citizens don't pay federal income tax; mostly lower income citizens. I suggest that any tax breaks be evenly distributed among all taxPAYERS.
The company Intuit being a primary reason our taxes are so complicated is a microcosm of what is wrong in this "representative" democracy of ours. You could undo Citizens United and it wouldn't make much of a dent in restoring government to the people as long we let lobbies write the laws.
13
Much as I loathe the Republicans and the Trump administration, if they can work together to significantly simplify the process of paying income tax, I might forgive them for everything -- or at least a few things. I have a business and I do my taxes the old fashioned way, on paper forms, one at a time. I don't use a pencil. I like to fill the forms out on my computer. But still, I am not far removed from the pencil. The process still takes days. It is time spent working for the government for no pay. Someday we will outlaw slavery -- I hope.
2
It appears everyone loves the idea of simplifying how Americans file their taxes. A huge part of the complication stems from all the various deductions and tax credits. Would Americans who claim filing taxes is too complicated be willing to forgo these two benefits? If the answer is yes, then Americans by the millions should call Congress, and all those loud voices would render as whispers, the opposition from those business entities wanting to maintain the filling status quo.
1
I think perhaps that charitable organizations report the same info that they do to you.
Really?
I must say I'm not for any type of lobbying, fund raising or donations to our already cash bloated legislators but as arcane as the system is, I'm not certain I'd trust our government to handle this right. As an example, something as easy as "single payer health care" seems beyond their grasp; why should I believe that "simplifying" anything would even remotely possible?
If this bunch can agree on anything, how about each "welfare" plan or program they choose to cut for the poor and near poor be equaled with a "cut" on the other end such as corporations tucking profits away in a foreign country to avoid paying taxes on them. I'm sure the money raised from this alone will buy an F-35 or two.
But, in reality, at least half of our legislators are millionaires and voting against their own interests is just not in the cards.
So wait for that old "trickle down" as the wealthy will certainly need to spend their money somewhere; its worked so well in the past!
I must say I'm not for any type of lobbying, fund raising or donations to our already cash bloated legislators but as arcane as the system is, I'm not certain I'd trust our government to handle this right. As an example, something as easy as "single payer health care" seems beyond their grasp; why should I believe that "simplifying" anything would even remotely possible?
If this bunch can agree on anything, how about each "welfare" plan or program they choose to cut for the poor and near poor be equaled with a "cut" on the other end such as corporations tucking profits away in a foreign country to avoid paying taxes on them. I'm sure the money raised from this alone will buy an F-35 or two.
But, in reality, at least half of our legislators are millionaires and voting against their own interests is just not in the cards.
So wait for that old "trickle down" as the wealthy will certainly need to spend their money somewhere; its worked so well in the past!
4
Single payer health care beyond our government's grasp? Apparently you are not aware of Medicare, the single payer, government run health care program for retired Americans. Been around for more than 40 years.
1
This article is largely nonsense. Pre-filled-out forms would give any taxpayers who are inclined to cheat a ready made excuse to do so -- "The government said this is what I owe -- who am I to argue with them." Contrary to what is said in the article, there are things the government doesn't know about many taxpayers' transactions, income, deductions, etc. Under our system, it is up to the taxpayer to inform the government about those things. The American economic system is free-wheeling. In many other places, the nature and complexity of economic transactions are much more limited. In our system, transactions that may have a tax effect often are subtle and are known only to the taxpayer or the taxpayer's accountant or lawyer. Honest taxpayers will disclose those transactions on their returns, and even those taxpayers who are inclined toward non-disclosure will worry that they will be caught if they attempt to deceive the government and will be penalized or subjected to criminal charges. There's no doubt that the tax laws can be made simpler. But (1) doing that could create more opportunities for the cheaters to cheat, (2) making the tax laws simpler is a lot harder to do than most people [including legislators] realize, and (3) when legislators try to make things simpler, the often make things worse. For the record, I do not prepare tax returns for a living.
