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I've never had to file US taxes so this might be a stupid question, but how exactly are the people in your example worse off with ReadyReturn? Isn't ReadyRetur

by avar 10y ago

I've never had to file US taxes so this might be a stupid question, but how exactly are the people in your example worse off with ReadyReturn? Isn't ReadyReturn just e.g. summing up their reported wages for the return, which they'd need to do accurately anyway if they were filling it in from scratch? Yes, if you have a pre-filled in tax return nothing that the government doesn't know about & which might be deductible is going to be on there, but that's the situation you were in already, wasn't it? Now you'll have more time to fill that out, instead of doing menial work like manually summing up your monthly payslips to arrive at a yearly total. Or is ReadyReturn somehow structurally flawed in allowing you to either file for a simplified pre-filled in return with no amendments, or having to do an old-style return from scratch? When I file my taxes in The Netherlands all the concerns you've raised are addressed through a system where most of the information is pre-filled in. I.e. they know how much I make so that number is on there, but they might not know about a few other deductibles, those are established through a series of questions you answer. E.g. "do you own a house" -> "what type of mortgage" -> "do you pay a land use fee?" -> that's a deductible (to cite one made-up example). Most importantly it establishes a workflow where if something is a deductible (unless it's something really obscure, manual returns still exist), it's going to be on the online tax form. So even if the initial implementation is bad just establishing that process is worthwhile, because there'll be political pressure to make it better next year, and the year after that.

hundt 10y ago
It's not a stupid question at all. In practice the U.S. tax code is not quite as simple as "Here is the tax burden for your income level; tell us if you have any deductions." Right off the bat, you need to determine your "filing status" (single, married, head of household, and some less common options) from a list of five choices, each of which has different rules for all the calculations that follow. Furthermore, for a large portion of people making modest incomes, various tax credits, most notably the "Earned Income Tax Credit" but also education and child-related credits, cause enormous swings in their taxes, for example perhaps from $1,000 to -$3,000 (many people pay negative income taxes). None of these things can be determined by information the government has. So for many people any "provisional" return that the government is likely to create will be very inaccurate. Now, you suggest that maybe this would just be some sort of provisional return that could be adjusted to match your correct situation. That is a fine idea. But in order to make that convenient, the government would basically need to develop their own implementation of TurboTax. That has its own issues (is the government likely to do a good job? will they apply the laws in a biased way?) but even if they are resolved we are still talking about a vastly greater effort than "just give people a pre-filled return." So I would ask advocates for simplifying tax filing to either admit that they are demanding that the government author its own fully-featured tax preparation software, or explain how they will otherwise address the complexity of the U.S. tax code.
- avar 10y ago
  What you're saying makes sense, but doesn't at all jive with the reported 99% satisfaction rate in the pilot program. Wouldn't more than 1% have noticed an increased tax burden? Or perhaps the focus group wasn't diverse enough.
  - hundt 10y ago
    It sounds like the 99% satisfaction rate was "of the people who filed their taxes using ReadyReturn" so it presumably excludes those who observed, or suspected, that the result was not correct and made alternative arrangements. That said, I will also admit that this article is really about California state taxes, which are substantially simpler for most people than federal taxes. I got off on a bit of a tangent because Prof. Bankman seems to claim that the same approach will work for federal taxes as well, and in general most people perceive these issues as linked: automatically prepared state taxes are seen as a step towards automatically prepared federal taxes.
- gech 10y ago
  Can you answer the question of whether Intuit lobbying for their interest is in the interest of the public?
  - hundt 10y ago
    I mean it might be, right? Just like when anyone else lobbies the government, Inuit might be asking for something that is good or something that is bad. In this case I think they are right.
sokoloff 10y ago
> Now you'll have more time to fill that out, instead of doing menial work like manually summing up your monthly payslips to arrive at a yearly total. There is no manual summing of paystubs. You (already) get an end-of year statement of wages (W-2 for employee wages, 1099 for contracting payments). ReadyReturn saves you nothing here.

by avar 10y ago

hundt 10y ago

It's not a stupid question at all. In practice the U.S. tax code is not quite as simple as "Here is the tax burden for your income level; tell us if you have any deductions." Right off the bat, you need to determine your "filing status" (single, married, head of household, and some less common options) from a list of five choices, each of which has different rules for all the calculations that follow. Furthermore, for a large portion of people making modest incomes, various tax credits, most notably the "Earned Income Tax Credit" but also education and child-related credits, cause enormous swings in their taxes, for example perhaps from $1,000 to -$3,000 (many people pay negative income taxes). None of these things can be determined by information the government has. So for many people any "provisional" return that the government is likely to create will be very inaccurate. Now, you suggest that maybe this would just be some sort of provisional return that could be adjusted to match your correct situation. That is a fine idea. But in order to make that convenient, the government would basically need to develop their own implementation of TurboTax. That has its own issues (is the government likely to do a good job? will they apply the laws in a biased way?) but even if they are resolved we are still talking about a vastly greater effort than "just give people a pre-filled return." So I would ask advocates for simplifying tax filing to either admit that they are demanding that the government author its own fully-featured tax preparation software, or explain how they will otherwise address the complexity of the U.S. tax code.

avar 10y ago
What you're saying makes sense, but doesn't at all jive with the reported 99% satisfaction rate in the pilot program. Wouldn't more than 1% have noticed an increased tax burden? Or perhaps the focus group wasn't diverse enough.
- hundt 10y ago
  It sounds like the 99% satisfaction rate was "of the people who filed their taxes using ReadyReturn" so it presumably excludes those who observed, or suspected, that the result was not correct and made alternative arrangements. That said, I will also admit that this article is really about California state taxes, which are substantially simpler for most people than federal taxes. I got off on a bit of a tangent because Prof. Bankman seems to claim that the same approach will work for federal taxes as well, and in general most people perceive these issues as linked: automatically prepared state taxes are seen as a step towards automatically prepared federal taxes.
gech 10y ago
Can you answer the question of whether Intuit lobbying for their interest is in the interest of the public?
- hundt 10y ago
  I mean it might be, right? Just like when anyone else lobbies the government, Inuit might be asking for something that is good or something that is bad. In this case I think they are right.

sokoloff 10y ago

> Now you'll have more time to fill that out, instead of doing menial work like manually summing up your monthly payslips to arrive at a yearly total. There is no manual summing of paystubs. You (already) get an end-of year statement of wages (W-2 for employee wages, 1099 for contracting payments). ReadyReturn saves you nothing here.