10 ms·

Taxes were complicated long before Intuit, its designed that way to benefit the wealthy. If it were simple they couldn't cheat.

prostoalex 5y ago
Isn’t most of the complexity associated with itemized deductions, which at lower levels of income default to a straight-up standard deduction? Or are you referring to some other provisions?
- lsiebert 5y ago
  So the biggest complexity is in terms of capital investments as opposed to income. Basically if you are paid money and put that money in the bank, you pay yearly income taxes on the income the money earns. If you are instead given a bunch of stock shares, you don't pay taxes on the stock when the price goes up, only when it's sold, which leads to all sorts of possible ways to side step paying taxes, or put them off and then paying them in a lump sum, or paying interest on loans secured with the stock, where the loan isn't considered income for tax purposes, etc. https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?op=1 https://www.businessinsider.com/american-billionaires-tax-av...
- nathanvanfleet 5y ago
  1. Your employer already reports how much you made to the government. 2. At the end of the year the government could just send you a summary and give you the ability to apply deductions. The above case would cover 99% of people. Instead you have to do a whole bunch of song and dance using some third party and hopefully the numbers match.
  - da_chicken 5y ago
    They could also assume that not filing assumes standard deduction. The government is already told about nearly everything. The weirdness comes if you work two jobs or are self-employed, which is why the quarterly estimates exist.
- SavantIdiot 5y ago
  > Isn’t most of the complexity associated with itemized deductions I had to laugh a little at this, its like saying, "CPUs, isn't that just a bunch of switches?" Yes, you are correct. But it's been nearly a century of wealthy people hiring lawmakers to create hundreds of thousands of esoteric deductions that are only accessible to people who own business that they can fiddle with, aka rich folks.
  - prostoalex 5y ago
    In the grandparent post you were excusing Intuit’s lobbyism by using a what-aboutist look-the-other-way argument to appoint a different entity (collection of “rich people”) as the designated tormentor for tax code complexity. I surmised that complexities introduced by that group are irrelevant in calculating standard tax return costs, as no one requires a low income earner to deal with vagaries of obscure deductions. It’s mainly Intuit who should be blamed for beefing up those costs. You seem to agree with that statement in your subsequent comment, so I’m no longer sure about the insight you are trying to drive through. Is it just a trivial “taxes are complex, man” thesis?
    - SavantIdiot 5y ago
      > In the grandparent post you were excusing Intuit’s lobbyism by using a what-aboutist look-the-other-way I did nothing of the sort. You inferred your own narrative and are now blaming me. Know what that is called?
      - prostoalex 5y ago
        I must’ve misread. My apologies.
stingrae 5y ago
Intuit lobbied to keep the tax system complicated. In theory the IRS could do your taxes for you and ask for corrections. For most people, they have all the information needed to do taxes and would save people a lot of stress and money.
- antupis 5y ago
  Yeah prefilled tax forms are like defecto in Europe.
  - lsiebert 5y ago
    Think you mean defacto :-D
    - hirako2000 5y ago
      It has also the defect of not just calculating, it takes it from the source, and employers are obliged to comply. It's less headache for tax payers, but makes it harder to not pay. Which until so long ago wasn't even an obligation. Soon we will be getting the automatic calculation, for a fee, and taken from source. It's already starting to happen, medium and other digital economies are doing that. Forced to collect from source , and they pass on the cost of the system to tax payers. If we don't attack the idea of tax, I think it will never end.
      - hirako2000 5y ago
        Oh, those who think taxing is legitimate, downvote all you want. Take a moment to explain this to those who refused from the get go to go around the world spending a portion of this money to bomb millions of people, costing over 2 trillion dollars in Afghanistan alone, money I think would have been sufficient to fund a hospital for everyone who needs it in the entire continent.
        thanatos519 5y ago
        You're not wrong. Please don't conflate taxation as a concept with the actions of a corrupt plutocratic prison state like the USA. In the more socialist capitalist countries, taxation is an effective way to mitigate the effects of the parasitic merchant class.
robomartin 5y ago
> its designed that way to benefit the wealthy "Design" implies intent requiring coordination and effort on the part of a group of people strategically situated to deliver a result. "To benefit the wealthy" identifies a clear and well-defined objective as the focus of such activities. Who came up with the original idea to "design" a tax code "to benefit the wealthy"? Was it more than one person? Names please. What were the design principles? No hand-wavy stuff, looking for specific objectives, etc. Over what period of time? Can you provide a year-by-year (or close enough) summary of the progression of this design and how it met your stated purpose? How? By this I mean: How was such a coordinated effort organized and run over, presumably, decades and through various generations of politicians participating in the process. And, for all of the above, documentation please. I remain puzzled about whether people just stay stuff like this or actually believe it. You don't have to make too much of an effort