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There was an interesting Planet Money episode about this [0]. Apparently the lobbying by Intuit is actually fairly minor compared to the opposition by Republic

There was an interesting Planet Money episode about this [0]. Apparently the lobbying by Intuit is actually fairly minor compared to the opposition by Republicans. Some group of Republican legislators came together and agreed to oppose all tax increases, and also agreed to oppose many types of tax simplification. The thinking being that the more painful filing your taxes is, the more people will have a negative perception of taxes in general and be opposed to tax increases. [0] https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero https://www.npr.org/sections/money/2017/03/22/521132960/epis...

philwelch 8y ago
Most Republican "flat tax" ideas have tax simplification as a major selling point (e.g. Ted Cruz talking about filing your taxes on a postcard); if you can simplify the implementation of the existing tax schedule, you lose that selling point.
- maxxxxx 8y ago
  Flat tax doesn't even simplify anything. The problem with taxes is to determine what the taxable income is. Figuring out the tax rate is trivial once you have that, no matter what the curve is. Flat tax is just another attempt to give big tax breaks to higher incomes.
  - philwelch 8y ago
    That's true. I never said the Ted Cruz postcard gimmick was honest; if it was honest, then it couldn't be sabotaged by simplifying the taxpayer experience for the existing schedule of rates and deductions.
  - avar 8y ago
    > Flat tax doesn't even simplify anything. Yes it does, depending on the implementation. There's a 2005 Economist article which does a good job of summarizing why[1]. BEGIN QUOTE Fewer brackets are simpler to administer, but one bracket is simplest of all. Under a pure flat tax, the taxman takes the same cut from the last dollar you earn that he took from the first. The appeal to high earners is obvious. But the administrative elegance of such a system is not so immediately apparent. Because every dollar is taxed at the same rate, it does not matter to the tax collector how many dollars are going to whom. Thus, in principle, the taxman could simply withhold 20% of a company's payroll, without needing to know who was paid what. Add a second rate of tax, however, or a personal exemption, and the tax collector must find out how much money is going into each pay packet before he can be sure of collecting the right amount from the right person. In America, for example, the tax collector needs to tax the wage packets of 130m or more employees, rather than simply taxing the payrolls of 8m or so enterprises. END QUOTE The mistake you're making is assuming that the tax system can only be simplified on the individual level, but as the quote above demonstrates this isn't true. Certain changes to the tax code do entirely away with the need for the government to exhaustively audit large parts of the economy. Another quote from the article demonstrating such a case: BEGIN QUOTE In Canada, Australia and the European Union, for example, staple foods, but not restaurant meals, are exempted from value-added tax. [Therefore] hot roast chicken is taxed, but cold roast chicken is not. “Does anyone expect tax administrators and business owners to have thermometers on hand when they do their tax calculations?” END QUOTE In this example, by progressively taxing food you're creating the accounting problem that the government theoretically has to track economic activity down to the level of whether a chicken was warm or not when it was sold. Simplifying the tax code does away with needing to solve that problem entirely, and eliminates some of the current incentives for tax avoidance and other fraud. 1. https://www.economist.com/special-report/2005/04/14/the-case-for-flat-taxes https://www.economist.com/special-report/2005/04/14/the-case...
    - DontGiveTwoFlux 8y ago
      The parent's comment still applies. If the progressive brackets were just swapped for a flat tax, the tax man still needs to know how much each employee had as deductibles, e.g. number of dependents, donations to charity, mortgage interest, etc.
      - chimeracoder 8y ago
        > The parent's comment still applies. If the progressive brackets were just swapped for a flat tax, the tax man still needs to know how much each employee had as deductibles, e.g. number of dependents, donations to charity, mortgage interest, etc. No, because the idea behind a flat tax is to eliminate most or all of those deductions, the same way they've already been eliminated for people who pay AMT instead of normal income tax.
        bmm6o 8y ago
        True in theory, but virtually every mainstream "flat tax" that actually gets to the stage of having a concrete proposal acknowledges the need for deductions. I don't recall ever seeing a true flat tax.
        avar 8y ago
