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Disruption could also come from tax reform. Some countries don't make you figure out things on your own: That's a bit like making a shopper put in the correct p

• wahern 5y ago
  > Some countries don't make you figure out things on your own: That's a bit like making a shopper put in the correct prices on each item they're buying and penalizing then for mistakes. A "Price is Right" game-show version of a tax filing system. The U.S. doesn't make you do this, either. Most people don't itemize deductions. You just plug in the data from your W-2. The percentage of people itemizing was 30%, but with the Trump Tax Cut which capped state and local deductions (i.e. lowered the maximum allowable deduction, effectively increasing taxes on a large number of people) this was predicted to drop to 10%. If you're itemizing, you're in a minority of tax payers, and in most cases a voluntary minority seeking to minimize your taxes in a way that simply wouldn't be possible elsewhere. The U.S. also has one of the highest rates of voluntary tax compliance, and hypothetically that might have something to do with 1) ability to itemize and 2) having to sign on the dotted line every year.
  • kmonsen 5y ago
    Funny you should call it the Trump tax cut since mine went up substantially for the reasons you mention.
    • PaulDavisThe1st 5y ago
      If it went up for the reasons mentioned, it means that your (previousl) itemized deductions put you in a rather small percentage of Americans. Also an unfortunate group: rich enough to have deductions at this scale, but not rich enough to have wriggled out of a large chunk of tax obligations.
      • ineedasername 5y ago
        Or it could have been increased taxes due to the cap on SALT exemptions.
        • PaulDavisThe1st 5y ago
          The standard deduction went up to $12k. If your SALT exemptions exceed that, you're holding a rather costly mortgage.
          • kmonsen 5y ago
            LOL, welcome to the Bay Area. It was not what anyone would call a luxury home, a 3 bedroom townhome.
  • cranekam 5y ago
    > You just plug in the data from your W-2. This is still a lot more work than in many countries, and you still need to either fill in a paper 1040 (plus state taxes where appropriate, and some of those (cough CA) are far from simple), use tax prep software, or someone like H&R Block. In the UK, if you're in the majority of people who have one job and straightforward finances (e.g. not renting property, no CGT, etc) you need to do nothing at all for your taxes. Your employer deducts tax from your wages and that's it. I guess technically you should verify that your "tax code" (the mechanism used to inform employers of what needs withholding) is correct but again, unless your situation is more complex that is a standard figure shared by the rest of the employed workforce. My parents never filed a return in their entire lives.
    • syshum 5y ago
      I am 100% opposed to this model. I am even opposed to Automatic Deductions People should have some "skin" in the game of taxation, if we allow the process to become seamless overtaxation becomes a real problem. Even today people do not treat their Gross income as their income, they look at net. This is the wrong way to look at it. I believe people should have to physically pay the government every month just like you do your water bill, your groceries, etc. If people had to write a check, or trigger an electronic payment to their local taxing authority every month there would likely be more focus on where that money is going, and why the government things they deserve a huge chunk of my income (hint they do not) This prevents the government from just raising taxes and hiding these increases.
      • gpderetta 5y ago
        If their take home goes down because of increased taxation, people will notice.
        • syshum 5y ago
          depends but I would say they would notice less, and would not have as strong reaction to it as they would if they had to write the check themselves. We have history of this as well in the US, a prime example of this is property taxes. When a state raises the income tax rate there are a few grumbles but hardly anyone actively protests, however if property taxes go up people can be found literately in the street protesting because it causes their mortgage to go up (as most people pay property taxes via escrow with their lender) This is direct payment of taxes monthly where the person received the money, then has to pay it out, has a vastly different psychological effect than if the money is seized before ever being received by the person I maintain that the ONLY way the government can get way with the MASSIVE amounts of taxation everyone pays is for 2 primary reasons 1. Distributed collection 2. Automatic Collection If either was not in place the government would have huge amounts of civil unrest because by an large most people would instantly recognized they are being fleeced by the government no different than a mugger on the street
  • Aaargh20318 5y ago
    > You just plug in the data (..) Here in the Netherlands I don't have to plug in any data, everything is pre-filled. Income, bank accounts, mortgage, advances on deductions, etc. All you have to do is verify it (you can change things if necessary, but I've never had to do that). Takes about five minutes max.