in digging into these ideas to fully identify them as nonsensical. Yet people believe this stuff without having one shred of proof, evidence, history or documentation. Not very different from folks who believe the COVID vaccine injects you with tiny little robots the government can use to control you (one of the things people say and I don't really know how to react other than to shrug and wish them well). I'll add my own observation to this: No, the US tax code is not designed to benefit the wealthy. It is based on incentivizing behavior through tax breaks/credits. For individuals the simplest example is the ability to deduct your mortgage interest from your income. Another example is the 30% solar system tax credit (I think it's down to 26% now). At the business level you get such things as Section 179 tax credits, which allow you to reduce your tax burden by as much as 100% of the purchase value of qualifying business property. For example, when we purchased our last Haas CNC vertical machining center and all the tooling and software required to design, program and run it, we got a Section 179 tax credit of nearly $250K. The theory behind these incentives is to promote behaviors. We bought equipment. The tax code treats this as a desirable behavior because it creates jobs. The options were: Send the IRS a check for $250K or send them $0 and use that money to buy additional machining capabilities. This is what is called a "no brainer". Everyone wins. This is why businesses can seem to pay zero taxes. Well, if they invest enough money into things the tax code wants them to put money into, they get to pay less taxes. Yet, in certain circles, this is treated with blinding ignorance; the headlines often reading company "x paid zero taxes". Nobody bothers to understand any of it. For the record, I don't like the idea of using the tax code to control behavior. I think this is (was) a terrible idea. It gives politicians tools they should not be able to access. Taxation should be as simple as possible, to a limit. The problems start once you try to simplify it. For example, "You must pay 10% of your income". OK, someone sets up an LLC and pay themselves very little. They pay very little in taxes. This is a very simplistic example to say that one of the reasons for which the tax code quickly gets convoluted is because, in software developer terms, it has to be a massive chain of "if-else if" statements in order to address all permutations and limit cheating to the extent possible. Once you start down that path you end-up with never-ending complexity because we don't have a way to control it. Perhaps a simpler approach would have no income tax at all for anyone (state of federal). All the money needed to run governments at various levels comes from taxing transactions. There are hundreds, if not thousands, of options here. For example, tax every electronic funds transfer; tax every single imported good; national VAT, etc. Not a simple idea. There are no simple options. Maybe that's my point. It wasn't designed to benefit the rich, it turned into a monster that requires more and more "if else-if" statements to be added every year because we find more and more conditions that require evaluation. It's crazy. Not sure what they right answer might be. Not sure there is a right answer at all. And, no, what they do in (country) "m" has no bearing whatsoever on what is done or should be done in any other country. Tax codes evolve almost like natural selection, they respond to evolutionary pressure and each makes sense (to the extent possible) within the nation it evolved from.
jjtheblunt 5y ago
Maybe there's no "design" and it's complex as an emergent phenomenon from never being refactored as new rules were added year after year; the result benefits those who can pay others to figure it out, basically the rich.
Iv 5y ago
In France taxes come pre-filled. Cheating is equally simple: you just "forget" to fill additional fields. No, TurboTax seems like a clear case of lobbying where millions are inconvenience just so that a handful of executive keep an underserved revenue.
circa 5y ago
Agreed, and to make jobs/keep people employed.
cosmodisk 5y ago
What makes taxes complicated for an average Joe in the US, who's got a job and doesn't engage in some complex activities that are more useful to the top 0.1% ? I used to do my own taxes in the UK and while the process is fairly straightforward (would never pay anyone to do it) but the terminology in some cases is outright silly. Now I'm in Lithuania, where I could file my tax returns just by logging into my online banking. It'd be interesting to see how it's on the other side of the pond.
- throwaway0a5e 5y ago
  Nothing. It's basically just an exercise in copying info from a few sources into a web form. Once you have your W2s (basically an annual pay stub) you can click through any of the free tax services in under an hour. If you have mortgage interest or student loan interest add however long it takes you to get those forms (they usually mail you a form telling you what you need to know for your taxes that year) or dig up the PDF version on your online account with the creditor. I just magnet the forms to the fridge as they show up at the beginning of the year and file once I have them all.
  - mkr-hn 5y ago
    Those free tax services exist because they lobby the government to keep it from offering free filing itself so companies can push paid services to free filers who don't really need those paid services.
    - throwaway0a5e 5y ago
      Yes and? That doesn't affect the answer to his question. Regardless of who's letterhead the guy who built the web form's pay stub is on the process is still the same. Having to click "no" on a few more screens doesn't make it much more challenging.

