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While I completely agree that the incentives seem absurd on their face, a counterpoint I have is that while I worked in a CPA office for several years, I came t
by ksdale 10y ago
While I completely agree that the incentives seem absurd on their face, a counterpoint I have is that while I worked in a CPA office for several years, I came to realize that a lot of people really have no idea how much they pay in taxes. Many people seem genuinely grateful to have received a refund, not realizing that it was money previously removed from their paychecks.
I have no idea what the correct policy would be, but I think a lot of people would feel very differently if they had to write a check for their taxes every time they received a paycheck instead of not thinking about it for 12 months and then getting a refund (which makes them feel like the government is doing them a favor). I'm not sure we can just dismiss out of hand the idea that the way people interact with their government affects their opinions on policy.
I certainly wouldn't go so far as to say we should make filing taxes painful, I'd personally just as soon never have to file a tax return, even if that meant my taxes weren't quite as optimized, but I know a lot about my tax situation. I guess it feels somehow more... honest (I'm not sure if that's the right word) if people viscerally feel how much they're paying in taxes, just like they feel how much they spend on utilities or groceries.
- baudehlo 10y agoMost people in the U.K. (the only other place I have experience with) never file a tax return. It's just assumed that the government is doing the right thing. Taxes are taken at source for all things, and if you have things outside of the norm you can tell your employer about it and they'll take care of it. Filing taxes was pretty alien to me. I'm used to it now, but it seems there are simpler ways.
- dboreham 10y agoI'm familiar with the UK system too. It is possible to get closer to it in the US than most people realize. For example you can calculate the correct tax to withhold and instruct your employer's payroll people to do so. Most people seem to not know this or nor care and as a result end up over withholding and the resulting "refund". It is perfectly possible to end up with roughly correct tax withheld although you do of course still need to complete the 1040 form. But software can do that.
- bluejekyll 10y agoYou need to be careful with this though, if you underpay throughout the year by too much, you will end up both owing and potentially have a tax penalty.
- dboreham 10y agoOf course. To be assessed a penalty you have to screw up pretty badly though, at least on the first try.
- fjdlwlv 10y agoIn the US that's called "nanny state". The US has a stronger tradition of citizens who think and act independently, even when they are working cooperatively.
- ryanwaggoner 10y agoIt's just assumed that the government is doing the right thing. This strikes me as a recipe for disaster in the long run. For any group of people who have tremendous power, not just the government.
- vollmond 10y agoI think that's what has happened with health coverage and with college over the last several decades. Mass ignorance about what people are actually paying, since the costs are removed from our immediate view, via automatic deductions, 3-months-later billing, and student loans.