6 ms·

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring ab

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.

ciaranm 10y ago
Most people in Europe don't need Lawyers to submit their taxes. In fact, until I started my own company (UK) - I didn't 'submit' taxes. It was calculated (and taken) automatically based on my salary and otherwise declared income.
- charlesdm 10y ago
  This depends a lot on the country. For example: I'd say most self employed people in Belgium use an accountant to file their taxes. Some (a subset) of those also have a tax lawyer who helps them optimise certain things. Self employed people (i.e. entrepreneurs) who make decent money will have a tax lawyer, because inevitably, you'll bump into an unfriendly tax collector somewhere down the road.
  - emp_zealoth 10y ago
    From my experiences with self-employed people (doctors, hundreds of them - im in an MD-motorcycle club) they will try to write off anything and everything and the accountants are there to talk them out of it
    - charlesdm 10y ago
      That's only because those tax deductions are often accepted. If one can write off an entire holiday home with a reasonable chance of success, say 80%, then you'd be crazy not to try. If countries don't want that, they should change their laws. In some higher tax countries, a lot of things are technically allowed, because that way they can tax "the little man" a lot and not tax higher earners as much (i.e. doctors, notaries, high earning entrepreneurs, etc).
  - Xylakant 10y ago
    Taxes for self employed people are much more complicated than taxes for salaried employees. Everywhere that I know, taxes from salaries are automatically withheld by the employer - those taxes have probably been calculated by a tax accountant in the first place. There's practically no way you'd need to pay extra taxes if your only income is your salary, so you can opt out of filing taxes. For self-employed people there are many more rules and regulations: How to write off which kind of cost and purchase, filing VAT if required, etc. so that's already cost efficient if you hire someone qualified.
    - charlesdm 10y ago
      Add to that that most self employed people tend to have certain types of investment income (that could or could not be taxed at a different rate depending on the country you live in), and that complicates things even further.
rmc 10y ago
Is this actually a thing in USA? Where you need a lawyer to do your taxes? Cause I'm in the EU, and this never happens.
- bsimpson 10y ago
  Some people hire a Certified Public Accountant; others use software like TurboTax. The American tax law is so complicated that doing them yourself leads to spending at least one weekend locked in your house with a calculator, filling out forms and hoping you don't get audited. Vox made a video about how companies like Intuit lobby to keep them complicated, to keep the money from TurboTax rolling in: http://player.ooyala.com/iframe.html#pbid=88e901a4b29c47ba959061faf8813e63&ec=poZDF5bDqkrR_LWWfdjlDIlpkohK8qYF http://player.ooyala.com/iframe.html#pbid=88e901a4b29c47ba95...
  - schoen 10y ago
    > The American tax law is so complicated that doing them yourself leads to spending at least one weekend locked in your house with a calculator, filling out forms and hoping you don't get audited. This is very different for Americans with different income levels. If you earned less than $100,000 and "[y]ou had only wages, salaries, tips, taxable scholarship or fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500", you can use Federal form 1040EZ, which is one side of one page and asks only about 10 questions, none of which call for the tax filer to make choices. https://www.irs.gov/pub/irs-pdf/f1040ez.pdf https://www.irs.gov/pub/irs-pdf/f1040ez.pdf With rare exceptions (mostly related to immigration or expatriation, self-employment or owning a business, or suffering calamities), complicated calculations and the risk of audit apply to itemized deductions, which is when filers declare that some of their income should not be taxes because they did something, spent money on something, or suffered a problem that the government recognizes as reducing tax liability. Examples of this include business expenses, paying some foreign or local taxes, paying interest on a home loan (probably the most common!), some medical or educational expenses, or making donations to a qualified charity. Itemized deductions have a big role in economic decisions in the U.S. and are pretty well-known in culture, but most people don't use them at all, and usually only the most well-off people use them consistently. This is not necessarily just because the well-off people are more aware of the benefits of itemization or have more access to professional tax advice, but also because poorer people may often not be able to benefit from itemization at all, by not having spent enough money on relevant kinds of stuff. https://www.fas.org/sgp/crs/misc/R43012.pdf https://www.fas.org/sgp/crs/misc/R43012.pdf A simple summary is that only about 1/3 of all American tax filers claim itemized deductions, and higher-income people use them dramatically more often than lower-income people (mostly because they're more likely to own their own homes or incur unreimbursed business expenses, but also for various other reasons). The risk of a personal income tax audit is primarily that the government will decide to challenge a filer's entitlement to claim particular deductions, and then demand to see evidence of their legitimacy (which might be receipts or paperwork showing that certain expenses were actually incurred and appear to be related to the purpose claimed on the tax return). For example, if you said that you gave $15,000 to charity or that you spent $10,000 on travel for your consulting business, the IRS might ask for documentation during an audit to prove that these things really happened. While I don't mean to minimize the pain or intrusiveness of a tax audit and HN readers may be at real risk of experiencing one, I think most Americans' tax position is relatively simple for them to determine and gives no reason for an audit, because it's based only on information like W2 wage statements that other parties have already reported to the IRS! (Though I was surprised to see that the IRS says the average paperwork burden for form 1040EZ is 5 hours, which is about 5 times as long as I would have guessed and seems to count against my account of the situation. I'm also oversimplifying because people who support a spouse or children will have to file a different, more complicated form in order to get tax benefits from that, which is true of lots of Americans who don't own a home. At the same time, they won't necessarily have to do many extra calculations or provide much extra documentation related to the people they're supporting.)
