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Planet Money covered tax filing a few years ago and visited it again recently: https://www.npr.org/templates/transcript/transcript.php?storyId=708195702 https:/

Planet Money covered tax filing a few years ago and visited it again recently: https://www.npr.org/templates/transcript/transcript.php?storyId=708195702 https://www.npr.org/templates/transcript/transcript.php?stor... My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes. The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.

fattire 7y ago
Link to audio: https://www.npr.org/player/embed/708195702/709698927 https://www.npr.org/player/embed/708195702/709698927
Dig1t 7y ago
Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his biggest point was that his goal was to support a system where people paid as little tax as possible, and this current system we have is just that.
- gowld 7y ago
  If complicated taxes are a Republican anti-tax strategy, why did Reagan and the 1980s republicans pursue a strategy of vastly simplifying the tax code? Doing taxes is a tax -- in hours and fees. Only the wealthiest people who can spend $10K on tax prep to save $100K via loophole deductions, oh.
  - jacobolus 7y ago
    Simplifying the tax code in the 80s was the public sales pitch. The real strategy was to dramatically cut taxes on the wealthy (e.g. by eliminating the top several marginal tax brackets). But keep in mind, the Democrats controlled congress, so reform had to gain bipartisan support.
    - twoodfin 7y ago
      This chart doesn’t show evidence of a particularly dramatic cut in effective rates for the top 1% of earners: https://taxfoundation.org/taxes-rich-1950-not-high/ https://taxfoundation.org/taxes-rich-1950-not-high/
      - jacobolus 7y ago
        The top 1% of earners today earn a dramatically larger share of total income than the top 1% in the 1950s. If taxes kept up, they would have noticeably higher effective tax rates than they used to have. P.S. The “Tax Foundation” is a right-wing “think tank” (i.e. activists masquerading as researchers) funded by billionaires and corporations. I would however recommend reading the whole paper they cite, http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf > Government redistribution made growth more equitable, but only slightly so. After taxes and transfers, income in the bottom quintile stagnated (+4%) over the 1980–2014 period while it grew a meager 21% for the bottom 50% as a whole. That is, transfers erased about a third of the gap between macroeconomic growth (61%) and growth for the bottom half of the distribution (+1% before government intervention). Taxes did not hamper the upsurge of income at the top, which grew almost as much as pre-tax. > The top panel of Figure II provides a granular view of who benefitted (or not) from growth, by showing the annualized real growth of pre-tax and post-tax income for each percentile of the distribution over the 1980–2014 period, with a zoom within the top 1%. There are two striking results. First, the vast majority of the population—from the bottom up to the 87th percentile—experienced less growth than the (modest) macro rate of 1.4% a year. For instance, the 10th percentile declined by 0.6% a year pre-tax (+0.3% post-tax); the 30th percentile stagnated pre-tax and grew 0.6% post-tax; the 80th percentile grew 1.2% pre-tax (+1.3% post-tax). Only the top 12 percentiles of the population achieved a growth rate as high or higher than the macro rate of 1.4%. Second, even percentiles 88 to 98 experienced unimpressive income gains, between 1.4% and 2.2% a year—in most cases less than the macro growth rate of U.S. incomes for the preceding generation, from 1946 to 1980. The only group that grew fast is the top 1%, whose average income increased 3.3% pre-tax and 3.2% post-tax, with growth culminating at +6.0% a year for the top 0.001%. The top 1% has pulled apart from the rest of the economy—not the top 20%. etc.
- sanderjd 7y ago
  Except the tax preparation industry must be taking a significant enough cut to make it lucrative to spend money lobbying. Is that cut smaller than the total extra tax that would be paid due to mistakes in the auto filing system? I'm skeptical.
  - astine 7y ago
    Tax preparers usually file federal taxes for free while charging a fee to file state and local taxes. That's where they make their money.
    - rhacker 7y ago
      So basically even if the IRS wanted to create a system, they would be competing with a free system anyway? And the IRS wouldn't go out and do a system for each state.
    - sanderjd 7y ago
      I suspect (but don't know) that they make more off of the various up-sells for people with more complex filing situations. Also, the free filing is marketing. It's their foot in the door. If something like rapid return happened, they would lose that strategy.
- hobs 7y ago
  If republicans wanted to make a system where people would save the most money we'd just reduce the tax loopholes and simplify the system - the system we have now actually only has the wealthy pay the least money. Some would say the republicans think this is a feature.