3
This would only work for people that take the standard deduction since many of the items included in schedule A are not reported to the IRS. There are many other items that are not reported as well such as percent of foreign income if you are taking a credit for foreign taxes. For this to really work the tax code would need to be simplified OR there would need to be many more reporting requirements of financial and other institutions (such as cities for property taxes). I could see that if this was enacted anyone with less than the most simple financial situation would be locked in a battle with the IRS for years disputing the original number that they came up with.
3
Simplified taxes would be wonderful, but what you describe here would not work for freelancers. I spend 2 days every year organizing my taxes for my accountant, which includes categorizing and adding up piles of receipts and painstakingly going through various types of statements to find and list write offs. Also, I go through my records to find and note cash payments from the year. It's a huge nuisance but unavoidable, I think.
1
In the case that the IRS would fill the earning, benefits, perks, bonuses, etc figures, the income tax for these in the upper 5% of the Americans, those who earn tenths and hundreds of millions each year, these taxes would be very high. These 5% of Americans prefer to support financially the political party that promises to minimize their taxes. The other 95% of the Americans, who are not the concern of the 5%, would have to work harder to file their taxes. Those in the 5% bracket, have an army of accountants, tax consultants, or a large accounting firm that anyhow files their corporation taxes. As in many other fields, healthcare, cost of medication, insurance, etc., the big corporations and the 5% Americans control everything. And we call this democracy...
1
And if we were notified online, my ISP could sell that information. So many things are not working now that everything has become a time consuming burden.
Back to learning about VPNs, TOR, https, and more layers of security. And the scam phone calls continue because my telephone carrier no longer protects the phone number the FCC has allowed them to assign for my private use. My phone number's abuse is not against the law here as it is in Canada and Europe. Without more rigorous privacy laws simple fixes seem like an open door to more problems.
Back to learning about VPNs, TOR, https, and more layers of security. And the scam phone calls continue because my telephone carrier no longer protects the phone number the FCC has allowed them to assign for my private use. My phone number's abuse is not against the law here as it is in Canada and Europe. Without more rigorous privacy laws simple fixes seem like an open door to more problems.
8
I completely agree with the author. I have felt for years that the more complex the tax rules, the happier the tax preparers are, and the more money they make to prepare tax returns with numbers that the government for the most part already knows.
I know it makes intuitive sense to approach tax preparation this way, and justifying it by highlighting the cost and time savings makes it almost a no-brainer, right, especially when you expose a network of corporate lobbies spending loads of money to prevent it from happening.
But let's look at it another way. Should the government be supportive of a plan that would instantly wipe out tens or hundreds of thousands of well-paid, highly skilled jobs? Should the government be supportive of driverless cars, of robots whirring around warehouses and factories filling shipping orders and riveting joints on an assembly line while so many Americans struggle to find stable employment? Maybe there is a silver lining to all those H&R Block offices you see - many people receiving paychecks signed by Mr. Block.
But let's look at it another way. Should the government be supportive of a plan that would instantly wipe out tens or hundreds of thousands of well-paid, highly skilled jobs? Should the government be supportive of driverless cars, of robots whirring around warehouses and factories filling shipping orders and riveting joints on an assembly line while so many Americans struggle to find stable employment? Maybe there is a silver lining to all those H&R Block offices you see - many people receiving paychecks signed by Mr. Block.
Talk about subsidizing. Should we have to subsidize the tax collecting industry?
Special interests and lobbyists are important career paths and job creators. It is never what is best for the average citizen but what is best for those with the means to curve common sense into confusion. While I appreciate anecdotal stories about the governments ineptitude, the fact that they get it right 95+% of the time or more makes me more than willing to work toward a better/simpler way and not let perfect get in the way of much better and cheaper. Given the motivation of big business, lets use United Airlines as an example, really I should trust them more than a government IT program/person?
3
Republicans will assume that we can't let the government fill out the forms for you - it's got to be handled by the private sector. But this is another case of the private sector congealing into what looks like a few companies running the show (monopolies) and lobbying hard against reforms that would benefit the public at large. Republicans and democrats both see that this problem writ large is one of the main problems in our society. If only we could agree on how to fix it. For me, I'll take regulations any day - can't republicans see this as evidence that the private sector doesn't solve everything but generally works against the public?
