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The government here (Spain) knows the money I make just as any government knows about its citizens. When I'm to do my taxes, I get an auto generated draft and

The government here (Spain) knows the money I make just as any government knows about its citizens. When I'm to do my taxes, I get an auto generated draft and the only thing I have to do is click the "Accept" button. You only have to fill your taxes manually if you're self employed or have some sort of earnings other than your job, in which case, the company that does you accounting, does the taxes for you too in 15 min.

jrockway 5y ago
> The government here (Spain) knows the money I make just as any government knows about its citizens. The problem the IRS is trying to solve is collecting taxes on money they don't know about. For example, if you sell illegal drugs, you should be paying tax on that income. But obviously you don't report to the government the amount of illegal drugs you sell. So they can't just send you a bill for your taxes. It is odd that every American has to suffer for this obscure corner case, but they probably lose a lot of revenue if they stop taxing drug dealers, so here we are.
- monocasa 5y ago
  Drug dealers aren't stupid enough to be reporting their incomes to the IRS, they're just getting an extra criminal charge when they get caught. It's not the IRS caring about losing revenue, but lobbying from tax firms that's the problem.
  - beardog 5y ago
    There's a corner-case to this corner case which is marijuana sales. Legal state vendors are technically violating federal law but the IRS still expects a cut from them, and the ones wanting to stay in good standing are certainly reporting.
    - monocasa 5y ago
      And, staying in context to the discussion, the IRS already knows about all of that from these companies' public state level filings.
- labster 5y ago
  Are they really trying to solve the problem of unreported income? Does it really solve that problem? We could look at that data from the IRS with a little study, and compare it to the productivity costs of millions of Americans compiling tax returns. The main problem tax returns are trying to solve is that Americans aren’t enraged enough at their taxes to demand lower taxes (on the rich) or a much simpler (and regressive) flat tax. I posit that there is no technical or financial incentive at all, and that the aim of the tax filing regulations is entirely political.
- hbrav 5y ago
  I'm pretty confident I'm correctly picking up on sarcasm here. But if I understand correctly, that corner case isn't even "real". Suppose you were a drug dealer in a country that automatically handles tax, and most citizens don't need to file a return, e.g. the UK. I'm pretty confident you can still be prosecuted for failure to report the income from your drug dealing, just as you could be for not reporting any other income where the tax wasn't removed from the paycheck.
- Fomite 5y ago
  Cash tipping can also fall into this, and is hardly an obscure corner case.
mcherm 5y ago
In the USA the government also knows the money you make. They have all the data they need to be able to generate a pre-filled draft, and taxpayers could use that as a starting point and modify it if they needed to take a large tax credit for installing solar panels, or some other such thing which the government doesn't necessarily know about. But it's against the law. The law specifically prohibits the tax agency (IRS) from providing pre-filled tax forms for taxpayers. Why? Who knows... I can't read the minds of Senate and House members! But I'd very confidently place a bet that it's entirely because of careful lobbying by the two companies (Intuit and H&R Block) who make large amounts of money off the current system. References: https://www.vox.com/policy-and-politics/22596072/irs-turbotax-hr-block-free-file-tax-return https://www.vox.com/policy-and-politics/22596072/irs-turbota... https://www.propublica.org/article/turbotax-just-tricked-you-into-paying-to-file-your-taxes https://www.propublica.org/article/turbotax-just-tricked-you...
- Darmody 5y ago
  That was my point. They know the money you make, they can make it free and easy but they don't want to cut the middleman.
  - CrazyCatDog 5y ago
    Even were this not the case—short of an arrest, there is no way for the federal government to “serve you” in a contactable manner—whereas my sense is that this is not the case in Estonia and a growing number of spam nations, ie the government can mandate that citizens be reachable digitally (e.g. portal login is sufficient). The IRS has no inexpensive and scalable way of proving that the person on my end of the Internet is the person with the SSN in the filling (login.gov is great but not pushed throughout all the service branches).
    - ikr678 5y ago
      I think the bigger issue is the complexity of personal taxes in the US. The technology is a solved problem. Australia has had a government provided free tax client since 1998 with pre-fill facilities, which was retired & moved to a web portal in 2016. You have entrenched interests keeping the whole process as difficult as possible.