  - rattlesnakedave 7y ago
    How do you differentiate deductions from loopholes?
    - dsfyu404ed 7y ago
      Easy. Any deduction you don't use is a loophole, legislative compromise of yesteryear or not.
  - rayiner 7y ago
    This is not true. There are tons of bread-and-butter deductions for the middle class. If you do a cross country comparison of taxes, the biggest difference between the US and Europe is not the rich. It’s the folks making $40-100k, where our low brackets plus tons of deductions (mortgage interest, child care, child credits, etc.) drive the effective tax rate way down
    - jacobolus 7y ago
      Folks in Europe comparable to the ones you are talking about here (i.e. the 50th–85th percentile) are generally much more financially stable/comfortable than in the USA. Varies a lot from country to country, but in general they have e.g. more-or-less functional healthcare systems, better parental leave, more vacations, easier access to childcare, stronger worker protections, ....
      - lagadu 7y ago
        A lot of what you mentioned on our side of the pond is paid for by our social security contributions, not from our taxes though.
- metaphor 7y ago
  > The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers. The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.
  - rayiner 7y ago
    The 22% tax bracket goes well above the median income. Meanwhile, in 2010 less than 15% of people filed the 1040ez.
    - metaphor 7y ago
      Bottom end of 22% tax bracket is ~$43k/annum based on 2019 Notice 1036...that's a $23k margin before hitting the $66k AGI threshold for free file offerings. That number is more like ~25mil, or just over 18% in 2017; +4.6% over previous year[1]. EDIT: I suppose I should probably ask what point you were trying to make? I didn't quite track where you were going with all that. [1] https://www.irs.gov/pub/irs-soi/17in01pl.xls https://www.irs.gov/pub/irs-soi/17in01pl.xls
  - lightedman 7y ago
    1040EZ was dead as of this year. Have you filed your taxes?
  - vonmoltke 7y ago
    > The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer. I was not asked for such a thing, and used a different preparer this year. I was asked to set a PIN for 2018, but I have never had to use a PIN I previously set. I have always been asked for the prior year's AGI for verification. What software asked you for a prior year's PIN to file this year?
- losteric 7y ago
  > However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. lol. No. First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations. Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.
- rebuilder 7y ago
  If private tax filing products saved money for their users, as compared to a hypothetical, IRS-produced product, what are these companies worried about? They'd have a clear competitive advantage over the IRS product.
  - mac01021 7y ago
    How could they save money, though? The tax code is the same in both cases, and most people's financial lives are not complicated enough to make it any kind of challenge to get the best refund.
    - rebuilder 7y ago
      Then the conclusion is the same: no reason not to let the IRS provide their own tax filing service.
jacobolus 7y ago
It’s not really about making people more or less aware of what they are paying. The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.
- deleted 7y ago
  [deleted]
- ecopoesis 7y ago
  The point is to enrich Intuit and other tax preparers that lobbied for this.
  - jumbopapa 7y ago
    That's for point 1. Point 2 is a completely different camp.
    - syn0byte 7y ago
      Point 2 is after-the-fact rationalization so they don't have to admit point 1 in public.
  - VSerge 7y ago
    These anti-tax activists seem to be playing the role of Useful Idiots for the much more substantial reason 1, bearing in mind that the very existence of such companies making tax filing easier does indeed destroy point 2 entirely (in addition to the what OP pointed out which also takes away any credit this idea might have had). From a european perspective, having tax returns that are not pre-filled, and having a tax administration that doesn't strive to make payment as easy and quick as possible is nonsensical. Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?
    - jeremyjh 7y ago
      For most people the state gets paid every payday from automatic employer withholdings. If your withholdings are much lower than the obligation then you may pay interest penalties. So it’s not really necessary from a cash flow perspective but still would be much more efficient.
rattlesnakedave 7y ago
A better way to do 2 would be to do away with withholding. After a year of that we’d see a radically different tax system.
- randysavage 7y ago
  Forcing everyone to make quarterly estimated payments would lead to riots in the streets.
  - vernie 7y ago