1
Our Congress responds not to the people but to the lobbyists. Our tax laws are enacted not to simplify the system or to maker it fairer but to appease the various lobbyists who want to reduce their taxes. Turbo Tax and other software companies make much money from a too complicated tax system. Until we have campaign reform we can expect very little from Congress in meaningful tax reform.
1
Our tax code is adjusted to influence our behavior. It's not a matter of how much money we made and just tax that; our government incites investment in corporations, e.g., and taxes income (capital gains) from those investments at a lower rate.
There are other taxation differences that are have the effect of incentive or disincentive. And that's why all income is not treated the same and taxed simply.
There are other taxation differences that are have the effect of incentive or disincentive. And that's why all income is not treated the same and taxed simply.
1
Japan has universal healthcare, and a different policy to collect taxes from contract/1099 workers. Our system has so many cheaters and scammers that we lose $4B plus a year in revenues because we have too few collectors.
Taxes are your civic responsibility and the key indicator of a strong middle class and stable, healthy country.
There is no money for infrastructure, education or entitlements because we collect too little - we should double, no triple the agency headcount and clamp down on fraud and those that any far too little on their earnings.
Taxes are your civic responsibility and the key indicator of a strong middle class and stable, healthy country.
There is no money for infrastructure, education or entitlements because we collect too little - we should double, no triple the agency headcount and clamp down on fraud and those that any far too little on their earnings.
10
It seems to me that the intricacies of most of the various deductions and other special situations could be eliminated. Most of it does not amount to a hill of beans for the average taxpayer. Other countries' tax codes are apparently much simpler. They don't have all these weird policies where you get a little discount for having a seeing eye dog.
Due to the daunting and very confusing nature of the various forms, most Americans just gather all their little slips of paper and give them to a tax preparer and hope for the best. It is well worth it to them not to have to deal with the headache.
However that method has some drawbacks. I have noticed that people who don't do their own taxes don't understand the regulations. In particular, they tend to think that all of their medical expenses and work related expenses are tax deductible, or that home repairs are tax deductible. They also seem to have this strange notion that "tax deductible" is better than "free".
Anyway, I am glad it is over with for another year and next year I may farm it out for the first time.
Due to the daunting and very confusing nature of the various forms, most Americans just gather all their little slips of paper and give them to a tax preparer and hope for the best. It is well worth it to them not to have to deal with the headache.
However that method has some drawbacks. I have noticed that people who don't do their own taxes don't understand the regulations. In particular, they tend to think that all of their medical expenses and work related expenses are tax deductible, or that home repairs are tax deductible. They also seem to have this strange notion that "tax deductible" is better than "free".
Anyway, I am glad it is over with for another year and next year I may farm it out for the first time.
1
It is also because of corporate lobbying that we have a pathetic healthcare system instead of an efficient, affordable single-payer system. The solution is simple. Get money out of politics once and for all and our representatives will do the people's bidding rather than the bidding of the corporate masters who pay them and keep them in power.
3
Our representatives? You mean the crooked politicians that "we" elect?
1
Japan, The Netherlands and EU countries rely largely on the value added tax (VAT) for their revenue. That makes tax collection a lot simpler for tax payers so the comparison seems not to be very useful.
1
VAT is actually more complex to administer than a simple sales tax, and individuals rarely if ever have to worry about VAT. So whether or not countries depend on VAT has little to do with whether individual tax returns are complex or not. I also question your statement about the Netherlands relying more heavily on VAT than income tax. I think it is the other way around. The Dutch government relies very heavily on income tax. What are your sources?
I have a friend who moved here from Singapore and he was and is still amazed at how long it takes to file your taxes in the US. It is a complex process and one that I dread every year. Obamacare has made this process even worse with the additional information and forms required. I actually don't mind paying my taxes but the process could be alot simpler but then an entire industry would crumble and we can't have that.
