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I've always wondered: Is the tax code kept complex because large accounting firms lobby for it? Much profit (and many jobs) would be lost if it was simplified.

TallGuyShort 9y ago
In case you missed the thread about H&R Block on here the other day, the do lobby for it. It may not be entirely that though - there's also plenty of political capital to be had by pushing for special loopholes for special people.
redbeard0x0a 9y ago
The tax-prep industry is active in lobbying to keep the tax system from becoming too simple. Think H&R Block and Intuit, not Pricewaterhouse Coopers (however I'm sure they are just as involved, but have less on the line compared to the retail companies since companies will always need accountants).
bluGill 9y ago
That is one factor. Another factor is the tax code does drive behavior. People with month who are considering doing one of two things will add preference to the cheaper one, the more complex tax code can make something cheaper after taxes are considered. Companies can deduct R&D money because the the country doesn't want to risk falling behind if the short term "bean counters" win and stop doing R&D. By making R&D cheaper the argument for doing it is stronger.
topkai22 9y ago
It's not just the accountancies. Planet Money did a bit about how right leaning organizations like Grover Norquist's "Americans for Tax Reform" opposed pre-filed income tax returns because they believed that making tax compliance less painful would lead people to be less opposed to taxes generally (I can't say they are totally wrong there). Special interest groups (including some thay aren't so special, like anyone with childcare costs) on both sides love "their" special tax deductions. The accounting firms aren't campaigning for simplification, but they are joined by a legion of others opposing it in various ways as well.
leeter 9y ago
Yes, but not that's not the whole problem. There are plenty of special interests that want their carve out. But honestly that's not even the major source of cost. The major source of cost is processing returns at all. If the IRS was allowed to do return free filing then it would massively simplify the majority of people's taxes because they don't have anything that requires the full 1040 for. That means only people who have significant and complex finances actually need to file a return.

TallGuyShort 9y ago

In case you missed the thread about H&R Block on here the other day, the do lobby for it. It may not be entirely that though - there's also plenty of political capital to be had by pushing for special loopholes for special people.

redbeard0x0a 9y ago

The tax-prep industry is active in lobbying to keep the tax system from becoming too simple. Think H&R Block and Intuit, not Pricewaterhouse Coopers (however I'm sure they are just as involved, but have less on the line compared to the retail companies since companies will always need accountants).

bluGill 9y ago

That is one factor. Another factor is the tax code does drive behavior. People with month who are considering doing one of two things will add preference to the cheaper one, the more complex tax code can make something cheaper after taxes are considered. Companies can deduct R&D money because the the country doesn't want to risk falling behind if the short term "bean counters" win and stop doing R&D. By making R&D cheaper the argument for doing it is stronger.

topkai22 9y ago

It's not just the accountancies. Planet Money did a bit about how right leaning organizations like Grover Norquist's "Americans for Tax Reform" opposed pre-filed income tax returns because they believed that making tax compliance less painful would lead people to be less opposed to taxes generally (I can't say they are totally wrong there). Special interest groups (including some thay aren't so special, like anyone with childcare costs) on both sides love "their" special tax deductions. The accounting firms aren't campaigning for simplification, but they are joined by a legion of others opposing it in various ways as well.

leeter 9y ago

Yes, but not that's not the whole problem. There are plenty of special interests that want their carve out. But honestly that's not even the major source of cost. The major source of cost is processing returns at all. If the IRS was allowed to do return free filing then it would massively simplify the majority of people's taxes because they don't have anything that requires the full 1040 for. That means only people who have significant and complex finances actually need to file a return.