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It's crazy to me that all Americans have to do their taxes every year and are charged for this. Many people in the UK go their entire lives without ever intera

by nly 4y ago

It's crazy to me that all Americans have to do their taxes every year and are charged for this. Many people in the UK go their entire lives without ever interacting with HMRC (our equivalent of the IRS) Self Assessment (doing taxes every year) takes about 20-30 minutes and that's when I'm claiming tax reliefs

rwmj 4y ago
Self Assessment is definitely not "20-30 minutes". Anyway what's crazy is that we have to do this at all. In normal countries the government calculates the tax you owe based on information filed by your employer, bank etc, and then sends you the bill. If you agree with it, you pay that. You are required to do no work at all unless you want to dispute the bill.
- itake 4y ago
  How do you track income that wasn’t from your employer? Like rent? How do you track deductions like installing a heat pump?
  - DangitBobby 4y ago
    > dispute the bill
  - rwmj 4y ago
    You'd have to ask how they do this in one of the European countries that has this kind of system. I suppose for rent you might need to register the rental (not a bad idea for landlords to be registered), and for the heat pump perhaps the installer would claim the discount. As I don't live in one of those countries, I don't know exactly how it works.
Liquix 4y ago
The craziest part is that the IRS verifies this information against their records and will investigate you if things don't match up. If there's a source of truth each citizen's submission must align with, why not just use that to begin with and investigate people whose assets/deposits exceed their expected income?
- twoodfin 4y ago
  To cover the breadth of US tax law, including provisions that impact large swaths of ordinary Americans, the IRS would have to collect a lot more data than they do today. More than likely this would be politically infeasible: Look at the uproar over their (now deferred) attempt to collect information on relatively low-dollar Venmo accounts.
  - maxerickson 4y ago
    The number of people that it would work for would easily justify the cost of the IRS sending out prepared taxes. That some small sliver of people have complicated taxes or want to itemize their expenses is not a good reason to complicate the activity for the majority that have straightforward taxes. And then if you want to simplify, just eliminate deductions altogether (and shift brackets to compensate). Eliminating top bracket income for the mortgage interest on a huge house is pretty regressive, for example.
    - twoodfin 4y ago
      That’s my point: Americans spend a ton of time doing their taxes because taxes are complicated, not because the IRS doesn’t pre-transcribe their W-2. If all you need is the 1040-EZ, you can do that in 20 minutes.
      - maxerickson 4y ago
        Right, the point is that we can and should get that down to 5 minutes. It's just stupid lobbying and weird ideology to insist that the IRS stay out of the preparation business. And then once they start doing it, they can probably figure out how to do it for a larger and larger percentage of people over time (and the tax code can be adjusted to make it work better in cases where it makes sense).
        twoodfin 4y ago
        I think you’re unintentionally making the weird ideologues’ point for them: The burden of taxes isn’t the 5, 10, 20, 200 minutes you spend preparing them, the burden is the taxes. Getting excited about saving taxpayers 15 minutes, and trading off $thousands of deductions for a few more minutes, suggests that you’re optimizing for obscuring the primary burden (the cost of government) rather than reducing it. It’s the weird ideologues who typically want an extremely simple system. But it’s very hard to make such a system as progressive as what we have today without reintroducing complexity.