    • C19is20 5y ago
      Italy, same.
      • cstork12 5y ago
        My wife is currently fighting with the tax accountant in Italy. Out of curiosity and in order to potentially help her, where do you find these prefilled forms?
    • TedDoesntTalk 5y ago
      If that were to happen in America, an entire industry would be put out of business.
      • brynjolf 5y ago
        Sounds like the industry is sustainable only due to it being an industry in the first place. Good riddance.
      • ghaff 5y ago
        The vast bulk of the accounting industry (including tax software) is not supported by consumers with very basic taxes taking their paperwork down to the mall or typing some numbers into this year's TurboTax.
      • LocalH 5y ago
        So?
      • ineedasername 5y ago
        Well, individual tax prep is just one arm a much larger accounting industry. Individuals that use an accountant for their taxes probably have more complex situations where the sort of streamlines process we're discussing wouldn't suit their needs. Or they're already buying the upgraded business/home-business version of turbotax for the same reason. Most people though just use a tax preparer at something like H&R block. A little searching indicates there's roughly 60k to 80k jobs like this in the US, and they earn (at least at H&R Block) about $16 per hour, and only for about 3 months a year. A small # of tax preparers with a bit more training & experience may provide other financial services in the off-season or assist small business with quaterly filings or bookkeeping. Overall though, you're not talking about much of an industry collapse in terms of people employed. The ones that work in that area year-round will lose some extra hours. The ones that don't, having some experience in finance, might seek further training to get a higher level job of that sort (maybe become an actual accountant) I don't think it should be considered a barrier to ending regulatory capture within this area. Apart from that, a few software products would collapse, losing most customers, retaining the ones that legitimately needed advanced guidance. And the company would probably have to charge the more for it, and possible compete with actual accountants on price in that respect. But I don't think "industry collapse" is correct.
  • ineedasername 5y ago
    Even plugging in your data from a w-2 can be an intimidating process with a a lot of conditionals and a few referals to other forms where you might need to give more information. In turn, those forms may reference still more forms, along with explanatory documents to further define the terms used and provide practical examples. A person may not know that supplemental forms aren't required for their situation until they have gone down that rabbit hole. As for itemizing, again, you may not know if you should itemize or not until you actually go through the process and see where the numbers fall. Meanwhile the IRS is held out as a boogey man who will ruin your life financially if you get something wrong. For most here on HN who deal with interlocking blocks of logic, tech documentation, etc? It's fine, and probably for a plenty of other people too. For a very large number of people though, it's the common paradox that it's only easy once once you already know what you're doing. And for a few weeks/months a year the tax prep industry works hard to convince people it's not something they should try to navigate on their own, and if they do then they're a sucker throwing away refund money because of hidden secret tricks to get more refund money back.
  • lotsofpulp 5y ago
    > The percentage of people itemizing was 30%, but with the Trump Tax Cut which capped state and local deductions (i.e. lowered the maximum allowable deduction, effectively increasing taxes on a large number of people) this was predicted to drop to 10%. 11.4% of tax filers itemized in 2018: https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-glance https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...
• 6510 5y ago
  We could evolve to requiring laws to be implemented as FOSS before they go live. I suspect the right tests could reveal all kinds of bugs, weird edge cases and exploits. Sadly law makers don't know how to code. If they did they would see what bloated monstrosity of complexity a few simple sounding sentences with some simple sounding exceptions produce. Perhaps a large bill and months of delay could provide enough of a clue.
  • wahern 5y ago
    AFAIU, the French Tax Code is effectively defined in terms of an algorithm. There was a recent HN thread (https://news.ycombinator.com/item?id=25208853 https://news.ycombinator.com/item?id=25208853) on a new open-source compiler for the tax code (https://arxiv.org/abs/2011.07966 https://arxiv.org/abs/2011.07966). The paper for the compiler references some interesting literature on the computability of legal codes. For example, > [U.S.] tax law drafting style follows default logic, a non-monotonic logic that is hard to encode in languages with first-order logic (FOL).