        There's flat tax proposals and implementations at every level of the economy in different countries, not all of them have to do with income tax. E.g. the case of the warm and cold chicken being taxed at different rates, as described in the linked Economist article. It's common in places with such a distinction in the tax code for some stores to sell packaged cold food clearly intended to be eaten on the go, and then to conveniently offer a customer-operated microwave on-site partly as a way to avoid paying a tax that distinguishes between food sold as groceries v.s. take-away food. I'm not advocating for flat taxes, but it is correct to say that such proposals in general do away with such emergent absurdities, and decrease the need for government bureaucracy.
        8y ago
  - ams6110 8y ago
    100%. Taxable income should be gross income. That would make everything so easy.
- briandear 8y ago
  The problem is the existing tax schedule isn’t so clear. Depreciation of assets for example. By “simplifying” tax filing without simplifying the underlying calculations, there is far less public visibility of just how broken the tax system is. A flat tax is closer to good than our current system. People that oppose flat taxes do so because they want other people to pay more. It’s that simple. See what Milton Friedman had to say about tax code complexity. TLDR: it gives politicians the ability to curry favor or punish and it’s the source of their real power. The power to tax is the power to destroy. A flat tax with a single standard deduction effectively declaws the government from being able to pick winners and losers based on from whom the campaign donations come.
  - dragonwriter 8y ago
    > A flat tax is closer to good than our current system. No, it's not. > People that oppose flat taxes do so because they want other people to pay more. People that oppose flat taxes do so because they want other people to pay more. It’s that simple. Some of the richest people oppose the flat tax. And they do so because they want people poorer than themselves to pay less than they would in a flat tax scheme funding the same services. > See what Milton Friedman had to say about tax code complexity. TLDR: it gives politicians the ability to curry favor or punish and it’s the source of their real power. Maybe Friedman said that, but it's wrong; the monopoly on violence does that, and the tax system isn't particularly special among the avenues by which the power that monopoly grants can be applied.
  - philwelch 8y ago
    > By “simplifying” tax filing without simplifying the underlying calculations, there is far less public visibility of just how broken the tax system is. That's a decently idealistic viewpoint, but "complicated" doesn't necessarily mean "broken". For example, pretty much all Unix-style operating systems have not only a ton of now-unnecessary code to handle text I/O from 1960's teletype machines, but they even come with a "terminal emulator" that literally emulates the behavior of a 1960's teletype machine. That's how the command line works. You would never design it that way from the start, it's complicated, it's crufty, and it's vaguely horrifying, and yet it works and solves virtually all of the real problems that real people would have with that system. Just like letting the IRS fill out the first draft of your tax return.
swebs 8y ago
>A few days later, a legislator called Bankman to tell him that Intuit’s lobbyists had killed ReadyReturn. >But then, Frommer says, “We ran into a wall. And the wall was Intuit.” >According to the L.A. Times, Intuit spent $1.25 million on lobbyists and gave $2.12 million to 120 California politicians from 2005 to 2010. Bankman says Intuit’s influence was obvious. In one meeting, he says, the legislator told him, “I’ve been warned about you.” >“What Intuit did well was they created a boogieman,” says Dario Frommer. “They said ReadyReturn would put all these accountants out of business, and they organized African-American and Latino accountants against the bill.” >Records show that tax preparers have spent over $28 million lobbying Washington since 1998. In 2007, Eric Cantor (a Republican leader) and Zoe Lofgren (a Democrat from Silicon Valley) had introduced a bill to ban return-free filing. Both received contributions from Inuit. >Intuit still tried to kill ReadyReturn. But this time, Dario Frommer says, ReadyReturn had enough support in the legislature to block Intuit. In 2013, 99% of its 80,000 users said they were satisfied with ReadyReturn. ReadyReturn was later incorporated into CalFile, which allows Californians to e-file their taxes. Intuit is not a fan. But yeah, let's keep up the anti-republican circlejerk
ams6110 8y ago
> The thinking being that the more painful filing your taxes is, the more people will have a negative perception of taxes in general and be opposed to tax increases. This is exactly the reason I do my taxes by hand on paper every year.