    Nah, no quarterly estimated payments. You just get your whole salary up front and you're completely fucked in April.
    - dnautics 7y ago
      It might be more effective if we moved filing to the first week of November.
      - dsfyu404ed 7y ago
        Doing that in absence of all other changes would likely have a highly positive outcome in the medium/long term (for tax reform at least).
- adjkant 7y ago
  Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes. What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea. What would be nice is if we make the easy filing system but explicitly highlight the amount you paid in taxes compared to your income. Most people only judge on refund amount and rarely check the math on the exact taxes owed.
guelo 7y ago
I would classify causing mass pain for political gain as purely evil.
- dwighttk 7y ago
  So: Politics is evil... Checks out.
- tathougies 7y ago
  Right because filing your taxes is the moral equivalent of strapping the population to the torture rack
  - magduf 7y ago
    He isn't claiming paying taxes is bad, he's claiming (correctly) that lobbying for a complex tax code and to prevent the IRS from offering a free-filing tool because it competes with entrenched tax-filing companies is evil, and it is.
tathougies 7y ago
> The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story. I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.
- robmaister 7y ago
  There's a few companies that are allowed to efile that do very little besides convert the IRS paper forms to web forms and do the arithmetic for you. They tend to be a lot cheaper than TurboTax/H&R Block. I've been using one of them (OLT) the last two years has worked well enough for me and efile processes a lot faster than paper. I also believe people should be filing their own taxes and understanding how the system works. I've owed money the last two years by underestimating self-employment taxes, so this year I've set up a spreadsheet that tells me how much I'll owe each quarter with all deductions built in and a tiny bit of overestimation.
  - tathougies 7y ago
    I make sure to mail them in so uncle sam has to waste his money paying an actual person to input my data.
- cascom 7y ago
  It’s worth it to me to pay a couple hundred dollars not to deal with it it and have someone else's signature on my return - that being said I have a back of the envelope spreadsheet that estimates my tax liability using about 5 inputs and is usually pretty accurate vs my prepared return
  - tathougies 7y ago
    Are you under the impression that having someones signature on the return means you do not owe tax penalties if they do it wrong? If you read the copious amount of detailed instructions the irs provides, you'll soon find that thats not the case
HashThis 7y ago
Congress sells out the american people. Congress doesn't work for the American people. Congress works for moneyed interests (corporations). This is congress aiding crony capitalist theft
tokyodude 7y ago
maybe not exactly the same but it is aguable if the majority of people had to write check to pay their taxes instead of having their taxes auto-deducted by their employer they'd push much harder for lower taxes and less government spending it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k) PS: don't have an opinion if this would be a good or bad idea. can see it both ways
- freddie_mercury 7y ago
  Why is it "arguable"? What you suggest is exactly how it worked before 1943 and there was a massive expansion of government, government services, and tax rates between 1913 and 1943. The actual historical evidence strongly suggests this theory is spurious and easily dismissed.
onetimemanytime 7y ago
Conspiracy theory: what if IRS (the Govt) when designing the free software with all the options--thousands and thousands of pages https://www.politifact.com/missouri/statements/2017/oct/17/roy-blunt/tax-code-so-long-nobodys-really-sure-its-length/ https://www.politifact.com/missouri/statements/2017/oct/17/r... --lean on the side of the government when in doubt? Intuit, HR Block etc have some sort of guarantee and incentive to save users, IRS not so much. Doesn't even have to be a conspiracy theory ("We need the money so let's make them pay $xx Billion more this year") just the way incentives work. Maybe simplify the code first?
- onefuncman 7y ago
  The IRS outsources the development of the free software. All the IRS does is publish the tax code in a specific XML format. MEF (mechanized e-file) is the interchange specification. It's rather a shame there's not more open source effort around tax filings...
  - magduf 7y ago