prostoalex 5y ago

Isn’t most of the complexity associated with itemized deductions, which at lower levels of income default to a straight-up standard deduction? Or are you referring to some other provisions?

lsiebert 5y ago
So the biggest complexity is in terms of capital investments as opposed to income. Basically if you are paid money and put that money in the bank, you pay yearly income taxes on the income the money earns. If you are instead given a bunch of stock shares, you don't pay taxes on the stock when the price goes up, only when it's sold, which leads to all sorts of possible ways to side step paying taxes, or put them off and then paying them in a lump sum, or paying interest on loans secured with the stock, where the loan isn't considered income for tax purposes, etc. https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?op=1 https://www.businessinsider.com/american-billionaires-tax-av...
nathanvanfleet 5y ago
1. Your employer already reports how much you made to the government. 2. At the end of the year the government could just send you a summary and give you the ability to apply deductions. The above case would cover 99% of people. Instead you have to do a whole bunch of song and dance using some third party and hopefully the numbers match.
- da_chicken 5y ago
  They could also assume that not filing assumes standard deduction. The government is already told about nearly everything. The weirdness comes if you work two jobs or are self-employed, which is why the quarterly estimates exist.
SavantIdiot 5y ago
> Isn’t most of the complexity associated with itemized deductions I had to laugh a little at this, its like saying, "CPUs, isn't that just a bunch of switches?" Yes, you are correct. But it's been nearly a century of wealthy people hiring lawmakers to create hundreds of thousands of esoteric deductions that are only accessible to people who own business that they can fiddle with, aka rich folks.
- prostoalex 5y ago
  In the grandparent post you were excusing Intuit’s lobbyism by using a what-aboutist look-the-other-way argument to appoint a different entity (collection of “rich people”) as the designated tormentor for tax code complexity. I surmised that complexities introduced by that group are irrelevant in calculating standard tax return costs, as no one requires a low income earner to deal with vagaries of obscure deductions. It’s mainly Intuit who should be blamed for beefing up those costs. You seem to agree with that statement in your subsequent comment, so I’m no longer sure about the insight you are trying to drive through. Is it just a trivial “taxes are complex, man” thesis?
  - SavantIdiot 5y ago
    > In the grandparent post you were excusing Intuit’s lobbyism by using a what-aboutist look-the-other-way I did nothing of the sort. You inferred your own narrative and are now blaming me. Know what that is called?
    - prostoalex 5y ago
      I must’ve misread. My apologies.

stingrae 5y ago

Intuit lobbied to keep the tax system complicated. In theory the IRS could do your taxes for you and ask for corrections. For most people, they have all the information needed to do taxes and would save people a lot of stress and money.

antupis 5y ago
Yeah prefilled tax forms are like defecto in Europe.
- lsiebert 5y ago
  Think you mean defacto :-D
  - hirako2000 5y ago
    It has also the defect of not just calculating, it takes it from the source, and employers are obliged to comply. It's less headache for tax payers, but makes it harder to not pay. Which until so long ago wasn't even an obligation. Soon we will be getting the automatic calculation, for a fee, and taken from source. It's already starting to happen, medium and other digital economies are doing that. Forced to collect from source , and they pass on the cost of the system to tax payers. If we don't attack the idea of tax, I think it will never end.
    - hirako2000 5y ago
      Oh, those who think taxing is legitimate, downvote all you want. Take a moment to explain this to those who refused from the get go to go around the world spending a portion of this money to bomb millions of people, costing over 2 trillion dollars in Afghanistan alone, money I think would have been sufficient to fund a hospital for everyone who needs it in the entire continent.
      - thanatos519 5y ago
        You're not wrong. Please don't conflate taxation as a concept with the actions of a corrupt plutocratic prison state like the USA. In the more socialist capitalist countries, taxation is an effective way to mitigate the effects of the parasitic merchant class.