jwie 4y ago
It’s not that crazy. The US tax code is intentionally complicated to provide space for tax preparation businesses and loopholes.
phpisthebest 4y ago
This is a double edge sword While the Tax Compliance scam is something that needs to be addressed, I am also not a fan of completely automated and "easy" taxation. I think government taking our money should be painful, and in your face. I am not even a fan of automated payroll deduction for this reason, people should experience having the money removed from them every month, week, what ever just like any other bill they have to pay. This psychologically is a check on government overspending as if people were paying 25+% of their income, as a bill payment every month to their government they would be more prone to ask why, instead of what many do today which is just look at their net income and treat the refund as a savings plan or even worse the government "giving" them money We have made it entirely tooooooo easy for governments to take money from us
- aceazzameen 4y ago
  I'm the opposite. I think we Americans have made it entirely too easy for corporations, accountants, and lawyers to swindle money from us. And I'm only referring to instances involving government taxes! I don't need this pain and nonsense every year. I'd rather be enjoying the one life I have.
  - phpisthebest 4y ago
    I don't think these are mutually exclusive...
kwhitefoot 4y ago
Same in Norway only it's even simpler. They send you a text saying your proposed tax return is ready. If you check it and agree you need do nothing at all. Otherwise one corrects the input figures and perhaps adds a little that they don't have direct access to such as overseas investments and property. All online and the system instantly recalculates the tax due. No need to claim any tax relief, it does it for you.
Consultant32452 4y ago
I don't think the government should even allow your employer to automate the payroll deductions. If every family in the country got hundreds of dollars more in their take-home pay and had to write a check to the government like they write a check for their mortgage, it would allow (force?) citizens to really consider the value they get for their money.
- rolenthedeep 4y ago
  This is a terrible idea because people are generally horrible with money. No automatic deductions means that you personally have to estimate and save up for your tax bill at the end of the year. You have to be able to set aside several thousand dollars and not touch it ever. A lot of those people would spend that money instead, and then be unable to pay their taxes at the end of the year. This results in people borrowing money to pay taxes, which is really just an opportunity for lenders to take advantage of people. Consider automatic deductions as deposits into an account you can't see or touch and is only accessible for taxes. That's pretty much exactly what most people would need to save for their taxes in the first place. Once your taxes are withdrawn from that account, you are refunded the difference.
  - Consultant32452 4y ago
    The idea that many people would wind up spending the money and not paying taxes is a feature, not a bug. Adding friction on tax collection and enforcement is the goal.
    - rolenthedeep 4y ago
      I see. What, exactly, do you think this plan would solve?
      - Consultant32452 4y ago
        I already told you in my first post. Payroll deductions are a psychological manipulation used against the public to separate payment from the perception of value. People don't "feel" paying their taxes every two weeks, and therefore are less able to consider the return on that value. Seeing money come into your account and then leaving is a very different emotional experience than less money coming in to begin with.

