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I feel like this is a kind of XY problem that could be solved theoretically by agreeing on a more streamlined tax-regulation. It will take away the ability to f

by vimsee 5y ago

I feel like this is a kind of XY problem that could be solved theoretically by agreeing on a more streamlined tax-regulation. It will take away the ability to fine tune tax deducts and so forth, but in return we can more easily design software to handle our taxes. I find that not having this automated nowadays with the advancement in computing resources that we have at disposal today is surprising.

umeshunni 5y ago
Yes, software can be much simpler if the real world wasn't so complex. The reality is that governments use taxation as one of their tools to reward certain behaviors and population segments and to discourage/punish others. Simplifying taxation is taking that power away from governments. Why would any government choose to divest itself of those powers?
- aniforprez 5y ago
  I don't think any other country does taxes as awfully as the US. Where I live, there's a government provided portal that has most of the stuff already filled from my employer. It gets "complicated" if I earn income from the side such as investments, contract work etc and even that is just a matter of filling forms on their website in a similar manner to how the author suggests filling fields in an Excel sheet and other fields get the values automatically calculated. If I have refunds pending, I pay nothing. If I have taxes to pay, it redirects to my bank, I pay my taxes and I'm done
  - umeshunni 5y ago
    Sure, but the US also generates about 40% of it's income from personal income taxes, compared to ~25% average across OECD https://files.taxfoundation.org/20210217111150/Sources-of-tax-revenue-in-the-United-States-compared-to-OECD-average.-US-tax-revenue-government-revenue-in-the-US-US-federal-tax-revenue-sources-of-revenue-in-the-United-States-2021.png https://files.taxfoundation.org/20210217111150/Sources-of-ta... from https://taxfoundation.org/us-tax-revenue-2021/ https://taxfoundation.org/us-tax-revenue-2021/ My guess reading this (and my experience growing up in India) is that many countries simply ignore income taxes (if you're the average schmoe with a regular job and salary, you pay taxes. If you are a business person of some sort, you simply accept cash, hide your income and pay no taxes) and the country makes for this shortcoming with a 20% VAT.
    - whakim 5y ago
      I'm not sure the OECD is the right comparison point because many OECD members (the Latin American and Eastern European countries, mostly) collect far less in tax revenue than the "more developed" OECD nations like the United States, France, Germany, Sweden or Japan. To use your example of India (I know India isn't in the OECD but it has good tax data, has been studied extensively, and its tax regime isn't miles away from the "less developed" OECD nations) - India collects somewhere on the order of 10% of its national income every year in taxes; the other countries mentioned are in the 40-70% range. For a country that only wants to collect 10% of its national income in taxes it's easy to get away with the (relatively simple) mechanism of consumption taxes; to collect more revenues increasingly progressive forms of taxation, such as income taxes, are required.
    - Closi 5y ago
      Well the UK is at 40% too if you also include national insurance contributions, but both income tax and national insurance are calculated by employers and paid automatically out of your payslip (PAYE). This means most people never have to think about doing a tax return, and also means it’s harder to hide earnings for most people. There is then a process where people with more complex tax affairs then fill in a government questionnaire on a website which instantly calculates the tax rebate/payment required and adjusts your tax balance.
- whakim 5y ago
  In many cases we could encourage/discourage the same behaviors by simply spending money on those things instead of using tax deductions. That's how most countries do it, and as a result their tax systems are much simpler.
SV_BubbleTime 5y ago
We could change the system with a focus on making it easier to file, process, and confirm. OR… Intuit can keep shoveling money into campaign funds. We know what it’ll be.
ajdlinux 5y ago
Or you could just have the government itself develop the software in tandem with the tax regulations. Obviously, even that would still be easier and cheaper with a less complex tax code, but in this thread we're talking about "open source tax software" that shouldn't even really need to exist when the government could just provide a fully functional web portal where the corner cases have been tested exhaustively by the organisation that knows those corner cases better than anyone.
- lbriner 5y ago
  This has to be the most sensible thing. The UK used to say that "tax doesn't have to be taxing", very pithy but then I tried to make a zero return for a dormant company and had to use some horrific software from the HMRC (tax office), which was some weird XML thing that was impossible to understand. If the government had to make the software we all had to use, as well as it being free, it would force the government to consider the cost of modifications when they decide in their infinite wisdom that some new tax-break should be created. Inertia can be good to slow-down knee-jerk politics.

