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This whole situation is a depressing demonstration of the ratchet effect [1]. Intuit obviously doesn't want free filing. They'ee engaging in rent-seeking behav
by jmyeet 5y ago
This whole situation is a depressing demonstration of the ratchet effect [1].
Intuit obviously doesn't want free filing. They'ee engaging in rent-seeking behaviour and free-filing would obviously hurt their business. Politicans are bought ("lobbied") for a pittance.
But the dirty little secret here is the complexity of the tax code. It's truly ridiculous. Everyone fights simplication of the tax code because every simplification will remove somebody's special exemption, write-off, accelerated depreciation schedule, tax credits and so on. Intuit loves this. The tax industry (not just Intuit) loves this: the more complex it is, the more money they make.
Worse, there's almost an institutional resistance to ANY simplification based pretty much on the slippery slope argument: well if they come for Acme Co's tax credits for not growing corn this week they might come for mine next week.
There's also an awful lot of dishonesty built into the system. Payroll and social security taxes are classified as "employer taxes" (in part at least). There are no employer taxes.
Simple example: Social Security is 6.2% on the employer and employee (up to a cap). So if you have a nominal income of $100,000, the employer is really paying you $106,200 and sending $12,400 to the Federal government.
Can't we just call this what it is?
And don't get me started on the bullshit that is the standard deducation.
In an ideal world, I'd like to see a consitutional amendment for universal basic income of $X per US citizen tax resident, a tax free income on the first $Y of personal income and just a flat rate tax beyond that. Congress gets to play with the values of X and Y.
I'm not holding my breath.
[1]: https://en.wikipedia.org/wiki/Ratchet_effect https://en.wikipedia.org/wiki/Ratchet_effect
- dlp211 5y ago> Simple example: Social Security is 6.2% on the employer and employee (up to a cap). So if you have a nominal income of $100,000, the employer is really paying you $106,200 and sending $12,400 to the Federal government. > Can't we just call this what it is? You seem to be under the impression that in the absence of the employer side of the FICA tax, you would be compensated the full $6,200. This however is not the case. It is almost certainly true that you would in fact see very little if that portion went away tomorrow due to how tax incidence works and how your salary is determined.