I filed my taxes in early February using Turbo Tax. It took me about an hour. I received my federal refund within two weeks after filing. I received my state refund within a month after filing. It is time consuming but Turbo Tax makes it easy. And regarding the IRS - they sent me a letter saying I owed them $9,000 from an annuity that was "sold." The IRS forgot to look at the loss column regarding that annuity. Turns out the IRS owed me an additional refund of $300. The IRS makes mistakes too.
The Japanese system is an improvement, but it still suffers from a fundamental flaw: taxable income must be defined. And people with the ability to influence government will define taxable income to their benefit.
Japan's system, like the American system, also misses income earned in the cash economy, which in the U.S. is substantial.
We really need a flat tax on consumption that protects low- and middle-income taxpayers from the regressive aspects of a consumption tax. A consumption tax captures revenue from everyone who buys things. And usually that means "everybody". Plus, it's simple and transparent, something neither you nor I (nor Congress) will ever be able to say about a tax on income.
Japan's system, like the American system, also misses income earned in the cash economy, which in the U.S. is substantial.
We really need a flat tax on consumption that protects low- and middle-income taxpayers from the regressive aspects of a consumption tax. A consumption tax captures revenue from everyone who buys things. And usually that means "everybody". Plus, it's simple and transparent, something neither you nor I (nor Congress) will ever be able to say about a tax on income.
35
A consumption tax is actually regressive as the poor spend all the money they earn and more and all their consumption is visible. The rich spend a far smaller share of their income and have many ways of both disguising their income as well as consumption.
1
As you acknowledge, a flat tax on consumption is cruel to low and middle income taxpayers. It's also regressive as the wealthy are able to invest and save more of their income and therefore would pay a lower tax rate than everyone else.
Figuring out a subsidy or tax credit program would be a nightmare. More fundamentally, shouldn't a guy making $10 million a year pay a higher percentage of his income in taxes than a guy making $10,000?
Figuring out a subsidy or tax credit program would be a nightmare. More fundamentally, shouldn't a guy making $10 million a year pay a higher percentage of his income in taxes than a guy making $10,000?
There are ways to protect the poor and middle class and still enact a consumption tax.
And a consumption tax does more than just collect federal revenue. It would eliminate collusion between Congress and wealthy individuals and corporations over "revisions" to the income tax code that allow the wealthy to avoid paying taxes and which allows Congress to curry campaign contributions in exchange for writing exemptions and exclusions into law.
With a flat consumption tax, there would be no "exemptions" and "exclusions" because the system would not be based on income. Under legislation that has already been introduced in Congress -- the Fair Tax Act -- the consumption tax would apply to all new goods and services, but would exclude "used" goods; so, purchases of used cars, existing homes, and other used goods would all be exempt from the consumption tax.
I am a longtime liberal Democrat and have studied the Fair Tax thoroughly. I know it is sponsored by Republicans, but that is just window dressing on their "conservative" credentials. Republicans don't want to give up the power to manipulate the federal income tax code any more than the Democrats do. And enacting the Fair Tax would mean exactly that.
And a consumption tax does more than just collect federal revenue. It would eliminate collusion between Congress and wealthy individuals and corporations over "revisions" to the income tax code that allow the wealthy to avoid paying taxes and which allows Congress to curry campaign contributions in exchange for writing exemptions and exclusions into law.
With a flat consumption tax, there would be no "exemptions" and "exclusions" because the system would not be based on income. Under legislation that has already been introduced in Congress -- the Fair Tax Act -- the consumption tax would apply to all new goods and services, but would exclude "used" goods; so, purchases of used cars, existing homes, and other used goods would all be exempt from the consumption tax.
I am a longtime liberal Democrat and have studied the Fair Tax thoroughly. I know it is sponsored by Republicans, but that is just window dressing on their "conservative" credentials. Republicans don't want to give up the power to manipulate the federal income tax code any more than the Democrats do. And enacting the Fair Tax would mean exactly that.