rm_-rf_slash 10y ago
Addendum: make filing taxes a largely automated task where data are shared with the government so the online submission is merely a review of what is already on your W-4 (or what have you). Make it so dead simple it should take no more than 15 minutes for the average citizen with a computer. Anything that is purchased or paid to you should already be built in: if you paid mortgage interest, the deduction is automatically applied from data supplied by the lender; if you installed solar panels on your roof, the vendor will have already informed the government and the correct deduction is pre-applied; if you registered a corporation in your name, the filing service will relay your costs to the government, as will your lawyer, if you did not file personally. If you paid interest on your student loans, the taxman will know long before April 15. Tack on a processing fee for manual deductions that scales with the potential cost of an audit.
- imrehg 10y ago
  This is pretty much how tax filing works in Taiwan (even for me as an expat here). Doing it in software (not great software but in the end result effective) and it's all just a review and crosscheck. Worked like a charm for the last 7 years. And even if you don't use the software, in the tax office it's about 10 mins to get everything done. Pretty much all info is in the central system already.
  - rm_-rf_slash 10y ago
    It really frustrates me that the US tax system is so complex you need a package like turbotax to get it done right, and the company uses my fees to lobby congress to keep this common sense from becoming reality.
- distances 10y ago
  In Finland personal taxes are pretty much automated. Every year I simply reviewed the taxation summary I automatically received in post, and accepted it by not doing any corrections (which can be sent via online service, or via mail). So basically I wouldn't do anything at all. In half a year I'd either get returns, or would have to pay the missing taxes if I underpaid during the year. There are many cases where you would still do corrections, such as if you're owning a rental property and did some renovations there. Most of officially regulated things such as capital gains are usually automatically reported by your bank/stock holding service, though. This is in quite a stark contrast to places where there's a lobby to change the laws yearly to make sure citizens have to use professional services for declaring their taxes.
newjersey 10y ago
Yes, that is a great idea but imagine writing unit tests for your code. Imagine someone is reading the tests as you write them (and has people whispering in your ears to influence what you write). Now, these people are trying to find edge cases. Remember that they just need one good edge case to pwn your code. Will you start writing more unit tests? Will your tests get more elaborate? My abstraction is bad because it doesn't cover another issue: public policy through taxation. We encourage things we consider "good" using taxes and we discourage things we consider "bad" using taxes as well. A lot of people support tax "relief" for things like mortgage loans, education loans, dependents and so on. If we want to simplify the tax code, these deductions must go away.
robbiemitchell 10y ago
The people with the most to lose in taxes have no problem paying specialists to handle it for them.
mike_hearn 10y ago
This isn't really about tax loopholes. It's about France being uncompetitive and unwilling to change. Google advertisers sign contracts with a company in Ireland because Ireland decided to effectively not apply corporation taxes (i.e. use a low rate and allow a variety of schemes that reduce the real rate even further). They did this fully knowingly ... the policy has been popular with voters ... because they wanted to attract international investment and employers to a place that otherwise wouldn't have much to offer, and as a strategy it worked amazingly well. Even during the financial crisis Ireland did not back down on that. This upset other countries in the EU but none moreso than France which has notoriously high taxes and a notoriously stagnant economy, combined with a population that routinely mounts protests against any attempt at reform. France is very powerful in the EU and thus instead of trying to make itself competitive has spent the last few years coming up with a variety of political solutions to their competitiveness problem: • Pressuring low tax jurisdictions to charge more tax • Getting the VAT rules for online businesses altered so now instead of paying VAT where the sale takes place, you have to pay to the country of the buyer ... woebetide you if you don't speak Hungarian or Croatian. You're gonna have to find someone who does and get them to file a tax return for you. • Now, apparently, simply harassing rich companies in an attempt to extract more money directly. Google hires very competent accountants, I seriously doubt they have actually made mistakes or lied on their tax returns. Instead France is going to exploit the existence of a Paris office to try and present Google with a giant bill. This would strongly incentivise Google to simply leave France entirely, I don't think the Paris office is very large compared to the others it has in Europe.
- tomp 10y ago
  It's completely within the right of Ireland and Irish citizens to promote investment by lowering the tax rates, as it is within the right of France and French citizens to tax companies that earn profits in France according to French tax law. I really don't see a problem.
  - stuaxo 10y ago
    And yet Ireland has harsh austerity that has pushed many into poverty, so it wouldn't seem to be making much difference to citizens. http://www.irishexaminer.com/viewpoints/analysis/irelands-austerity-success-is-no-model-for-greece-340662.html http://www.irishexaminer.com/viewpoints/analysis/irelands-au...