    >It's rather a shame there's not more open source effort around tax filings... This is one place where FOSS just isn't going to work. Let me ask you: are you willing to invest a lot of your time and effort into contributing to such a project? No, I didn't think so. Me neither. Here's the problems with it: 1) It's not very fun. Volunteer coders don't want to work on something as deadly-boring as tax filing. 2) It's USA-only: lots of FOSS volunteers are outside the US. They're not going to spend their time on a tax tool they're not going to use. 3) It's constantly changing. The tax code changes every single year. Lots of FOSS projects become mature at some point, and only get maintenance or occasional feature additions. Most do not work according to a schedule. The IRS requires you to file your taxes on April 15, and they release the changes to the tax code a certain amount of time before that, so a project would only have a certain window of time to incorporate all these changes. 4) The risk to users is high, since there's no one really willing to guarantee this product. Of course, bugs in tax-prep software don't absolve taxpayers, but there's still a certain appearance that a big company standing behind a product makes it safer.
dwighttk 7y ago
Checking math? You must have simpler taxes than I do. By the time I’m done entering various non w2 forms I don’t even know what math I’d check.
RayVR 7y ago
The second argument is about raising all relevant barriers to submitting your tax return. If I were in this camp I’d be pushing for everyone to have zero withholding and carry cash to a tax filing center. Ideally, there would be very few tax filing centers so you would need to travel far and wait in line. My bet is that within the first year of this taxes would be massively reduced. Also, very few people would actually be able to pay the government. Again, this is just for the sake of argument.
- _archon_ 7y ago
  I don't understand what anyone would gain from this. Citizens would be more cash-rich throughout the year, then cash-poor when tax time came. Over the years, people would learn to squirrel away similar amounts to what they're withholding now. Withholdings exist now as a forced savings plan for the poor and a free loan system for the .gov for the upper class. > My bet is that within the first year of this taxes would be massively reduced. Making the filing and paying of taxes difficult and painful won't change a person's tax liability, it'll just irritate every citizen until we collectively demand an easier process. If you can't pay, you get penalties and a payment plan. Don't forget that the IRS is a government entity capable of legally charging, suing, etc. with the force of law. Why would having to travel to a payment center reduce someone's tax liability? I guess I want to know more of the argument, for the sake of argument, because the argument doesn't make sense to me as presented.
  - moduspol 7y ago
    The easier and more "automatic" any tax is, the easier it is to hide, and the less people understand that they're paying it. And as they become less aware of what they're paying, it becomes easier to take more. OP is acknowledging the inverse is also true, and that if "automatic" aspects of the system were removed, people would become much more aware of what taxes they are paying, which would lead to public support for reducing the amount.
  - indigochill 7y ago
    The anti-tax group wants to make paying taxes as painful and inconvenient as possible based on the assumption that if taxes suck, more people will be more actively in favor of reducing taxes (as opposed to, you know, making the process not suck). It's not about reducing liability at all right now, it's about making more people anti-tax.
ransom1538 7y ago
The US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.
- ivm 7y ago
  Recently I was filing my taxes in Chile for the first time and it took about 10 minutes because the tax service already knows most of my activities, including stock purchases via a local broker and dividends from them. I only needed to review the form for correctness and press "send".
- conanbatt 7y ago
  This is not done because the IRS doesn't have the power to enforce its tax system, and if it reported the information it had to the people, the people could know they can slip away with not paying anything that wasnt properly reported. First, a transparent system of the IRS would lower revenue. Second, the deductibles system is very complex for the IRS to pre-calculate it, so they are unable to do it.
  - wl 7y ago
    Especially with the tax reform, most folks will be taking the standard deduction. Making the common case easy is still worth pursuing, even if some people will still itemize.
  - basseq 7y ago
    You didn't cover the most important—and political—reason: it would delay refunds. 2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks. As the tax refund check is the largest check many Americans receive every year, delaying that payout gets taxpayer advocacy groups up in arms and is tantamount to political suicide. Incidentally, this same gap is where a bulk of tax return fraud happens—equalling billions of dollars. In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone. I haven't seen any analysis that such a system would lower revenues (indeed, it would stop billions of dollars of fraud and tax evasion), or that the deductible system is too complex.