by nly 4y ago

rwmj 4y ago

Self Assessment is definitely not "20-30 minutes". Anyway what's crazy is that we have to do this at all. In normal countries the government calculates the tax you owe based on information filed by your employer, bank etc, and then sends you the bill. If you agree with it, you pay that. You are required to do no work at all unless you want to dispute the bill.

itake 4y ago
How do you track income that wasn’t from your employer? Like rent? How do you track deductions like installing a heat pump?
- DangitBobby 4y ago
  > dispute the bill
- rwmj 4y ago
  You'd have to ask how they do this in one of the European countries that has this kind of system. I suppose for rent you might need to register the rental (not a bad idea for landlords to be registered), and for the heat pump perhaps the installer would claim the discount. As I don't live in one of those countries, I don't know exactly how it works.

Liquix 4y ago

The craziest part is that the IRS verifies this information against their records and will investigate you if things don't match up. If there's a source of truth each citizen's submission must align with, why not just use that to begin with and investigate people whose assets/deposits exceed their expected income?

twoodfin 4y ago
To cover the breadth of US tax law, including provisions that impact large swaths of ordinary Americans, the IRS would have to collect a lot more data than they do today. More than likely this would be politically infeasible: Look at the uproar over their (now deferred) attempt to collect information on relatively low-dollar Venmo accounts.
- maxerickson 4y ago
  The number of people that it would work for would easily justify the cost of the IRS sending out prepared taxes. That some small sliver of people have complicated taxes or want to itemize their expenses is not a good reason to complicate the activity for the majority that have straightforward taxes. And then if you want to simplify, just eliminate deductions altogether (and shift brackets to compensate). Eliminating top bracket income for the mortgage interest on a huge house is pretty regressive, for example.
  - twoodfin 4y ago
    That’s my point: Americans spend a ton of time doing their taxes because taxes are complicated, not because the IRS doesn’t pre-transcribe their W-2. If all you need is the 1040-EZ, you can do that in 20 minutes.
    - maxerickson 4y ago
      Right, the point is that we can and should get that down to 5 minutes. It's just stupid lobbying and weird ideology to insist that the IRS stay out of the preparation business. And then once they start doing it, they can probably figure out how to do it for a larger and larger percentage of people over time (and the tax code can be adjusted to make it work better in cases where it makes sense).
      - twoodfin 4y ago
        I think you’re unintentionally making the weird ideologues’ point for them: The burden of taxes isn’t the 5, 10, 20, 200 minutes you spend preparing them, the burden is the taxes. Getting excited about saving taxpayers 15 minutes, and trading off $thousands of deductions for a few more minutes, suggests that you’re optimizing for obscuring the primary burden (the cost of government) rather than reducing it. It’s the weird ideologues who typically want an extremely simple system. But it’s very hard to make such a system as progressive as what we have today without reintroducing complexity.

jwie 4y ago

It’s not that crazy. The US tax code is intentionally complicated to provide space for tax preparation businesses and loopholes.

phpisthebest 4y ago

This is a double edge sword While the Tax Compliance scam is something that needs to be addressed, I am also not a fan of completely automated and "easy" taxation. I think government taking our money should be painful, and in your face. I am not even a fan of automated payroll deduction for this reason, people should experience having the money removed from them every month, week, what ever just like any other bill they have to pay. This psychologically is a check on government overspending as if people were paying 25+% of their income, as a bill payment every month to their government they would be more prone to ask why, instead of what many do today which is just look at their net income and treat the refund as a savings plan or even worse the government "giving" them money We have made it entirely tooooooo easy for governments to take money from us

aceazzameen 4y ago
I'm the opposite. I think we Americans have made it entirely too easy for corporations, accountants, and lawyers to swindle money from us. And I'm only referring to instances involving government taxes! I don't need this pain and nonsense every year. I'd rather be enjoying the one life I have.
- phpisthebest 4y ago
  I don't think these are mutually exclusive...

kwhitefoot 4y ago

Same in Norway only it's even simpler. They send you a text saying your proposed tax return is ready. If you check it and agree you need do nothing at all. Otherwise one corrects the input figures and perhaps adds a little that they don't have direct access to such as overseas investments and property. All online and the system instantly recalculates the tax due. No need to claim any tax relief, it does it for you.

Consultant32452 4y ago

I don't think the government should even allow your employer to automate the payroll deductions. If every family in the country got hundreds of dollars more in their take-home pay and had to write a check to the government like they write a check for their mortgage, it would allow (force?) citizens to really consider the value they get for their money.

rolenthedeep 4y ago
This is a terrible idea because people are generally horrible with money. No automatic deductions means that you personally have to estimate and save up for your tax bill at the end of the year. You have to be able to set aside several thousand dollars and not touch it ever. A lot of those people would spend that money instead, and then be unable to pay their taxes at the end of the year. This results in people borrowing money to pay taxes, which is really just an opportunity for lenders to take advantage of people. Consider automatic deductions as deposits into an account you can't see or touch and is only accessible for taxes. That's pretty much exactly what most people would need to save for their taxes in the first place. Once your taxes are withdrawn from that account, you are refunded the difference.
- Consultant32452 4y ago
  The idea that many people would wind up spending the money and not paying taxes is a feature, not a bug. Adding friction on tax collection and enforcement is the goal.
  - rolenthedeep 4y ago
    I see. What, exactly, do you think this plan would solve?
    - Consultant32452 4y ago
      I already told you in my first post. Payroll deductions are a psychological manipulation used against the public to separate payment from the perception of value. People don't "feel" paying their taxes every two weeks, and therefore are less able to consider the return on that value. Seeing money come into your account and then leaving is a very different emotional experience than less money coming in to begin with.