5 ms·

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

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
    I agree absolutely [0]. This would fundamentally upend American policy making, but that's OK. Our elected representatives would have to decide to actively people money for doing things they want to promote rather, which would improve the transparency of legislative goal setting. [0] I don't agree about the flat percentage. The USA has had a progressive tax structure in various ways since its founding, and given the concept of marginal utility, I stronly believe that this is the right way to tax income.
    - nybble41 5y ago
      > The USA has had a progressive tax structure in various ways since its founding… The system I described is still modestly "progressive" in the sense that those with more earnings pay a larger percentage than those with less, due to subtracting the poverty level. (Up to the poverty level, nothing is taxed; at 2X the poverty level, only half your total earnings are taxed; etc.) It starts at 0% and asymptotically approaches the flat rate as earnings increase. To be sure, it's not quite so heavily biased as the current tax tables, but then we also have this principle that the law is supposed to apply equally to everyone and not discriminate on the basis of wealth or status, in either direction. The current political environment targeting a small number of individuals for special taxes or punitive rates based on either their income or wealth practically amounts to a bill of attainder–which would obviously be unconstitutional, and for good reason.
      - PaulDavisThe1st 5y ago
        The concept of marginal utility says that taking different amounts from people with different levels of income/wealth is treating them the same. To a person who earns $10k/yr, $1k is huge (whether it is extra income or owed tax). To a person who earns $1M/yr, $1k is basically pocket change. The utility of that marginal $1k varies for them both. Ergo, to treat them equally, we tax them differently.
        nybble41 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
  I agree absolutely [0]. This would fundamentally upend American policy making, but that's OK. Our elected representatives would have to decide to actively people money for doing things they want to promote rather, which would improve the transparency of legislative goal setting. [0] I don't agree about the flat percentage. The USA has had a progressive tax structure in various ways since its founding, and given the concept of marginal utility, I stronly believe that this is the right way to tax income.
  - nybble41 5y ago
    > The USA has had a progressive tax structure in various ways since its founding… The system I described is still modestly "progressive" in the sense that those with more earnings pay a larger percentage than those with less, due to subtracting the poverty level. (Up to the poverty level, nothing is taxed; at 2X the poverty level, only half your total earnings are taxed; etc.) It starts at 0% and asymptotically approaches the flat rate as earnings increase. To be sure, it's not quite so heavily biased as the current tax tables, but then we also have this principle that the law is supposed to apply equally to everyone and not discriminate on the basis of wealth or status, in either direction. The current political environment targeting a small number of individuals for special taxes or punitive rates based on either their income or wealth practically amounts to a bill of attainder–which would obviously be unconstitutional, and for good reason.
    - PaulDavisThe1st 5y ago
      The concept of marginal utility says that taking different amounts from people with different levels of income/wealth is treating them the same. To a person who earns $10k/yr, $1k is huge (whether it is extra income or owed tax). To a person who earns $1M/yr, $1k is basically pocket change. The utility of that marginal $1k varies for them both. Ergo, to treat them equally, we tax them differently.
      - nybble41 5y ago