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Lets not forget to note that these companies in the USA have actively lobbied against simplifying taxes for citizens. So yes the size of the country adds comple

Lets not forget to note that these companies in the USA have actively lobbied against simplifying taxes for citizens. So yes the size of the country adds complexity but our nasty capitalism makes it worse.

harryh 7y ago
People say this, but it's not really clear to me if this is true. When I look at my (more complex than average) tax return I see a lot of ways to simplify things but most of them would involve going against a major interest of one of the two parties. Consider, for example, the deductibility of state and local taxes. This is a source of significant tax code complexity, but various constituencies have howled quite loudly about even reducing the amount of the deduction. I am doubtful that it can be eliminated completely.
- willvarfar 7y ago
  https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free https://www.propublica.org/article/inside-turbotax-20-year-f... dives in, but it’s been covered on a gazillion mainstream news coverage over the years.
  - harryh 7y ago
    Yes, I've read that before. I think there is some truth that Intuit has had some role in limiting tax software rollouts by the IRS. However I think it's probably overstated. There is a ton of complexity in the US tax code due to various political interests of the DEMs or GOPs. It's this complexity that is really the source of most of the problems. Unfortunately there just isn't much of a constituency in the US for eliminating tax code complexity.
    - willvarfar 7y ago
      No matter how complicated the tax code, the government know in advance how much you should pay. (Imagine the code was so complicated that they didn’t know, and they relied on your honesty. How well would that work?) In all the countries I’ve lived, the government simply tells you that number. You can dispute it if you think it wrong. In the US, you have to tell them that number, and you had better have added it up right because they can trivially check. Oh, and you pay for this privilege?
      - harryh 7y ago
        No matter how complicated the tax code, the government know in advance how much you should pay. This is not true. Just as an example, I have various business expenses that I incurred while consulting last year. The government has no way of knowing in advance what those expenses are.
        willvarfar 7y ago
        Yes. This is normal in all those countries with free easy tax filing. I regularly adjust the number, claiming various expenses etc. I have been audited twice, which was actually a lot less scary than it sounds. This is normal, easy and doesn’t cost and doesn’t even need complicated software. I have filled in forms, but I believe you can also do it online in the country I’m talking about now.
- lvh 7y ago
  There are two points worth separating here: tax code complexity and for-profit filing. The two are obviously interrelated, but different: Intuit wants for-profit filing so TurboTax makes money, and Intuit also wants tax code complexity to increase the barrier to entry. But the IRS gets to bear the brunt of any complexity in the tax code, and they've already suggested free filing. They also clearly already know what to expect in significant detail anyway, since they adjusted my return last year. This was part of my point with Belgium elsewhere in the tread: Belgium has tremendously intricate (and sensitive) governmental structure, but that hasn't prevented them from making tax filing a postcard for virtually everyone. The actual tax code is a lot more complex than the postcard (though still far less complex than the US' tax code), but the tax authority does the math, suggests a number, and if you have some reason to dispute it you go file a "proper" return. So: yes, maybe we can make the tax code simpler, but that should not preclude us from making _filing_ simpler regardless of how complex the tax code is.