fattire 7y ago

Link to audio: https://www.npr.org/player/embed/708195702/709698927 https://www.npr.org/player/embed/708195702/709698927

Dig1t 7y ago

Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his biggest point was that his goal was to support a system where people paid as little tax as possible, and this current system we have is just that.

gowld 7y ago
If complicated taxes are a Republican anti-tax strategy, why did Reagan and the 1980s republicans pursue a strategy of vastly simplifying the tax code? Doing taxes is a tax -- in hours and fees. Only the wealthiest people who can spend $10K on tax prep to save $100K via loophole deductions, oh.
- jacobolus 7y ago
  Simplifying the tax code in the 80s was the public sales pitch. The real strategy was to dramatically cut taxes on the wealthy (e.g. by eliminating the top several marginal tax brackets). But keep in mind, the Democrats controlled congress, so reform had to gain bipartisan support.
  - twoodfin 7y ago
    This chart doesn’t show evidence of a particularly dramatic cut in effective rates for the top 1% of earners: https://taxfoundation.org/taxes-rich-1950-not-high/ https://taxfoundation.org/taxes-rich-1950-not-high/
    - jacobolus 7y ago
      The top 1% of earners today earn a dramatically larger share of total income than the top 1% in the 1950s. If taxes kept up, they would have noticeably higher effective tax rates than they used to have. P.S. The “Tax Foundation” is a right-wing “think tank” (i.e. activists masquerading as researchers) funded by billionaires and corporations. I would however recommend reading the whole paper they cite, http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf > Government redistribution made growth more equitable, but only slightly so. After taxes and transfers, income in the bottom quintile stagnated (+4%) over the 1980–2014 period while it grew a meager 21% for the bottom 50% as a whole. That is, transfers erased about a third of the gap between macroeconomic growth (61%) and growth for the bottom half of the distribution (+1% before government intervention). Taxes did not hamper the upsurge of income at the top, which grew almost as much as pre-tax. > The top panel of Figure II provides a granular view of who benefitted (or not) from growth, by showing the annualized real growth of pre-tax and post-tax income for each percentile of the distribution over the 1980–2014 period, with a zoom within the top 1%. There are two striking results. First, the vast majority of the population—from the bottom up to the 87th percentile—experienced less growth than the (modest) macro rate of 1.4% a year. For instance, the 10th percentile declined by 0.6% a year pre-tax (+0.3% post-tax); the 30th percentile stagnated pre-tax and grew 0.6% post-tax; the 80th percentile grew 1.2% pre-tax (+1.3% post-tax). Only the top 12 percentiles of the population achieved a growth rate as high or higher than the macro rate of 1.4%. Second, even percentiles 88 to 98 experienced unimpressive income gains, between 1.4% and 2.2% a year—in most cases less than the macro growth rate of U.S. incomes for the preceding generation, from 1946 to 1980. The only group that grew fast is the top 1%, whose average income increased 3.3% pre-tax and 3.2% post-tax, with growth culminating at +6.0% a year for the top 0.001%. The top 1% has pulled apart from the rest of the economy—not the top 20%. etc.
sanderjd 7y ago
Except the tax preparation industry must be taking a significant enough cut to make it lucrative to spend money lobbying. Is that cut smaller than the total extra tax that would be paid due to mistakes in the auto filing system? I'm skeptical.
- astine 7y ago
  Tax preparers usually file federal taxes for free while charging a fee to file state and local taxes. That's where they make their money.
  - rhacker 7y ago