    • 6510 5y ago
      Fascinating. I thought Estonia was the only one who kept an eye on difficulty of implementation.
  • qzw 5y ago
    Tax laws are hundreds to thousands of pages each. The complexity is intentional and not accidental. Many carve outs are specifically created for special interest or to target certain constituencies. Edit: referring to the US
• netcan 5y ago
  >>Disruption could also come from tax reform. I'd say that's the most appropriate place, really. It's a designed system, sort of. It's malleable, in that changes occur regularly. The obvious place for bug fixes is here. I get your pessimism in the sense that the same dynamics, politics and systems that have shaped the present problem seem unlikely to have the desire/capability to fix it. OTOH, things stay the same until they don't. There have been a lot of tax systems invented over the last N thousand years. 99.N% of those tax codes are currently extinct. Also... we're due a shift of reigning economic religion, periodically speaking. Maybe the next one will take a differing view on efficiency. Stuff like taxes were always enigmas productivity-wise. For a mill, product-out/labour-in = labour productivity... or product-out/capital for capital efficiency. Either way, efficiency is self evident. For a tax code, legal system or whatnot, there's no way to measure output and no "economists agree" way to know the value of the output even if you could. It could be negative. Well... This now also applies also to JPMorgan, Pfizer, Alphabet, FB and such. Just like it's not obvious that more legal procedures = more justice, measurements of most of the economy's output is increasingly ethereal and unrelated to obvious scarcities. That don't mean nothing definite, but we are in times of change... which means don't bet on long term saminess of most things.
• hahamrfunnyguy 5y ago
  Couldn't agree more. We need tax reform, not software. The returns should be file automatically, if we disagree we can fill out paperwork with what we should be getting.
  • PaulDavisThe1st 5y ago
    Roughly 7% of the US population is self-employed (a little over 10 million people). It's not clear to me what "the returns should be file[d] automatically" means for this group of people. In addition, there are many non-employment based events in the US tax code that change your tax liability. Last year I received a roughly US$3k tax credit because I installed a 6.6kW solar PV array on my house. There are dozens or even hundreds of cases like this in the US tax code.
    • nybble41 5y ago
      > It's not clear to me what "the returns should be file[d] automatically" means for [the self-employed]. The employer files the income forms and handles withholding. If you're self-employed, that means you are responsible for that part. And of course anyone with more complex taxes (e.g. non-W2 income) would still need to file, though they could start with the pre-filled forms. > Last year I received a roughly US$3k tax credit because I installed a 6.6kW solar PV array on my house. There are dozens or even hundreds of cases like this in the US tax code. Yes, and all those special cases should be removed as part of the reform. If they want to hand out money as an incentive for installing a PV system (for example) then they should make that a separate application and payment, since this has nothing to do with collecting taxes. For business income you can subtract legitimate business expenses (since this is about income, not gross revenues), for capital gains you obviously subtract the cost basis, and for personal income you subtract the official poverty level for your household. (If there are multiple filers for one household then they split the deduction.) If the sum is less than zero then you simply pay no taxes—there are no refunds. That's it. No special surtaxes or exclusions. Apply a flat percentage to the total and you're done.
      • PaulDavisThe1st 5y ago
• syshum 5y ago
  >> I am of course pessimistic on tax reform since that general populace just accepts "oh yeah filing taxes sucks" That is not the hold back for tax reform, any efforts to simply the tax code gets push back from every special interest that to keep their deductions, and they point to "the others" as "unfair" deductions, so it never changes. People with kids want to keep the massive deductions for having kids, even though childless people believe that is unfair, people with homes want to keep the deductions for home ownership even though renters believe that is unfair, and so it goes down the line for 1000's and 1000's of loop holes and deductions... Never a one shall be expunged from the code
  • lotsofpulp 5y ago
    Deductions should not exist period. The more transparent way for a government to subsidize something would be to give cash. This would force the government to recognize the costs of the subsidy and who is benefiting from it clearly.