robomartin 5y ago

> its designed that way to benefit the wealthy "Design" implies intent requiring coordination and effort on the part of a group of people strategically situated to deliver a result. "To benefit the wealthy" identifies a clear and well-defined objective as the focus of such activities. Who came up with the original idea to "design" a tax code "to benefit the wealthy"? Was it more than one person? Names please. What were the design principles? No hand-wavy stuff, looking for specific objectives, etc. Over what period of time? Can you provide a year-by-year (or close enough) summary of the progression of this design and how it met your stated purpose? How? By this I mean: How was such a coordinated effort organized and run over, presumably, decades and through various generations of politicians participating in the process. And, for all of the above, documentation please. I remain puzzled about whether people just stay stuff like this or actually believe it. You don't have to make too much of an effort in digging into these ideas to fully identify them as nonsensical. Yet people believe this stuff without having one shred of proof, evidence, history or documentation. Not very different from folks who believe the COVID vaccine injects you with tiny little robots the government can use to control you (one of the things people say and I don't really know how to react other than to shrug and wish them well). I'll add my own observation to this: No, the US tax code is not designed to benefit the wealthy. It is based on incentivizing behavior through tax breaks/credits. For individuals the simplest example is the ability to deduct your mortgage interest from your income. Another example is the 30% solar system tax credit (I think it's down to 26% now). At the business level you get such things as Section 179 tax credits, which allow you to reduce your tax burden by as much as 100% of the purchase value of qualifying business property. For example, when we purchased our last Haas CNC vertical machining center and all the tooling and software required to design, program and run it, we got a Section 179 tax credit of nearly $250K. The theory behind these incentives is to promote behaviors. We bought equipment. The tax code treats this as a desirable behavior because it creates jobs. The options were: Send the IRS a check for $250K or send them $0 and use that money to buy additional machining capabilities. This is what is called a "no brainer". Everyone wins. This is why businesses can seem to pay zero taxes. Well, if they invest enough money into things the tax code wants them to put money into, they get to pay less taxes. Yet, in certain circles, this is treated with blinding ignorance; the headlines often reading company "x paid zero taxes". Nobody bothers to understand any of it. For the record, I don't like the idea of using the tax code to control behavior. I think this is (was) a terrible idea. It gives politicians tools they should not be able to access. Taxation should be as simple as possible, to a limit. The problems start once you try to simplify it. For example, "You must pay 10% of your income". OK, someone sets up an LLC and pay themselves very little. They pay very little in taxes. This is a very simplistic example to say that one of the reasons for which the tax code quickly gets convoluted is because, in software developer terms, it has to be a massive chain of "if-else if" statements in order to address all permutations and limit cheating to the extent possible. Once you start down that path you end-up with never-ending complexity because we don't have a way to control it. Perhaps a simpler approach would have no income tax at all for anyone (state of federal). All the money needed to run governments at various levels comes from taxing transactions. There are hundreds, if not thousands, of options here. For example, tax every electronic funds transfer; tax every single imported good; national VAT, etc. Not a simple idea. There are no simple options. Maybe that's my point. It wasn't designed to benefit the rich, it turned into a monster that requires more and more "if else-if" statements to be added every year because we find more and more conditions that require evaluation. It's crazy. Not sure what they right answer might be. Not sure there is a right answer at all. And, no, what they do in (country) "m" has no bearing whatsoever on what is done or should be done in any other country. Tax codes evolve almost like natural selection, they respond to evolutionary pressure and each makes sense (to the extent possible) within the nation it evolved from.

jjtheblunt 5y ago

Maybe there's no "design" and it's complex as an emergent phenomenon from never being refactored as new rules were added year after year; the result benefits those who can pay others to figure it out, basically the rich.

Iv 5y ago

In France taxes come pre-filled. Cheating is equally simple: you just "forget" to fill additional fields. No, TurboTax seems like a clear case of lobbying where millions are inconvenience just so that a handful of executive keep an underserved revenue.

circa 5y ago

Agreed, and to make jobs/keep people employed.

cosmodisk 5y ago

What makes taxes complicated for an average Joe in the US, who's got a job and doesn't engage in some complex activities that are more useful to the top 0.1% ? I used to do my own taxes in the UK and while the process is fairly straightforward (would never pay anyone to do it) but the terminology in some cases is outright silly. Now I'm in Lithuania, where I could file my tax returns just by logging into my online banking. It'd be interesting to see how it's on the other side of the pond.

throwaway0a5e 5y ago
Nothing. It's basically just an exercise in copying info from a few sources into a web form. Once you have your W2s (basically an annual pay stub) you can click through any of the free tax services in under an hour. If you have mortgage interest or student loan interest add however long it takes you to get those forms (they usually mail you a form telling you what you need to know for your taxes that year) or dig up the PDF version on your online account with the creditor. I just magnet the forms to the fridge as they show up at the beginning of the year and file once I have them all.
- mkr-hn 5y ago
  Those free tax services exist because they lobby the government to keep it from offering free filing itself so companies can push paid services to free filers who don't really need those paid services.
  - throwaway0a5e 5y ago
    Yes and? That doesn't affect the answer to his question. Regardless of who's letterhead the guy who built the web form's pay stub is on the process is still the same. Having to click "no" on a few more screens doesn't make it much more challenging.