  - harryh 7y ago
    Yes, two different but interrelated things. I'm skeptical that much progress can really be made on the latter (for-profit filing) without significant work on the former (code complexity). Perhaps I am wrong though. Maybe I'll go read about the Belgian tax code. Sounds like some light reading for a Sunday afternoon. ;-)
    - lvh 7y ago
      Can you think of an argument that would be convincing? The IRS already saying they can do it (when they obviously already do the work internally) as well as other countries with more complex governmental structure pulling it off seems like it would be convincing.
      - hundt 7y ago
        Can you point to where the IRS has said that they can prepare returns for taxpayers? As far as I know they can correct isolated pieces of information (e.g. wrong numbers from a W-2) but do not have the ability to prepare a return from scratch. Edit: I mean, they can obviously put all the pieces of information they know about you onto one return and do the calculations. But there will be many pieces they don't know, and I think you are unlikely to get an accurate return without them (or based on guessing). But if the IRS says otherwise I would like to know.
- scarface74 7y ago
  How is that complex? Just like employers send the government your W2 information every year, the states could also. Most people’s tax is not that complicated, especially with the increased standard deduction and most people not itemizing anymore.
- usaar333 7y ago
  Most people are solidly in standard deduction territory after TCJA. If your income is entirely W2 (any stocks sales if any are in tax advantaged accounts) and you take the standard deduction, generally your taxes can be automated easily. That covers most people. Honestly, the only thing that even makes my taxes complicated are investments (made worse by CA diverging from the federal government in matters like HSAs) -- even then, until recently, most of that could be automated from 1099b filings. Turbotax if anything makes taxes more complex than they have to. There are so many things in their "step by step" for deductions that are completely irrelevant if you are taking the standard deduction. It would be a huge improvement for them to simply pose a question: "Is there any chance the sum of the stuff below is going to exceed $14k? YES -- itemize. No -- skip" I suspect they don't do this though to keep convincing users of the need for complex, pricey software.
  - mrep 7y ago
    So true on useless questions in turbo tax. I used credit karma this year and it was way easier than turbo tax simply because i didn't have to answer a million questions.
  - 205guy 7y ago
    Yeah, no. That TCJA (aka Trump's tax cut), moved me from solidly in deductions to just under standard deductions. I guess financially it's slightly better, but it doesn't simplify my taxes. Because now I'm just on the limit, so I have to do the itemization work anyway. I do use TT, and did all my itemizing (an evening of work), just for it to say "you get the standard deduction now!" So I do agree, TT could be much better by explaining the deductions (standard vs itemized) up front and asking if you think you want to answer all the detailed questions. Mortgage interest was always the big one, so all new homeowners would have to itemize. But mortgage interest goes down over time, so you have to keep doing it every year just to see when it's not enough to qualify. You can also deduct your home office, as a percentage of the surface of your home and share of the utilities. That's one that might apply to a lot of tech people. Another big one is charitable donations. Some people give up to $1000 (and more), which could put you over the standard limit. I think the deductions are really what make US tax complicated for the regular person (businesses are another can of worms). It's like saying: you could pay less tax if you can find of all the ways that the tax code has said you can deduct from your income.