Solution: Get rid of tax law as one of the major sub-industries of the legal profession. When I no longer need a lawyer to submit my taxes, I'll start caring about corporate tax loopholes.

ciaranm 10y ago

Most people in Europe don't need Lawyers to submit their taxes. In fact, until I started my own company (UK) - I didn't 'submit' taxes. It was calculated (and taken) automatically based on my salary and otherwise declared income.

charlesdm 10y ago
This depends a lot on the country. For example: I'd say most self employed people in Belgium use an accountant to file their taxes. Some (a subset) of those also have a tax lawyer who helps them optimise certain things. Self employed people (i.e. entrepreneurs) who make decent money will have a tax lawyer, because inevitably, you'll bump into an unfriendly tax collector somewhere down the road.
- emp_zealoth 10y ago
  From my experiences with self-employed people (doctors, hundreds of them - im in an MD-motorcycle club) they will try to write off anything and everything and the accountants are there to talk them out of it
  - charlesdm 10y ago
    That's only because those tax deductions are often accepted. If one can write off an entire holiday home with a reasonable chance of success, say 80%, then you'd be crazy not to try. If countries don't want that, they should change their laws. In some higher tax countries, a lot of things are technically allowed, because that way they can tax "the little man" a lot and not tax higher earners as much (i.e. doctors, notaries, high earning entrepreneurs, etc).
- Xylakant 10y ago
  Taxes for self employed people are much more complicated than taxes for salaried employees. Everywhere that I know, taxes from salaries are automatically withheld by the employer - those taxes have probably been calculated by a tax accountant in the first place. There's practically no way you'd need to pay extra taxes if your only income is your salary, so you can opt out of filing taxes. For self-employed people there are many more rules and regulations: How to write off which kind of cost and purchase, filing VAT if required, etc. so that's already cost efficient if you hire someone qualified.
  - charlesdm 10y ago
    Add to that that most self employed people tend to have certain types of investment income (that could or could not be taxed at a different rate depending on the country you live in), and that complicates things even further.