1
Another bonus would be the ability to drastically cut the size of the IRS auditing branch. Since I suspect that most people would (maybe) verify the basic numbers and sign off, there wouldn't be any reason for audits for them. The only people who would need to be audited would be the folks who add in things like charitable deductions, mileage, and other unreimbursed business expenses. It would be such a big help to be able to know exactly what the IRS thinks should be in the various reported income and deduction categories, especially for investments.
1
In the U.K. about 85% of all wage earners do not have to file income tax returns. Accurate withholding is done at the source with the amounts withheld reflecting the taxpayer's lexel of earnings. Accommodations are also made to account for items which in the US would generate a deduction. The Revenue Service at year end then mails the taxpayer a refund check or a bill for more taxes due. For the 15% with more complicated affairs, typically business owners, life is far simpler than it is in the US. One goes trough a booklet answering questions and then mails that into revenue authorities who figure out your taxes and again mail you a bill or refund based on the information you provided. The system is called PAYE, Pay AsYou Earn. Most industrial countries have such a system. They all work very well for everyone, except for purveyors of software to help with filing taxes or large companies such those we have in the US to prepare our taxes. In the U.K., they simply do not exist.
5
Not mentioned is Congress selling tax loopholes for political donations. They're not likely to give up this perk any time soon.
12
The biggest problem with Reid's suggestion is that Congress and certain Presidents continue to cut the budget for the I.R.S. Their computer systems are antiquated at best and one office's computers cannot talk to those in another office in a different state. There are not nearly enough I.R.S. employees to assist the taxpayers. What is needed is a substantial increase in the I.R.S. budget and a total overhaul and upgrade of their computer software and hardware systems.
1
I'm a dual citizen (Australia & the USA) and my husband is an Australian citizen who is classified as a Resident Alien. We've been living, working and paying taxes in Australia for over 16 years and yet we're still legally required to file US taxes. We don't owe any taxes and yet It's hours of work, ridiculously complex and costs approx. $500 each year for the accountant. "Simpler and Fairer" would certainly be welcome. There are a lot of things wrong with the US tax code and citizenship-based taxation is one of them.
6
The suggestion that the Trump white house, the McConnell Senate, or the Ryan house would ever attempt to throttle an unnecessary, cronyist industry in pursuit of government tax collecting efficiency is perhaps as ludicrous as the thought that, despite all evidence to the contrary that, any of those groups actually gives one iota of care towards the well being of most Americans.
6
It's not just the tax-preparation lobby. The Dutch, and all the other countries mentioned, forgo all those wonderful deductions and depreciations, the differences between passive and active incomes, the difference capital as opposed to W-2 income, etc. It's these complications that enable the President and his cronies in Wall Street, commercial real estate and elsewhere to pay virtually no tax at all. Why would they gather together to give all that up? It's a bait and switch all over again. It doesn't change because there is profit in the tax complication that permeates every aspect of the economy to the benefit of those with capital.
19
I have used turbotax for years and find it relatively simple. It would seem appropriate for the government to make similar software, pre-filled, available for me to use.
The tax prep industry could go back to where it was a generation ago; something for those who have complicated situations.
Having industries wax and wane as circumstances change is natural. Fighting it with protectionism is a losing battle. To soften the blow, the government could purchase one of the successful tax-prep packages as a starting point.
The tax prep industry could go back to where it was a generation ago; something for those who have complicated situations.
Having industries wax and wane as circumstances change is natural. Fighting it with protectionism is a losing battle. To soften the blow, the government could purchase one of the successful tax-prep packages as a starting point.
7
We in the US also use the tax code to implement social policy - whether providing credits for things we want people to do (solar), or provide benefits to deserving but under-earning citizens (Earned Income Tax Credit) or enhance the progressivity of the marginal rate by limiting various deductions from income. So every year by filling out the forms we "apply" for these social policy benefits, and the instructions tell us whether we "qualify" and for how much of the benefit.