    So basically even if the IRS wanted to create a system, they would be competing with a free system anyway? And the IRS wouldn't go out and do a system for each state.
  - sanderjd 7y ago
    I suspect (but don't know) that they make more off of the various up-sells for people with more complex filing situations. Also, the free filing is marketing. It's their foot in the door. If something like rapid return happened, they would lose that strategy.
hobs 7y ago
If republicans wanted to make a system where people would save the most money we'd just reduce the tax loopholes and simplify the system - the system we have now actually only has the wealthy pay the least money. Some would say the republicans think this is a feature.
- rattlesnakedave 7y ago
  How do you differentiate deductions from loopholes?
  - dsfyu404ed 7y ago
    Easy. Any deduction you don't use is a loophole, legislative compromise of yesteryear or not.
- rayiner 7y ago
  This is not true. There are tons of bread-and-butter deductions for the middle class. If you do a cross country comparison of taxes, the biggest difference between the US and Europe is not the rich. It’s the folks making $40-100k, where our low brackets plus tons of deductions (mortgage interest, child care, child credits, etc.) drive the effective tax rate way down
  - jacobolus 7y ago
    Folks in Europe comparable to the ones you are talking about here (i.e. the 50th–85th percentile) are generally much more financially stable/comfortable than in the USA. Varies a lot from country to country, but in general they have e.g. more-or-less functional healthcare systems, better parental leave, more vacations, easier access to childcare, stronger worker protections, ....
    - lagadu 7y ago
      A lot of what you mentioned on our side of the pond is paid for by our social security contributions, not from our taxes though.
metaphor 7y ago
> The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers. The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.
- rayiner 7y ago
  The 22% tax bracket goes well above the median income. Meanwhile, in 2010 less than 15% of people filed the 1040ez.
  - metaphor 7y ago
    Bottom end of 22% tax bracket is ~$43k/annum based on 2019 Notice 1036...that's a $23k margin before hitting the $66k AGI threshold for free file offerings. That number is more like ~25mil, or just over 18% in 2017; +4.6% over previous year[1]. EDIT: I suppose I should probably ask what point you were trying to make? I didn't quite track where you were going with all that. [1] https://www.irs.gov/pub/irs-soi/17in01pl.xls https://www.irs.gov/pub/irs-soi/17in01pl.xls
- lightedman 7y ago
  1040EZ was dead as of this year. Have you filed your taxes?
- vonmoltke 7y ago
  > The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer. I was not asked for such a thing, and used a different preparer this year. I was asked to set a PIN for 2018, but I have never had to use a PIN I previously set. I have always been asked for the prior year's AGI for verification. What software asked you for a prior year's PIN to file this year?
losteric 7y ago
> However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. lol. No. First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations. Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.
rebuilder 7y ago
If private tax filing products saved money for their users, as compared to a hypothetical, IRS-produced product, what are these companies worried about? They'd have a clear competitive advantage over the IRS product.
- mac01021 7y ago
  How could they save money, though? The tax code is the same in both cases, and most people's financial lives are not complicated enough to make it any kind of challenge to get the best refund.
  - rebuilder 7y ago
    Then the conclusion is the same: no reason not to let the IRS provide their own tax filing service.