rmc 10y ago

Is this actually a thing in USA? Where you need a lawyer to do your taxes? Cause I'm in the EU, and this never happens.

bsimpson 10y ago
Some people hire a Certified Public Accountant; others use software like TurboTax. The American tax law is so complicated that doing them yourself leads to spending at least one weekend locked in your house with a calculator, filling out forms and hoping you don't get audited. Vox made a video about how companies like Intuit lobby to keep them complicated, to keep the money from TurboTax rolling in: http://player.ooyala.com/iframe.html#pbid=88e901a4b29c47ba959061faf8813e63&ec=poZDF5bDqkrR_LWWfdjlDIlpkohK8qYF http://player.ooyala.com/iframe.html#pbid=88e901a4b29c47ba95...
- schoen 10y ago
  > The American tax law is so complicated that doing them yourself leads to spending at least one weekend locked in your house with a calculator, filling out forms and hoping you don't get audited. This is very different for Americans with different income levels. If you earned less than $100,000 and "[y]ou had only wages, salaries, tips, taxable scholarship or fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500", you can use Federal form 1040EZ, which is one side of one page and asks only about 10 questions, none of which call for the tax filer to make choices. https://www.irs.gov/pub/irs-pdf/f1040ez.pdf https://www.irs.gov/pub/irs-pdf/f1040ez.pdf With rare exceptions (mostly related to immigration or expatriation, self-employment or owning a business, or suffering calamities), complicated calculations and the risk of audit apply to itemized deductions, which is when filers declare that some of their income should not be taxes because they did something, spent money on something, or suffered a problem that the government recognizes as reducing tax liability. Examples of this include business expenses, paying some foreign or local taxes, paying interest on a home loan (probably the most common!), some medical or educational expenses, or making donations to a qualified charity. Itemized deductions have a big role in economic decisions in the U.S. and are pretty well-known in culture, but most people don't use them at all, and usually only the most well-off people use them consistently. This is not necessarily just because the well-off people are more aware of the benefits of itemization or have more access to professional tax advice, but also because poorer people may often not be able to benefit from itemization at all, by not having spent enough money on relevant kinds of stuff. https://www.fas.org/sgp/crs/misc/R43012.pdf https://www.fas.org/sgp/crs/misc/R43012.pdf A simple summary is that only about 1/3 of all American tax filers claim itemized deductions, and higher-income people use them dramatically more often than lower-income people (mostly because they're more likely to own their own homes or incur unreimbursed business expenses, but also for various other reasons). The risk of a personal income tax audit is primarily that the government will decide to challenge a filer's entitlement to claim particular deductions, and then demand to see evidence of their legitimacy (which might be receipts or paperwork showing that certain expenses were actually incurred and appear to be related to the purpose claimed on the tax return). For example, if you said that you gave $15,000 to charity or that you spent $10,000 on travel for your consulting business, the IRS might ask for documentation during an audit to prove that these things really happened. While I don't mean to minimize the pain or intrusiveness of a tax audit and HN readers may be at real risk of experiencing one, I think most Americans' tax position is relatively simple for them to determine and gives no reason for an audit, because it's based only on information like W2 wage statements that other parties have already reported to the IRS! (Though I was surprised to see that the IRS says the average paperwork burden for form 1040EZ is 5 hours, which is about 5 times as long as I would have guessed and seems to count against my account of the situation. I'm also oversimplifying because people who support a spouse or children will have to file a different, more complicated form in order to get tax benefits from that, which is true of lots of Americans who don't own a home. At the same time, they won't necessarily have to do many extra calculations or provide much extra documentation related to the people they're supporting.)

rm_-rf_slash 10y ago

Addendum: make filing taxes a largely automated task where data are shared with the government so the online submission is merely a review of what is already on your W-4 (or what have you). Make it so dead simple it should take no more than 15 minutes for the average citizen with a computer. Anything that is purchased or paid to you should already be built in: if you paid mortgage interest, the deduction is automatically applied from data supplied by the lender; if you installed solar panels on your roof, the vendor will have already informed the government and the correct deduction is pre-applied; if you registered a corporation in your name, the filing service will relay your costs to the government, as will your lawyer, if you did not file personally. If you paid interest on your student loans, the taxman will know long before April 15. Tack on a processing fee for manual deductions that scales with the potential cost of an audit.