1
This has nothing to do with lobbying by tax preparers. It has everything to do with a do-nothing Congress that keeps a highly complex tax code in place. In 1913, our tax code was 400 pages. It is now ~70,000 pages. In 1986, the Tax Reform Act of 1986 collapsed a corrupt system into a maximum of a 28% ordinary income and capital gains rate collapsing tax brackets, eliminating massive and illegitimate deductions while not only maintaining revenue neutrality but also preserving the distribution of tax burden. Congress and Presidents have since continued to tinker, add, distort, conflate and in general add layers of complexity in the name of incentives. It's up to Congress to do its job.
10
Far too many people whose returns are sufficiently simple
that they could fill out the returns themselves pay money
to these companies because they are afraid of numbers
or the IRS or something.
The IRS already has deals with these companies for free
filing software that is easy to use for people who make less
than $64000. All they have to do is fill in the basic info
from the forms they get.
I'm done fighting with Intuit's Turbo Tax which often doesn't
even do things right. I've done overrides that Turbo Tax doesn't
like, but the IRS has no problem with. These companies want
to create dependencies.
Next year, I'm using the fillable pdf on the IRS web site.
One thing that would help a lot would be wider availability of
electronic W-2 and 1099 forms that would allow people to
transfer info into these forms.
that they could fill out the returns themselves pay money
to these companies because they are afraid of numbers
or the IRS or something.
The IRS already has deals with these companies for free
filing software that is easy to use for people who make less
than $64000. All they have to do is fill in the basic info
from the forms they get.
I'm done fighting with Intuit's Turbo Tax which often doesn't
even do things right. I've done overrides that Turbo Tax doesn't
like, but the IRS has no problem with. These companies want
to create dependencies.
Next year, I'm using the fillable pdf on the IRS web site.
One thing that would help a lot would be wider availability of
electronic W-2 and 1099 forms that would allow people to
transfer info into these forms.
120
Some time ago tax forms and tax booklets were available in every Post Office.
Either through a decrease in the number using those forms or from pressure by companies selling tax prep products those forms are no longer available. Just another impediment the government or corporations have put in our way to force us to use the products sold by big corporations. The forms seem to scare people for some reason. I knew a middle school math teacher who had no property and no investments making the return just taking numbers from one form to another and looking up the tax in a booklet. That person paid someone to do that simple task. Whether you pay someone or use the TurboTax or similar products you're adding to the cost of filing. Those products also try to get you to sign up for additional coverage by paying extra in case there's a mistake on the forms they help you fill out- not much confidence in their own products or fee padding?
Either through a decrease in the number using those forms or from pressure by companies selling tax prep products those forms are no longer available. Just another impediment the government or corporations have put in our way to force us to use the products sold by big corporations. The forms seem to scare people for some reason. I knew a middle school math teacher who had no property and no investments making the return just taking numbers from one form to another and looking up the tax in a booklet. That person paid someone to do that simple task. Whether you pay someone or use the TurboTax or similar products you're adding to the cost of filing. Those products also try to get you to sign up for additional coverage by paying extra in case there's a mistake on the forms they help you fill out- not much confidence in their own products or fee padding?
One (relatively) easy way for employers to generate W-2s is on the Web site of the Social Security Business Services Online: https://secure.ssa.gov/acu/LoginWeb/loginHandler.do Once you finish, you can print out your forms and file the forms with Social Security electronically. I think Intuit and maybe a few others offer similar systems for generating and filing W2s electronically.
April is a dreaded time for many Americans, I am not talking about the rich like Trump who can hire accountants. Many of us do not have the money to pay for accountants to do our returns. American tax code is the worst in the industrialized world, many loop holes deliberately created to benefit the rich. According to a study, Americans spend 6 billion hours in collecting the data and filing out the forms. What a waste of time in energy,time and money! The whole process should take 5 minutes like in Netherlands. In Japan it takes less than a minute, you file a post card. We have to learn from other countries. Our tax code is a mess just like our health care system . We are the only one without a universal health care among all industrialized countries. Our politicians and president are not interested in a simple, fair tax code, they do not want any change because they and other rich people benefit from all the loop holes they have created. By the way, when is our president going to release his tax returns?
83
The government may know your reported income but only you know your deductions.