harryh 7y ago

People say this, but it's not really clear to me if this is true. When I look at my (more complex than average) tax return I see a lot of ways to simplify things but most of them would involve going against a major interest of one of the two parties. Consider, for example, the deductibility of state and local taxes. This is a source of significant tax code complexity, but various constituencies have howled quite loudly about even reducing the amount of the deduction. I am doubtful that it can be eliminated completely.

willvarfar 7y ago
https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free https://www.propublica.org/article/inside-turbotax-20-year-f... dives in, but it’s been covered on a gazillion mainstream news coverage over the years.
- harryh 7y ago
  Yes, I've read that before. I think there is some truth that Intuit has had some role in limiting tax software rollouts by the IRS. However I think it's probably overstated. There is a ton of complexity in the US tax code due to various political interests of the DEMs or GOPs. It's this complexity that is really the source of most of the problems. Unfortunately there just isn't much of a constituency in the US for eliminating tax code complexity.
  - willvarfar 7y ago
    No matter how complicated the tax code, the government know in advance how much you should pay. (Imagine the code was so complicated that they didn’t know, and they relied on your honesty. How well would that work?) In all the countries I’ve lived, the government simply tells you that number. You can dispute it if you think it wrong. In the US, you have to tell them that number, and you had better have added it up right because they can trivially check. Oh, and you pay for this privilege?
    - harryh 7y ago
      No matter how complicated the tax code, the government know in advance how much you should pay. This is not true. Just as an example, I have various business expenses that I incurred while consulting last year. The government has no way of knowing in advance what those expenses are.
      - willvarfar 7y ago
        Yes. This is normal in all those countries with free easy tax filing. I regularly adjust the number, claiming various expenses etc. I have been audited twice, which was actually a lot less scary than it sounds. This is normal, easy and doesn’t cost and doesn’t even need complicated software. I have filled in forms, but I believe you can also do it online in the country I’m talking about now.
lvh 7y ago
There are two points worth separating here: tax code complexity and for-profit filing. The two are obviously interrelated, but different: Intuit wants for-profit filing so TurboTax makes money, and Intuit also wants tax code complexity to increase the barrier to entry. But the IRS gets to bear the brunt of any complexity in the tax code, and they've already suggested free filing. They also clearly already know what to expect in significant detail anyway, since they adjusted my return last year. This was part of my point with Belgium elsewhere in the tread: Belgium has tremendously intricate (and sensitive) governmental structure, but that hasn't prevented them from making tax filing a postcard for virtually everyone. The actual tax code is a lot more complex than the postcard (though still far less complex than the US' tax code), but the tax authority does the math, suggests a number, and if you have some reason to dispute it you go file a "proper" return. So: yes, maybe we can make the tax code simpler, but that should not preclude us from making _filing_ simpler regardless of how complex the tax code is.
- harryh 7y ago
  Yes, two different but interrelated things. I'm skeptical that much progress can really be made on the latter (for-profit filing) without significant work on the former (code complexity). Perhaps I am wrong though. Maybe I'll go read about the Belgian tax code. Sounds like some light reading for a Sunday afternoon. ;-)
  - lvh 7y ago
    Can you think of an argument that would be convincing? The IRS already saying they can do it (when they obviously already do the work internally) as well as other countries with more complex governmental structure pulling it off seems like it would be convincing.
    - hundt 7y ago
      Can you point to where the IRS has said that they can prepare returns for taxpayers? As far as I know they can correct isolated pieces of information (e.g. wrong numbers from a W-2) but do not have the ability to prepare a return from scratch. Edit: I mean, they can obviously put all the pieces of information they know about you onto one return and do the calculations. But there will be many pieces they don't know, and I think you are unlikely to get an accurate return without them (or based on guessing). But if the IRS says otherwise I would like to know.
scarface74 7y ago
How is that complex? Just like employers send the government your W2 information every year, the states could also. Most people’s tax is not that complicated, especially with the increased standard deduction and most people not itemizing anymore.
usaar333 7y ago
Most people are solidly in standard deduction territory after TCJA. If your income is entirely W2 (any stocks sales if any are in tax advantaged accounts) and you take the standard deduction, generally your taxes can be automated easily. That covers most people. Honestly, the only thing that even makes my taxes complicated are investments (made worse by CA diverging from the federal government in matters like HSAs) -- even then, until recently, most of that could be automated from 1099b filings. Turbotax if anything makes taxes more complex than they have to. There are so many things in their "step by step" for deductions that are completely irrelevant if you are taking the standard deduction. It would be a huge improvement for them to simply pose a question: "Is there any chance the sum of the stuff below is going to exceed $14k? YES -- itemize. No -- skip" I suspect they don't do this though to keep convincing users of the need for complex, pricey software.
- mrep 7y ago
  So true on useless questions in turbo tax. I used credit karma this year and it was way easier than turbo tax simply because i didn't have to answer a million questions.
- 205guy 7y ago
  Yeah, no. That TCJA (aka Trump's tax cut), moved me from solidly in deductions to just under standard deductions. I guess financially it's slightly better, but it doesn't simplify my taxes. Because now I'm just on the limit, so I have to do the itemization work anyway. I do use TT, and did all my itemizing (an evening of work), just for it to say "you get the standard deduction now!" So I do agree, TT could be much better by explaining the deductions (standard vs itemized) up front and asking if you think you want to answer all the detailed questions. Mortgage interest was always the big one, so all new homeowners would have to itemize. But mortgage interest goes down over time, so you have to keep doing it every year just to see when it's not enough to qualify. You can also deduct your home office, as a percentage of the surface of your home and share of the utilities. That's one that might apply to a lot of tech people. Another big one is charitable donations. Some people give up to $1000 (and more), which could put you over the standard limit. I think the deductions are really what make US tax complicated for the regular person (businesses are another can of worms). It's like saying: you could pay less tax if you can find of all the ways that the tax code has said you can deduct from your income.