4 ms·

Doesn't this imply that simplifying/automating the return harms no one (folks can still file individually if they choose), while helping those who would otherwi

Doesn't this imply that simplifying/automating the return harms no one (folks can still file individually if they choose), while helping those who would otherwise have to take time or invest money in tax prep? How is this not an un-alloyed good?

rayiner 8y ago
It would hurt a lot of people if they end up paying more taxes than they owe because they don't realize they can pay less by filing their own return. It can be scary receiving a "bill" from the government, and many people might not try to contest the IRS's calculation. For automated tax filing to be workable, it has to at least be accurate for nearly everyone. If it overstates taxes for most people, I think that's a big problem. In the U.S., I don't think you can achieve that level of accuracy without either changing the tax code, or having the federal government track a lot more information about people than it currently does. I owe the IRS money every year because my wife and I are subject to the marriage penalty. You can't calculate our correct taxes without knowing we are married to each other. And the IRS doesn't know that unless I put it on my returns. Note that many countries track their citizens much more closely than does the U.S. For example, in Germany, you have to register with a Registration Office within one week whenever you move between cities.
- OrwellianChild 8y ago
  Thanks for the dialogue! Just to try to simplify things, it sounds like you are worried about tax filing being regressive - causing under-privileged, low-income, and other disadvantaged people to pay more taxes than they owe. Isn't it true, though, that tax filings typically increase in complexity alongside income? Things like marriage records and children aren't currently kept private such that the Child Tax Credit and Joint Filing rules couldn't be automatically applied. It's not immediately apparent to me that vulnerable populations would necessarily be at a disadvantage. (Basically, I figure that if I'm high-income, it's my problem to sort out my taxes to my greatest advantage, but it should be easy for folks who don't have the luxury of time or money.)
  - rayiner 8y ago
    We're not talking about "high-income" people. The biggest tax benefit for low-income people is the Earned Income Tax credit, which is calculated based on number of dependent children. Then there are all sorts of middle-class credits and deductions even for people who do not itemize: child credits, child care credits, child care deductions, teaching supply deductions, etc. And large numbers of middle class people use the mortgage interest deduction. And even relatively high income people ($100,000+, which might just be a household of two teachers) might be hesitant to dispute a "bill" sent by the IRS. As to applying these deductions automatically: the IRS simply lacks the information. There is simply no database (federal or state) tracking which children live with which adults (the credits are computed based on dependent children, not biological or legal children). There is no federal database of marriages, and while there are marriage certificates at the state level, it's unclear whether there are any easily accessible databases of married couples. There are no databases tracking which daycare you send your children to, what you spend in college tuition, etc.
    - OrwellianChild 8y ago
      Currently people seeking the EITC and Mortgage Interest Deduction have to file. This wouldn't change that. Nor is there a prohibition against the IRS sending a nice note encouraging folks to file if they want to take advantage of these benefits. It doesn't have to look like a bill. We may just disagree on the size of the burden or the ability to ameliorate risks/downsides, but I'm having a hard time imagining that they cannot be addressed with _implementation_ choices on a pre-filed return. I feel like this is important because it seems like we agree on the fundamentals: that the tax code should advantage the vulnerable, that filing should be as easy as possible, and that taxpayers should be able to discover and utilize all breaks available to them. The status quo does not seem _nearly_ good enough at these things to be worth preserving.

rayiner 8y ago

It would hurt a lot of people if they end up paying more taxes than they owe because they don't realize they can pay less by filing their own return. It can be scary receiving a "bill" from the government, and many people might not try to contest the IRS's calculation. For automated tax filing to be workable, it has to at least be accurate for nearly everyone. If it overstates taxes for most people, I think that's a big problem. In the U.S., I don't think you can achieve that level of accuracy without either changing the tax code, or having the federal government track a lot more information about people than it currently does. I owe the IRS money every year because my wife and I are subject to the marriage penalty. You can't calculate our correct taxes without knowing we are married to each other. And the IRS doesn't know that unless I put it on my returns. Note that many countries track their citizens much more closely than does the U.S. For example, in Germany, you have to register with a Registration Office within one week whenever you move between cities.

OrwellianChild 8y ago
Thanks for the dialogue! Just to try to simplify things, it sounds like you are worried about tax filing being regressive - causing under-privileged, low-income, and other disadvantaged people to pay more taxes than they owe. Isn't it true, though, that tax filings typically increase in complexity alongside income? Things like marriage records and children aren't currently kept private such that the Child Tax Credit and Joint Filing rules couldn't be automatically applied. It's not immediately apparent to me that vulnerable populations would necessarily be at a disadvantage. (Basically, I figure that if I'm high-income, it's my problem to sort out my taxes to my greatest advantage, but it should be easy for folks who don't have the luxury of time or money.)
- rayiner 8y ago
  We're not talking about "high-income" people. The biggest tax benefit for low-income people is the Earned Income Tax credit, which is calculated based on number of dependent children. Then there are all sorts of middle-class credits and deductions even for people who do not itemize: child credits, child care credits, child care deductions, teaching supply deductions, etc. And large numbers of middle class people use the mortgage interest deduction. And even relatively high income people ($100,000+, which might just be a household of two teachers) might be hesitant to dispute a "bill" sent by the IRS. As to applying these deductions automatically: the IRS simply lacks the information. There is simply no database (federal or state) tracking which children live with which adults (the credits are computed based on dependent children, not biological or legal children). There is no federal database of marriages, and while there are marriage certificates at the state level, it's unclear whether there are any easily accessible databases of married couples. There are no databases tracking which daycare you send your children to, what you spend in college tuition, etc.
  - OrwellianChild 8y ago
    Currently people seeking the EITC and Mortgage Interest Deduction have to file. This wouldn't change that. Nor is there a prohibition against the IRS sending a nice note encouraging folks to file if they want to take advantage of these benefits. It doesn't have to look like a bill. We may just disagree on the size of the burden or the ability to ameliorate risks/downsides, but I'm having a hard time imagining that they cannot be addressed with _implementation_ choices on a pre-filed return. I feel like this is important because it seems like we agree on the fundamentals: that the tax code should advantage the vulnerable, that filing should be as easy as possible, and that taxpayers should be able to discover and utilize all breaks available to them. The status quo does not seem _nearly_ good enough at these things to be worth preserving.