7 ms·

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 8y ago
Forcing everyone to make quarterly estimated payments would lead to riots in the streets.
- vernie 8y ago
  Nah, no quarterly estimated payments. You just get your whole salary up front and you're completely fucked in April.
  - dnautics 8y ago
    It might be more effective if we moved filing to the first week of November.
    - dsfyu404ed 8y 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 8y 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.
- rattlesnakedave 8y ago
  This is actually how things were done pre WW2. If people were able to budget for it then, why not now? The current system makes filing taxes and getting refunded seem like a reward, it should probably be a bit painful to do your taxes. Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
  - adjkant 8y ago
    > If people were able to budget for it then, why not now? A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years. > Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit. Given that it directly affects take-home pay, any significant change is pretty noticeable. Heck, even Trump's very small changes for the middle class were noticed on paychecks slightly, though there was also an unequal decrease in witholding that made people's refunds smaller.
    - rplst8 8y ago
      > A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years. While these may play a small part in why people couldn't budget for it now, I think a bigger part of it is that income tax just did not apply to most people in as large of sums that it does today. For example. The lowest tax bracket in 1940 was 4% and went from $0-4000. Median income at that time in the US was about $950.
      - mauricio 8y ago
        Using the tax brackets to measure how much we pay in taxes is incorrect. There are things like Earned Income Credit and other credits that generally relieve the tax burden completely from lower income earners. Check out https://taxfoundation.org/summary-federal-income-tax-data-2017/ https://taxfoundation.org/summary-federal-income-tax-data-20... for an analysis on 2015 US taxes. The bottom 50% of the US paid an average of 3.59% of their income. MarketWatch claims that 44.4% of Americans pay no federal income tax at all: https://www.marketwatch.com/story/81-million-americans-wont-pay-any-federal-income-taxes-this-year-heres-why-2018-04-16 https://www.marketwatch.com/story/81-million-americans-wont-...
u801e 8y ago
I've always thought it would be better to replace the income tax with a national sales tax. Then, for those who earn less and have to spend a greater proportion of their income on essential expenses, the government would credit them through their employer's paycheck (essentially the opposite of what federal withholding is now). For those who earn more, they would receive less credit or won't receive any credit.
- mac01021 8y ago
  What's the benefit compared to what we have now?
  - u801e 8y ago
    Basically, we wouldn't have to go through the process of filing taxes every year, and we wouldn't have to worry about the potential bill and penalties if we didn't have enough money withheld from our paychecks in the last year.
    - mac01021 8y ago
      We would have to file to get the proper credit, though, right?
      - u801e 8y ago
        The W4 form should be sufficient (since it's used to determine the credit, if any, you receive per paycheck). You shouldn't need to file a 1040. Your employer would file the W-2 form which would allow the government to determine your income for the purposes of the amount of credit you receive per paycheck.
        mac01021 8y ago
        So any income other than as a W-2 employee doesn't count influence your credit? This includes capital gains, rent collected from tenants, AdSense revenue. The right way to handle this stuff is not immediately obvious to me.
projektfu 8y ago
I'd say within six months we would be back to the same tax system. People would either get a monthly bill or withholding would be reintroduced. Payroll processors would give people the option to do the withholding. As an experiment we could try to switch to withholding taxes on a quarterly basis. There would be lots of trouble as people hit that first quarter's reduced paycheck.
tathougies 8y ago
Sure.. Having had to pay estimated tax before, i say make everyone do it. Then we'd get rid of these taxes like no ones business

randysavage 8y ago

Forcing everyone to make quarterly estimated payments would lead to riots in the streets.

vernie 8y ago
Nah, no quarterly estimated payments. You just get your whole salary up front and you're completely fucked in April.
- dnautics 8y ago
  It might be more effective if we moved filing to the first week of November.
  - dsfyu404ed 8y 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 8y 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.

rattlesnakedave 8y ago
This is actually how things were done pre WW2. If people were able to budget for it then, why not now? The current system makes filing taxes and getting refunded seem like a reward, it should probably be a bit painful to do your taxes. Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit.
- adjkant 8y ago
  > If people were able to budget for it then, why not now? A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years. > Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see fit. Given that it directly affects take-home pay, any significant change is pretty noticeable. Heck, even Trump's very small changes for the middle class were noticed on paychecks slightly, though there was also an unequal decrease in witholding that made people's refunds smaller.
  - rplst8 8y ago
    > A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years. While these may play a small part in why people couldn't budget for it now, I think a bigger part of it is that income tax just did not apply to most people in as large of sums that it does today. For example. The lowest tax bracket in 1940 was 4% and went from $0-4000. Median income at that time in the US was about $950.
    - mauricio 8y ago
      Using the tax brackets to measure how much we pay in taxes is incorrect. There are things like Earned Income Credit and other credits that generally relieve the tax burden completely from lower income earners. Check out https://taxfoundation.org/summary-federal-income-tax-data-2017/ https://taxfoundation.org/summary-federal-income-tax-data-20... for an analysis on 2015 US taxes. The bottom 50% of the US paid an average of 3.59% of their income. MarketWatch claims that 44.4% of Americans pay no federal income tax at all: https://www.marketwatch.com/story/81-million-americans-wont-pay-any-federal-income-taxes-this-year-heres-why-2018-04-16 https://www.marketwatch.com/story/81-million-americans-wont-...

u801e 8y ago

I've always thought it would be better to replace the income tax with a national sales tax. Then, for those who earn less and have to spend a greater proportion of their income on essential expenses, the government would credit them through their employer's paycheck (essentially the opposite of what federal withholding is now). For those who earn more, they would receive less credit or won't receive any credit.

mac01021 8y ago
What's the benefit compared to what we have now?
- u801e 8y ago
  Basically, we wouldn't have to go through the process of filing taxes every year, and we wouldn't have to worry about the potential bill and penalties if we didn't have enough money withheld from our paychecks in the last year.
  - mac01021 8y ago
    We would have to file to get the proper credit, though, right?
    - u801e 8y ago
      The W4 form should be sufficient (since it's used to determine the credit, if any, you receive per paycheck). You shouldn't need to file a 1040. Your employer would file the W-2 form which would allow the government to determine your income for the purposes of the amount of credit you receive per paycheck.
      - mac01021 8y ago
        So any income other than as a W-2 employee doesn't count influence your credit? This includes capital gains, rent collected from tenants, AdSense revenue. The right way to handle this stuff is not immediately obvious to me.

projektfu 8y ago

I'd say within six months we would be back to the same tax system. People would either get a monthly bill or withholding would be reintroduced. Payroll processors would give people the option to do the withholding. As an experiment we could try to switch to withholding taxes on a quarterly basis. There would be lots of trouble as people hit that first quarter's reduced paycheck.

tathougies 8y ago

Sure.. Having had to pay estimated tax before, i say make everyone do it. Then we'd get rid of these taxes like no ones business