imrehg 10y ago
This is pretty much how tax filing works in Taiwan (even for me as an expat here). Doing it in software (not great software but in the end result effective) and it's all just a review and crosscheck. Worked like a charm for the last 7 years. And even if you don't use the software, in the tax office it's about 10 mins to get everything done. Pretty much all info is in the central system already.
- rm_-rf_slash 10y ago
  It really frustrates me that the US tax system is so complex you need a package like turbotax to get it done right, and the company uses my fees to lobby congress to keep this common sense from becoming reality.
distances 10y ago
In Finland personal taxes are pretty much automated. Every year I simply reviewed the taxation summary I automatically received in post, and accepted it by not doing any corrections (which can be sent via online service, or via mail). So basically I wouldn't do anything at all. In half a year I'd either get returns, or would have to pay the missing taxes if I underpaid during the year. There are many cases where you would still do corrections, such as if you're owning a rental property and did some renovations there. Most of officially regulated things such as capital gains are usually automatically reported by your bank/stock holding service, though. This is in quite a stark contrast to places where there's a lobby to change the laws yearly to make sure citizens have to use professional services for declaring their taxes.

newjersey 10y ago

Yes, that is a great idea but imagine writing unit tests for your code. Imagine someone is reading the tests as you write them (and has people whispering in your ears to influence what you write). Now, these people are trying to find edge cases. Remember that they just need one good edge case to pwn your code. Will you start writing more unit tests? Will your tests get more elaborate? My abstraction is bad because it doesn't cover another issue: public policy through taxation. We encourage things we consider "good" using taxes and we discourage things we consider "bad" using taxes as well. A lot of people support tax "relief" for things like mortgage loans, education loans, dependents and so on. If we want to simplify the tax code, these deductions must go away.

robbiemitchell 10y ago

The people with the most to lose in taxes have no problem paying specialists to handle it for them.

mike_hearn 10y ago

This isn't really about tax loopholes. It's about France being uncompetitive and unwilling to change. Google advertisers sign contracts with a company in Ireland because Ireland decided to effectively not apply corporation taxes (i.e. use a low rate and allow a variety of schemes that reduce the real rate even further). They did this fully knowingly ... the policy has been popular with voters ... because they wanted to attract international investment and employers to a place that otherwise wouldn't have much to offer, and as a strategy it worked amazingly well. Even during the financial crisis Ireland did not back down on that. This upset other countries in the EU but none moreso than France which has notoriously high taxes and a notoriously stagnant economy, combined with a population that routinely mounts protests against any attempt at reform. France is very powerful in the EU and thus instead of trying to make itself competitive has spent the last few years coming up with a variety of political solutions to their competitiveness problem: • Pressuring low tax jurisdictions to charge more tax • Getting the VAT rules for online businesses altered so now instead of paying VAT where the sale takes place, you have to pay to the country of the buyer ... woebetide you if you don't speak Hungarian or Croatian. You're gonna have to find someone who does and get them to file a tax return for you. • Now, apparently, simply harassing rich companies in an attempt to extract more money directly. Google hires very competent accountants, I seriously doubt they have actually made mistakes or lied on their tax returns. Instead France is going to exploit the existence of a Paris office to try and present Google with a giant bill. This would strongly incentivise Google to simply leave France entirely, I don't think the Paris office is very large compared to the others it has in Europe.

tomp 10y ago
It's completely within the right of Ireland and Irish citizens to promote investment by lowering the tax rates, as it is within the right of France and French citizens to tax companies that earn profits in France according to French tax law. I really don't see a problem.
- stuaxo 10y ago
  And yet Ireland has harsh austerity that has pushed many into poverty, so it wouldn't seem to be making much difference to citizens. http://www.irishexaminer.com/viewpoints/analysis/irelands-austerity-success-is-no-model-for-greece-340662.html http://www.irishexaminer.com/viewpoints/analysis/irelands-au...