philwelch 8y ago

Most Republican "flat tax" ideas have tax simplification as a major selling point (e.g. Ted Cruz talking about filing your taxes on a postcard); if you can simplify the implementation of the existing tax schedule, you lose that selling point.

maxxxxx 8y ago
Flat tax doesn't even simplify anything. The problem with taxes is to determine what the taxable income is. Figuring out the tax rate is trivial once you have that, no matter what the curve is. Flat tax is just another attempt to give big tax breaks to higher incomes.
- philwelch 8y ago
  That's true. I never said the Ted Cruz postcard gimmick was honest; if it was honest, then it couldn't be sabotaged by simplifying the taxpayer experience for the existing schedule of rates and deductions.
- avar 8y ago
  > Flat tax doesn't even simplify anything. Yes it does, depending on the implementation. There's a 2005 Economist article which does a good job of summarizing why[1]. BEGIN QUOTE Fewer brackets are simpler to administer, but one bracket is simplest of all. Under a pure flat tax, the taxman takes the same cut from the last dollar you earn that he took from the first. The appeal to high earners is obvious. But the administrative elegance of such a system is not so immediately apparent. Because every dollar is taxed at the same rate, it does not matter to the tax collector how many dollars are going to whom. Thus, in principle, the taxman could simply withhold 20% of a company's payroll, without needing to know who was paid what. Add a second rate of tax, however, or a personal exemption, and the tax collector must find out how much money is going into each pay packet before he can be sure of collecting the right amount from the right person. In America, for example, the tax collector needs to tax the wage packets of 130m or more employees, rather than simply taxing the payrolls of 8m or so enterprises. END QUOTE The mistake you're making is assuming that the tax system can only be simplified on the individual level, but as the quote above demonstrates this isn't true. Certain changes to the tax code do entirely away with the need for the government to exhaustively audit large parts of the economy. Another quote from the article demonstrating such a case: BEGIN QUOTE In Canada, Australia and the European Union, for example, staple foods, but not restaurant meals, are exempted from value-added tax. [Therefore] hot roast chicken is taxed, but cold roast chicken is not. “Does anyone expect tax administrators and business owners to have thermometers on hand when they do their tax calculations?” END QUOTE In this example, by progressively taxing food you're creating the accounting problem that the government theoretically has to track economic activity down to the level of whether a chicken was warm or not when it was sold. Simplifying the tax code does away with needing to solve that problem entirely, and eliminates some of the current incentives for tax avoidance and other fraud. 1. https://www.economist.com/special-report/2005/04/14/the-case-for-flat-taxes https://www.economist.com/special-report/2005/04/14/the-case...
  - DontGiveTwoFlux 8y ago
    The parent's comment still applies. If the progressive brackets were just swapped for a flat tax, the tax man still needs to know how much each employee had as deductibles, e.g. number of dependents, donations to charity, mortgage interest, etc.
    - chimeracoder 8y ago
      > The parent's comment still applies. If the progressive brackets were just swapped for a flat tax, the tax man still needs to know how much each employee had as deductibles, e.g. number of dependents, donations to charity, mortgage interest, etc. No, because the idea behind a flat tax is to eliminate most or all of those deductions, the same way they've already been eliminated for people who pay AMT instead of normal income tax.
      - bmm6o 8y ago
        True in theory, but virtually every mainstream "flat tax" that actually gets to the stage of having a concrete proposal acknowledges the need for deductions. I don't recall ever seeing a true flat tax.
        avar 8y ago
        There's flat tax proposals and implementations at every level of the economy in different countries, not all of them have to do with income tax. E.g. the case of the warm and cold chicken being taxed at different rates, as described in the linked Economist article. It's common in places with such a distinction in the tax code for some stores to sell packaged cold food clearly intended to be eaten on the go, and then to conveniently offer a customer-operated microwave on-site partly as a way to avoid paying a tax that distinguishes between food sold as groceries v.s. take-away food. I'm not advocating for flat taxes, but it is correct to say that such proposals in general do away with such emergent absurdities, and decrease the need for government bureaucracy.
        8y ago
- ams6110 8y ago
  100%. Taxable income should be gross income. That would make everything so easy.
briandear 8y ago
The problem is the existing tax schedule isn’t so clear. Depreciation of assets for example. By “simplifying” tax filing without simplifying the underlying calculations, there is far less public visibility of just how broken the tax system is. A flat tax is closer to good than our current system. People that oppose flat taxes do so because they want other people to pay more. It’s that simple. See what Milton Friedman had to say about tax code complexity. TLDR: it gives politicians the ability to curry favor or punish and it’s the source of their real power. The power to tax is the power to destroy. A flat tax with a single standard deduction effectively declaws the government from being able to pick winners and losers based on from whom the campaign donations come.
- dragonwriter 8y ago
  > A flat tax is closer to good than our current system. No, it's not. > People that oppose flat taxes do so because they want other people to pay more. People that oppose flat taxes do so because they want other people to pay more. It’s that simple. Some of the richest people oppose the flat tax. And they do so because they want people poorer than themselves to pay less than they would in a flat tax scheme funding the same services. > See what Milton Friedman had to say about tax code complexity. TLDR: it gives politicians the ability to curry favor or punish and it’s the source of their real power. Maybe Friedman said that, but it's wrong; the monopoly on violence does that, and the tax system isn't particularly special among the avenues by which the power that monopoly grants can be applied.
- philwelch 8y ago
  > By “simplifying” tax filing without simplifying the underlying calculations, there is far less public visibility of just how broken the tax system is. That's a decently idealistic viewpoint, but "complicated" doesn't necessarily mean "broken". For example, pretty much all Unix-style operating systems have not only a ton of now-unnecessary code to handle text I/O from 1960's teletype machines, but they even come with a "terminal emulator" that literally emulates the behavior of a 1960's teletype machine. That's how the command line works. You would never design it that way from the start, it's complicated, it's crufty, and it's vaguely horrifying, and yet it works and solves virtually all of the real problems that real people would have with that system. Just like letting the IRS fill out the first draft of your tax return.

