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> Should the U.S. have an official tax preparation system? That would sure save a lot of people a lot of money, Would it? Seems like a conflict of interest to

by umvi 4y ago

> Should the U.S. have an official tax preparation system? That would sure save a lot of people a lot of money, Would it? Seems like a conflict of interest to me. Down the road the government might be tempted to abuse its control of both tax laws and ubiquitous tax preparation software. I think it would be better if: - Tax laws and tax law updates are required to be released in machine-readable format (i.e. JSON) using a machine-parsable protocol (i.e. converted from "English" to "Tax Grammar") - IRS was required to maintain a public API for submitting returns This would lower barrier-to-entry of tax filing software and weaken incumbents' (i.e. Intuit's) lobbying power. Furthermore, IRS is free to build a tool if they want, so long as it is both open source and dogfoods the public API and public tax law data that everyone else has access to.

runako 4y ago
> the government might be tempted to abuse its control of both tax laws and ubiquitous tax preparation software. Could you describe a scenario where this could be the case? What kind of things would abusive tax prep software do? Would it lie to get people to overpay? Why would the government take that approach instead of just levying directly from people's accounts and/or reducing their refunds?
- nightski 4y ago
  Well the U.S. tax system is heavily dependent on deductions which the IRS often does not have information on. So I'd imagine a lot of people would go with the default when in reality they might be able to save money. That said, Trumps tax law greatly increased the standard deduction so it's not as big of an issue any more.
  - runako 4y ago
    > tax law greatly increased the standard deduction so it's not as big of an issue any more. As of 2019, only ~11% of filers itemized. It would be a good idea to have a public website where 90% of filers could do their taxes for free.
    - nightski 4y ago
      I agree but was just pointing out one method through which this could be turned against filers. If the standard deduction was greatly reduced it could cause taxpayers to pay more tax than they needed. Personally I hate the fact we have so many deductions. I'd love a simplified tax code but I think that would be a tough sell.
- captainoats 4y ago
  The government is naturally incentivized to maximize revenue. Individuals are incentivized to pay as little tax as they can, legally. Private tax prep software is pretty aggressive about identifying all possible deductions to reported income. The government would not be as motivated in designing their own system. You can see this in the paper filing forms, they have detailed instructions, but almost nothing on how to reduce tax paid, besides things like the child tax credit and earned income tax credit.
  - runako 4y ago
    > The government is naturally incentivized to maximize revenue This is a fundamental misunderstanding of the situation. The tax law is what it Congress decides it is. The law depends on taxpayers to report their incomes as well as deductions and other facets of their financial lives (e.g. household size, addresses, etc.). A government-run tax prep site couldn't necessarily pull in all of your deductions, that's correct. But it also couldn't necessarily pull in all your income (especially business income, offshore income, etc.). It's mostly neutral in that respect.
    - missedthecue 4y ago
      But most Americans have at least a few deductions. How many Americans have offshore income? Especially the ones that would be relying on gov. tax prep? In this case, it is mostly one sided
      - runako 4y ago
        See: https://news.ycombinator.com/item?id=32513370 https://news.ycombinator.com/item?id=32513370 Roughly 90% of Americans file using the standard deduction ($13k for a single person, $26k for a married couple filing jointly). Median household income is ~$67k, so the median household is not itemizing. The remaining 10% of people would not be bound to use the free public system.
        missedthecue 4y ago

by umvi 4y ago

runako 4y ago

> the government might be tempted to abuse its control of both tax laws and ubiquitous tax preparation software. Could you describe a scenario where this could be the case? What kind of things would abusive tax prep software do? Would it lie to get people to overpay? Why would the government take that approach instead of just levying directly from people's accounts and/or reducing their refunds?

nightski 4y ago
Well the U.S. tax system is heavily dependent on deductions which the IRS often does not have information on. So I'd imagine a lot of people would go with the default when in reality they might be able to save money. That said, Trumps tax law greatly increased the standard deduction so it's not as big of an issue any more.
- runako 4y ago
  > tax law greatly increased the standard deduction so it's not as big of an issue any more. As of 2019, only ~11% of filers itemized. It would be a good idea to have a public website where 90% of filers could do their taxes for free.
  - nightski 4y ago
    I agree but was just pointing out one method through which this could be turned against filers. If the standard deduction was greatly reduced it could cause taxpayers to pay more tax than they needed. Personally I hate the fact we have so many deductions. I'd love a simplified tax code but I think that would be a tough sell.
captainoats 4y ago
The government is naturally incentivized to maximize revenue. Individuals are incentivized to pay as little tax as they can, legally. Private tax prep software is pretty aggressive about identifying all possible deductions to reported income. The government would not be as motivated in designing their own system. You can see this in the paper filing forms, they have detailed instructions, but almost nothing on how to reduce tax paid, besides things like the child tax credit and earned income tax credit.
- runako 4y ago
  > The government is naturally incentivized to maximize revenue This is a fundamental misunderstanding of the situation. The tax law is what it Congress decides it is. The law depends on taxpayers to report their incomes as well as deductions and other facets of their financial lives (e.g. household size, addresses, etc.). A government-run tax prep site couldn't necessarily pull in all of your deductions, that's correct. But it also couldn't necessarily pull in all your income (especially business income, offshore income, etc.). It's mostly neutral in that respect.
  - missedthecue 4y ago
    But most Americans have at least a few deductions. How many Americans have offshore income? Especially the ones that would be relying on gov. tax prep? In this case, it is mostly one sided
    - runako 4y ago
      See: https://news.ycombinator.com/item?id=32513370 https://news.ycombinator.com/item?id=32513370 Roughly 90% of Americans file using the standard deduction ($13k for a single person, $26k for a married couple filing jointly). Median household income is ~$67k, so the median household is not itemizing. The remaining 10% of people would not be bound to use the free public system.
      - missedthecue 4y ago