5 ms·

> 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 pen

by 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-...

by wahern 5y ago

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-...