by vimsee 5y ago

umeshunni 5y ago

Yes, software can be much simpler if the real world wasn't so complex. The reality is that governments use taxation as one of their tools to reward certain behaviors and population segments and to discourage/punish others. Simplifying taxation is taking that power away from governments. Why would any government choose to divest itself of those powers?

aniforprez 5y ago
I don't think any other country does taxes as awfully as the US. Where I live, there's a government provided portal that has most of the stuff already filled from my employer. It gets "complicated" if I earn income from the side such as investments, contract work etc and even that is just a matter of filling forms on their website in a similar manner to how the author suggests filling fields in an Excel sheet and other fields get the values automatically calculated. If I have refunds pending, I pay nothing. If I have taxes to pay, it redirects to my bank, I pay my taxes and I'm done
- umeshunni 5y ago
  Sure, but the US also generates about 40% of it's income from personal income taxes, compared to ~25% average across OECD https://files.taxfoundation.org/20210217111150/Sources-of-tax-revenue-in-the-United-States-compared-to-OECD-average.-US-tax-revenue-government-revenue-in-the-US-US-federal-tax-revenue-sources-of-revenue-in-the-United-States-2021.png https://files.taxfoundation.org/20210217111150/Sources-of-ta... from https://taxfoundation.org/us-tax-revenue-2021/ https://taxfoundation.org/us-tax-revenue-2021/ My guess reading this (and my experience growing up in India) is that many countries simply ignore income taxes (if you're the average schmoe with a regular job and salary, you pay taxes. If you are a business person of some sort, you simply accept cash, hide your income and pay no taxes) and the country makes for this shortcoming with a 20% VAT.
  - whakim 5y ago
    I'm not sure the OECD is the right comparison point because many OECD members (the Latin American and Eastern European countries, mostly) collect far less in tax revenue than the "more developed" OECD nations like the United States, France, Germany, Sweden or Japan. To use your example of India (I know India isn't in the OECD but it has good tax data, has been studied extensively, and its tax regime isn't miles away from the "less developed" OECD nations) - India collects somewhere on the order of 10% of its national income every year in taxes; the other countries mentioned are in the 40-70% range. For a country that only wants to collect 10% of its national income in taxes it's easy to get away with the (relatively simple) mechanism of consumption taxes; to collect more revenues increasingly progressive forms of taxation, such as income taxes, are required.
  - Closi 5y ago
    Well the UK is at 40% too if you also include national insurance contributions, but both income tax and national insurance are calculated by employers and paid automatically out of your payslip (PAYE). This means most people never have to think about doing a tax return, and also means it’s harder to hide earnings for most people. There is then a process where people with more complex tax affairs then fill in a government questionnaire on a website which instantly calculates the tax rebate/payment required and adjusts your tax balance.
whakim 5y ago
In many cases we could encourage/discourage the same behaviors by simply spending money on those things instead of using tax deductions. That's how most countries do it, and as a result their tax systems are much simpler.

SV_BubbleTime 5y ago

We could change the system with a focus on making it easier to file, process, and confirm. OR… Intuit can keep shoveling money into campaign funds. We know what it’ll be.

ajdlinux 5y ago

Or you could just have the government itself develop the software in tandem with the tax regulations. Obviously, even that would still be easier and cheaper with a less complex tax code, but in this thread we're talking about "open source tax software" that shouldn't even really need to exist when the government could just provide a fully functional web portal where the corner cases have been tested exhaustively by the organisation that knows those corner cases better than anyone.

lbriner 5y ago
This has to be the most sensible thing. The UK used to say that "tax doesn't have to be taxing", very pithy but then I tried to make a zero return for a dormant company and had to use some horrific software from the HMRC (tax office), which was some weird XML thing that was impossible to understand. If the government had to make the software we all had to use, as well as it being free, it would force the government to consider the cost of modifications when they decide in their infinite wisdom that some new tax-break should be created. Inertia can be good to slow-down knee-jerk politics.