swebs 8y ago

>A few days later, a legislator called Bankman to tell him that Intuit’s lobbyists had killed ReadyReturn. >But then, Frommer says, “We ran into a wall. And the wall was Intuit.” >According to the L.A. Times, Intuit spent $1.25 million on lobbyists and gave $2.12 million to 120 California politicians from 2005 to 2010. Bankman says Intuit’s influence was obvious. In one meeting, he says, the legislator told him, “I’ve been warned about you.” >“What Intuit did well was they created a boogieman,” says Dario Frommer. “They said ReadyReturn would put all these accountants out of business, and they organized African-American and Latino accountants against the bill.” >Records show that tax preparers have spent over $28 million lobbying Washington since 1998. In 2007, Eric Cantor (a Republican leader) and Zoe Lofgren (a Democrat from Silicon Valley) had introduced a bill to ban return-free filing. Both received contributions from Inuit. >Intuit still tried to kill ReadyReturn. But this time, Dario Frommer says, ReadyReturn had enough support in the legislature to block Intuit. In 2013, 99% of its 80,000 users said they were satisfied with ReadyReturn. ReadyReturn was later incorporated into CalFile, which allows Californians to e-file their taxes. Intuit is not a fan. But yeah, let's keep up the anti-republican circlejerk

ams6110 8y ago

> The thinking being that the more painful filing your taxes is, the more people will have a negative perception of taxes in general and be opposed to tax increases. This is exactly the reason I do my taxes by hand on paper every year.