25
So? They can pre-fill an electronic form with all the numbers they know, including common deductions as dependents, state and real estate taxes and mortgage interest. Then you would only have to fill in the deductions they don't have a record of (which in my case would only be donations), and check if their numbers are right. That alone would make life much easier.
2
Nobody is proposing preventing you from submitting your deductions. But for the 70% of Americans who take the standard deduction, this is an idea whose time has come.
They know those too. Or other t should be so simple that everything is easily known. Its just ridiculous
Well, the government does already have records of all reported income - if you get it off the books. obviously it's missing. Maybe they fear not being able to charge a budding Al Capone with tax evasion?
I would bet, as suggested by A-M Hislop tha tour astoundingly complicated system of what is or is not deductible, or added or excepted, or depreciated pr recaptured, is vastly more complicated than the Japanese system - and each area has defenders.
I5 minutes! That's about the time it takes me to open the tax software . . .
I would bet, as suggested by A-M Hislop tha tour astoundingly complicated system of what is or is not deductible, or added or excepted, or depreciated pr recaptured, is vastly more complicated than the Japanese system - and each area has defenders.
I5 minutes! That's about the time it takes me to open the tax software . . .
21
Out system is vastly more (and unnecessarily) complicated b/c the rent seekers pay our representatives to make and keep it that way.
I'm not sure I'd trust the gov't to get it right. I had a, let's say 'struggle,' with the state over my 2015 returns. They said I owed a penalty, not because I hadn't paid enough. They agreed I had overpaid by a small amount. What was said was that my estimated payments were off so that I didn't pay enough at a particular time of year. Because of the complication of the form we went back and forth for months. Ultimately, though, the $106 penalty they wanted me to pay became $8.48 - quite a difference.
I'd also wonder how the gov't would know about charitable giving (do charities report on individuals to the IRS?) - and on income for which the employer/hirer did not pay taxes, e.g., I get a payment for preaching, but am retired and not a church employee.
Lastly, do countries like Japan have so many deductions or special situations? Simplifying is thought to mean less of those, but that is hard to do...
I'd also wonder how the gov't would know about charitable giving (do charities report on individuals to the IRS?) - and on income for which the employer/hirer did not pay taxes, e.g., I get a payment for preaching, but am retired and not a church employee.
Lastly, do countries like Japan have so many deductions or special situations? Simplifying is thought to mean less of those, but that is hard to do...
60
Mistakes are inevitable in any system. The government doubtless makes mistakes with social security, Medicare and Medicaid, veterans benefits etc. We could place the responsibility for calculating these amounts, and more, on citizens. But it's very probable the government gets the figures right the large majority of the time. It would be much more efficient, as described in the article, to let the government do tax calculations, which it does anyway, but provide people with an opportunity to check the calculation and appeal. To facilitate this, explanations of calculations can be made available.
Similarly, financial institutions make mistakes. We could ask consumers to calculate the interest due to them on all of their investments and the interest they need to pay on loans and credit cards, including amortizations on mortgages. But this would be a headache obviously, just as is the current process of doing taxes. Instead we allow institutions to do the calculations. Some of us do at least some checking to make sure everything looks right.
The bottomline is that is we focus on mistrust because of mistakes that occur and insist on doing all our own calculations, government and otherwise, we would be faced with a considerably less efficient situation. Instead of insisting on doing all calculations ourselves (as we currently do for taxes), it might be more productive to insist on clearer explanations of calculations to facilitate checking for those who wish to do it.
Similarly, financial institutions make mistakes. We could ask consumers to calculate the interest due to them on all of their investments and the interest they need to pay on loans and credit cards, including amortizations on mortgages. But this would be a headache obviously, just as is the current process of doing taxes. Instead we allow institutions to do the calculations. Some of us do at least some checking to make sure everything looks right.
The bottomline is that is we focus on mistrust because of mistakes that occur and insist on doing all our own calculations, government and otherwise, we would be faced with a considerably less efficient situation. Instead of insisting on doing all calculations ourselves (as we currently do for taxes), it might be more productive to insist on clearer explanations of calculations to facilitate checking for those who wish to do it.