jacobolus 7y ago

It’s not really about making people more or less aware of what they are paying. The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.

deleted 7y ago
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ecopoesis 7y ago
The point is to enrich Intuit and other tax preparers that lobbied for this.
- jumbopapa 7y ago
  That's for point 1. Point 2 is a completely different camp.
  - syn0byte 7y ago
    Point 2 is after-the-fact rationalization so they don't have to admit point 1 in public.
- VSerge 7y ago
  These anti-tax activists seem to be playing the role of Useful Idiots for the much more substantial reason 1, bearing in mind that the very existence of such companies making tax filing easier does indeed destroy point 2 entirely (in addition to the what OP pointed out which also takes away any credit this idea might have had). From a european perspective, having tax returns that are not pre-filled, and having a tax administration that doesn't strive to make payment as easy and quick as possible is nonsensical. Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?
  - jeremyjh 7y ago
    For most people the state gets paid every payday from automatic employer withholdings. If your withholdings are much lower than the obligation then you may pay interest penalties. So it’s not really necessary from a cash flow perspective but still would be much more efficient.

rattlesnakedave 7y ago

A better way to do 2 would be to do away with withholding. After a year of that we’d see a radically different tax system.

randysavage 7y ago
Forcing everyone to make quarterly estimated payments would lead to riots in the streets.
- vernie 7y ago
  Nah, no quarterly estimated payments. You just get your whole salary up front and you're completely fucked in April.
  - dnautics 7y ago
    It might be more effective if we moved filing to the first week of November.
    - dsfyu404ed 7y ago
      Doing that in absence of all other changes would likely have a highly positive outcome in the medium/long term (for tax reform at least).
adjkant 7y ago
Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes. What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea. What would be nice is if we make the easy filing system but explicitly highlight the amount you paid in taxes compared to your income. Most people only judge on refund amount and rarely check the math on the exact taxes owed.

guelo 7y ago

I would classify causing mass pain for political gain as purely evil.

dwighttk 7y ago
So: Politics is evil... Checks out.
tathougies 7y ago
Right because filing your taxes is the moral equivalent of strapping the population to the torture rack
- magduf 7y ago
  He isn't claiming paying taxes is bad, he's claiming (correctly) that lobbying for a complex tax code and to prevent the IRS from offering a free-filing tool because it competes with entrenched tax-filing companies is evil, and it is.

tathougies 7y ago

> The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story. I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.

robmaister 7y ago
There's a few companies that are allowed to efile that do very little besides convert the IRS paper forms to web forms and do the arithmetic for you. They tend to be a lot cheaper than TurboTax/H&R Block. I've been using one of them (OLT) the last two years has worked well enough for me and efile processes a lot faster than paper. I also believe people should be filing their own taxes and understanding how the system works. I've owed money the last two years by underestimating self-employment taxes, so this year I've set up a spreadsheet that tells me how much I'll owe each quarter with all deductions built in and a tiny bit of overestimation.
- tathougies 7y ago
  I make sure to mail them in so uncle sam has to waste his money paying an actual person to input my data.
cascom 7y ago
It’s worth it to me to pay a couple hundred dollars not to deal with it it and have someone else's signature on my return - that being said I have a back of the envelope spreadsheet that estimates my tax liability using about 5 inputs and is usually pretty accurate vs my prepared return
- tathougies 7y ago
  Are you under the impression that having someones signature on the return means you do not owe tax penalties if they do it wrong? If you read the copious amount of detailed instructions the irs provides, you'll soon find that thats not the case

HashThis 7y ago

Congress sells out the american people. Congress doesn't work for the American people. Congress works for moneyed interests (corporations). This is congress aiding crony capitalist theft

tokyodude 7y ago

maybe not exactly the same but it is aguable if the majority of people had to write check to pay their taxes instead of having their taxes auto-deducted by their employer they'd push much harder for lower taxes and less government spending it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k) PS: don't have an opinion if this would be a good or bad idea. can see it both ways

freddie_mercury 7y ago
Why is it "arguable"? What you suggest is exactly how it worked before 1943 and there was a massive expansion of government, government services, and tax rates between 1913 and 1943. The actual historical evidence strongly suggests this theory is spurious and easily dismissed.

onetimemanytime 7y ago

Conspiracy theory: what if IRS (the Govt) when designing the free software with all the options--thousands and thousands of pages https://www.politifact.com/missouri/statements/2017/oct/17/roy-blunt/tax-code-so-long-nobodys-really-sure-its-length/ https://www.politifact.com/missouri/statements/2017/oct/17/r... --lean on the side of the government when in doubt? Intuit, HR Block etc have some sort of guarantee and incentive to save users, IRS not so much. Doesn't even have to be a conspiracy theory ("We need the money so let's make them pay $xx Billion more this year") just the way incentives work. Maybe simplify the code first?