jrockway 5y ago

> The government here (Spain) knows the money I make just as any government knows about its citizens. The problem the IRS is trying to solve is collecting taxes on money they don't know about. For example, if you sell illegal drugs, you should be paying tax on that income. But obviously you don't report to the government the amount of illegal drugs you sell. So they can't just send you a bill for your taxes. It is odd that every American has to suffer for this obscure corner case, but they probably lose a lot of revenue if they stop taxing drug dealers, so here we are.

monocasa 5y ago
Drug dealers aren't stupid enough to be reporting their incomes to the IRS, they're just getting an extra criminal charge when they get caught. It's not the IRS caring about losing revenue, but lobbying from tax firms that's the problem.
- beardog 5y ago
  There's a corner-case to this corner case which is marijuana sales. Legal state vendors are technically violating federal law but the IRS still expects a cut from them, and the ones wanting to stay in good standing are certainly reporting.
  - monocasa 5y ago
    And, staying in context to the discussion, the IRS already knows about all of that from these companies' public state level filings.
labster 5y ago
Are they really trying to solve the problem of unreported income? Does it really solve that problem? We could look at that data from the IRS with a little study, and compare it to the productivity costs of millions of Americans compiling tax returns. The main problem tax returns are trying to solve is that Americans aren’t enraged enough at their taxes to demand lower taxes (on the rich) or a much simpler (and regressive) flat tax. I posit that there is no technical or financial incentive at all, and that the aim of the tax filing regulations is entirely political.
hbrav 5y ago
I'm pretty confident I'm correctly picking up on sarcasm here. But if I understand correctly, that corner case isn't even "real". Suppose you were a drug dealer in a country that automatically handles tax, and most citizens don't need to file a return, e.g. the UK. I'm pretty confident you can still be prosecuted for failure to report the income from your drug dealing, just as you could be for not reporting any other income where the tax wasn't removed from the paycheck.
Fomite 5y ago
Cash tipping can also fall into this, and is hardly an obscure corner case.

mcherm 5y ago

In the USA the government also knows the money you make. They have all the data they need to be able to generate a pre-filled draft, and taxpayers could use that as a starting point and modify it if they needed to take a large tax credit for installing solar panels, or some other such thing which the government doesn't necessarily know about. But it's against the law. The law specifically prohibits the tax agency (IRS) from providing pre-filled tax forms for taxpayers. Why? Who knows... I can't read the minds of Senate and House members! But I'd very confidently place a bet that it's entirely because of careful lobbying by the two companies (Intuit and H&R Block) who make large amounts of money off the current system. References: https://www.vox.com/policy-and-politics/22596072/irs-turbotax-hr-block-free-file-tax-return https://www.vox.com/policy-and-politics/22596072/irs-turbota... https://www.propublica.org/article/turbotax-just-tricked-you-into-paying-to-file-your-taxes https://www.propublica.org/article/turbotax-just-tricked-you...

Darmody 5y ago
That was my point. They know the money you make, they can make it free and easy but they don't want to cut the middleman.
- CrazyCatDog 5y ago
  Even were this not the case—short of an arrest, there is no way for the federal government to “serve you” in a contactable manner—whereas my sense is that this is not the case in Estonia and a growing number of spam nations, ie the government can mandate that citizens be reachable digitally (e.g. portal login is sufficient). The IRS has no inexpensive and scalable way of proving that the person on my end of the Internet is the person with the SSN in the filling (login.gov is great but not pushed throughout all the service branches).
  - ikr678 5y ago
    I think the bigger issue is the complexity of personal taxes in the US. The technology is a solved problem. Australia has had a government provided free tax client since 1998 with pre-fill facilities, which was retired & moved to a web portal in 2016. You have entrenched interests keeping the whole process as difficult as possible.