2
If you receive payments from the church, you should have received a 1099 detailing the payments and how much, if any, had been deducted for any federal, state or local taxes. If you preach at several different churches, you'll end up with a stack of 1099's. Then you have to calculate any deductions related to the payments: mileage to and from the churches, the costs of any new vestments, etc., etc., etc. Furthmore, if you preach at churches in different states, you'll have to read all the laws relating to whether you need to pay state taxes in each state and how those payments interact with each other and with the federal tax rules. This entire system is entirely ridiculous but as Mr. Egan says, but it keeps tax preparation companies in business.
I live in France, where we have all these issues - and still get pre-filled in forms. If your situation is complicated, there are always things to add, including charitable contributions. But the form still saves a lot of trouble, and for many Americans, whose situation is not complicated, there would be nothing to do besides sign.
This is just another infamous example of how citizens don't actually run their government. Because of Congress' willingness to do the bidding of corporate special interests, we have the most irrationally complicated income tax regime in the world.
.
Every day there is a parade of lobbyists visiting representatives and senators, and their only job is to convince them to do something against the best interest of citizens.
.
The IRS already knows what we owe and whether or not we paid it, yet millions of people spend many hours filling out completely redundant forms. Who is going to fix this stupidity?
.
Every day there is a parade of lobbyists visiting representatives and senators, and their only job is to convince them to do something against the best interest of citizens.
.
The IRS already knows what we owe and whether or not we paid it, yet millions of people spend many hours filling out completely redundant forms. Who is going to fix this stupidity?
515
IRS doesn't know what you owe. IRS know what is reported. And you can let the IRS figure your taxes now.
4
I am not a Trump supporter, but even I have to say that if Trump enacted these recommendations, he would become the most popular president in a stroke of a pen. The Tax Prep Industrial complex is expensive, unfair to those in the middle class, biased toward business owners, and a boil on the skin of everyone. Flat tax; simple compliance. Even I might have to vote Trump.
1
Well-designed public funding of political campaigns would go a long way toward reducing the influence of the vast number narrow special interests. Couple this with a stringent and transparent system for allperks that public officials can receive (trips, services, jobs for relatives, etc., etc.).
How do we get there?
The more citizens speak up about a broad range of issues and concerns, the more influence citizens will have in general. The possibility of reforms, such as mentioned above, then becomes greater. This goes beyond simply signing online petitions. Phone calls to representatives can be effective. But well beyond this, we can insist on accountability and, when appropriate, concrete and prompt action. This is a skill set that anyone can develop. The key is to be respectful and friendly but at the same time firm.
I've communicated, by phone or email, with government offices from the local to the federal level a number of times. I received a full, detailed phone explanation on one occasion of why a federal law was written the way it was. I've had county government immediately change a form that I thought was confusing. I had local agencies improve their energy conservation and pollution abatement practices. The more people start seeing themselves as in charge of government and officials as public servants, the faster things will improve. We just have to take "government of the people, by the people and for the people" to heart and start acting accordingly!
How do we get there?
The more citizens speak up about a broad range of issues and concerns, the more influence citizens will have in general. The possibility of reforms, such as mentioned above, then becomes greater. This goes beyond simply signing online petitions. Phone calls to representatives can be effective. But well beyond this, we can insist on accountability and, when appropriate, concrete and prompt action. This is a skill set that anyone can develop. The key is to be respectful and friendly but at the same time firm.
I've communicated, by phone or email, with government offices from the local to the federal level a number of times. I received a full, detailed phone explanation on one occasion of why a federal law was written the way it was. I've had county government immediately change a form that I thought was confusing. I had local agencies improve their energy conservation and pollution abatement practices. The more people start seeing themselves as in charge of government and officials as public servants, the faster things will improve. We just have to take "government of the people, by the people and for the people" to heart and start acting accordingly!
Now retired, I do VITA tax preparation for those who can least afford to pay. Just the IRS forms for health coverage under the ACA is enough to understand that our income tax system is "cruel and unusual punishment."
We could do so much better if only political will could prevail.