onefuncman 7y ago
The IRS outsources the development of the free software. All the IRS does is publish the tax code in a specific XML format. MEF (mechanized e-file) is the interchange specification. It's rather a shame there's not more open source effort around tax filings...
- magduf 7y ago
  >It's rather a shame there's not more open source effort around tax filings... This is one place where FOSS just isn't going to work. Let me ask you: are you willing to invest a lot of your time and effort into contributing to such a project? No, I didn't think so. Me neither. Here's the problems with it: 1) It's not very fun. Volunteer coders don't want to work on something as deadly-boring as tax filing. 2) It's USA-only: lots of FOSS volunteers are outside the US. They're not going to spend their time on a tax tool they're not going to use. 3) It's constantly changing. The tax code changes every single year. Lots of FOSS projects become mature at some point, and only get maintenance or occasional feature additions. Most do not work according to a schedule. The IRS requires you to file your taxes on April 15, and they release the changes to the tax code a certain amount of time before that, so a project would only have a certain window of time to incorporate all these changes. 4) The risk to users is high, since there's no one really willing to guarantee this product. Of course, bugs in tax-prep software don't absolve taxpayers, but there's still a certain appearance that a big company standing behind a product makes it safer.

dwighttk 7y ago

Checking math? You must have simpler taxes than I do. By the time I’m done entering various non w2 forms I don’t even know what math I’d check.

RayVR 7y ago

The second argument is about raising all relevant barriers to submitting your tax return. If I were in this camp I’d be pushing for everyone to have zero withholding and carry cash to a tax filing center. Ideally, there would be very few tax filing centers so you would need to travel far and wait in line. My bet is that within the first year of this taxes would be massively reduced. Also, very few people would actually be able to pay the government. Again, this is just for the sake of argument.

_archon_ 7y ago
I don't understand what anyone would gain from this. Citizens would be more cash-rich throughout the year, then cash-poor when tax time came. Over the years, people would learn to squirrel away similar amounts to what they're withholding now. Withholdings exist now as a forced savings plan for the poor and a free loan system for the .gov for the upper class. > My bet is that within the first year of this taxes would be massively reduced. Making the filing and paying of taxes difficult and painful won't change a person's tax liability, it'll just irritate every citizen until we collectively demand an easier process. If you can't pay, you get penalties and a payment plan. Don't forget that the IRS is a government entity capable of legally charging, suing, etc. with the force of law. Why would having to travel to a payment center reduce someone's tax liability? I guess I want to know more of the argument, for the sake of argument, because the argument doesn't make sense to me as presented.
- moduspol 7y ago
  The easier and more "automatic" any tax is, the easier it is to hide, and the less people understand that they're paying it. And as they become less aware of what they're paying, it becomes easier to take more. OP is acknowledging the inverse is also true, and that if "automatic" aspects of the system were removed, people would become much more aware of what taxes they are paying, which would lead to public support for reducing the amount.
- indigochill 7y ago
  The anti-tax group wants to make paying taxes as painful and inconvenient as possible based on the assumption that if taxes suck, more people will be more actively in favor of reducing taxes (as opposed to, you know, making the process not suck). It's not about reducing liability at all right now, it's about making more people anti-tax.

ransom1538 7y ago

The US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.

ivm 7y ago
Recently I was filing my taxes in Chile for the first time and it took about 10 minutes because the tax service already knows most of my activities, including stock purchases via a local broker and dividends from them. I only needed to review the form for correctness and press "send".
conanbatt 7y ago
This is not done because the IRS doesn't have the power to enforce its tax system, and if it reported the information it had to the people, the people could know they can slip away with not paying anything that wasnt properly reported. First, a transparent system of the IRS would lower revenue. Second, the deductibles system is very complex for the IRS to pre-calculate it, so they are unable to do it.
- wl 7y ago
  Especially with the tax reform, most folks will be taking the standard deduction. Making the common case easy is still worth pursuing, even if some people will still itemize.
- basseq 7y ago
  You didn't cover the most important—and political—reason: it would delay refunds. 2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks. As the tax refund check is the largest check many Americans receive every year, delaying that payout gets taxpayer advocacy groups up in arms and is tantamount to political suicide. Incidentally, this same gap is where a bulk of tax return fraud happens—equalling billions of dollars. In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone. I haven't seen any analysis that such a system would lower revenues (indeed, it would stop billions of dollars of fraud and tax evasion), or that the deductible system is too complex.