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> That information is already there! It's already being calculated! This is a common misconception, especially on HN. For the average tax payer this might be t

by kodah 4y ago

> That information is already there! It's already being calculated! This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm. That's to say, the system you described probably isn't ever going to materialize. The IRS is not some omnipotent entity. They're going to need something akin to TurboTax that asks you a bunch of questions and juxtaposes that with things they know for certain like your net income and net losses that are reported throughout the year. That system also needs to be able to read and adapt to evolving tax code as time goes on.

ok123456 4y ago
Make a buffer of $3k: you don't owe a return unless the difference between what they have per-calculated and what owe is over that. This would eliminate 95% of returns and tax documents. This is roughly what the UK does.
- kodah 4y ago
  The IRS already kind of does this. They know that when someone itemizes their expenses and their net income is x while net losses are y that their itemization has an error threshold of +/-z, where z is an already padded number. All that does is decrease the number of non-random audits they have to do. I'm not sure it'd really make taxes any more simple or complicated than they already are. It's probably important to note there's many different camps here: 1. People who want a simpler tax code (eg: flat tax) 2. People who don't want to have to pay tax processors 3. People who don't want the IRS submission to be an exercise in hedging Personally, I'm more in camp 2, because I recognize our tax code is full of levers we use, that change and adapt, to incentivize activity in the economy.
ldoughty 4y ago
They didn't stop the IRS from telling us what they know and what they expect, and if it's accurate and you don't dispute their information, you pay the bill and attest you have no other income. I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.
renewiltord 4y ago
Interestingly, enough, this is yet another thing to add to the list of things that are impossible to do (according to the Internet) but are already done by someone else that I've encountered in the US: 1. Final price including tax 2. Fiber to the home 3. Optional tax returns 4. High speed rail 5. Unarmed alternatives to police Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled: 1. Fiber to the home (I had it) 2. High speed rail (Acela) 3. Unarmed alternatives to police (Camden, NJ) The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.
dqv 4y ago
>This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm. The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is: IRS: "We think you owe $4,200.69 in taxes" Parents: "Not so fast! We had quadruplets this year, we're taking a credit!" IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck." (I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.) It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?" All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill. The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.
klyrs 4y ago
For those incredibly rare events, the IRS doesn't need perfect omniscience. For the vast majority of the population, for the vast majority of their years filing taxes, it can be extremely simple. A checkbox "did you have a kid, get married or divorced, or die this year" will pretty much cover it for most people. Business taxes are different. That's fine. Accountants are a cost of doing business.
- kodah 4y ago
  16% of the US, or roughly 30M people, also own businesses which take advantage of an evolving and incentivized tax code. That's why I said making it more simple doesn't solve the problems people think it does. An e-file system with the appropriate questions asked could leave our tax system in place and eliminate tax processing fees. Some people have very simple taxes, no doubt, but I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population.
  - pessimizer 4y ago
    > Some people have very simple taxes, no doubt Looks like 84% are left unless you want to peel off a few more. > I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population. Nobody is asking you to. I would absolutely do work for 100% of people that only 84% would be able to fully use. Imagine not building roads because only 84% of people drive.
  - klyrs 4y ago
    Yep, 84% is a pretty big majority, is it not? You aren't really disagreeing with me. The general proposal is that you'd get a "tax bill" that would typically be for $0 for people thanks to automatic payroll deductions, and can be safely ignored if you file your taxes. Businesses would file taxes, the vast majority of people would not. If your concern is that business owners blindly pay bills without reading bold text that says something along the lines of "if you have additional deductions to report, file your taxes, find more information at https:// https://..." then those business owners weren't going to last a year anyway.
theptip 4y ago
The system proposed above is how other countries such as the UK already do it, so hypothesizing that it’s impossible is an easily refutable position. In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.
- Doxin 4y ago
  To add on to this comment, For the last 5 years filing my taxes in the Netherlands has involved logging into the tax app on my phone and then clicking the "yep looks good" button. This year I bought a house so perhaps it'll get a smidge more complex, but my mortgage has already been sent to the IRS-equivalent so I rather expect it to stay roughly the same level of complexity.
Teever 4y ago
It must be pretty disappointing to be a tech-savvy American who has a rough idea of the extent of surveillance that the NSA performs yet is also aware of how little benefit you're able to get from it. It's sad that the IRS can't prefile taxes. The information is there.
idopmstuff 4y ago
> For the average tax payer this might be truthy It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulated-returns https://www.vox.com/23055489/irs-automatic-filing-prepopulat... Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.
smileysteve 4y ago
This covers not only the average but the 90%. The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.
repomies69 4y ago
Weird that in other countries it tends to work as described. My experience is from European countries is that most information is automatically filled in, then you fill the corrections. Most years you don't have to correct or add any information as they have already all of it.

by kodah 4y ago

ok123456 4y ago

Make a buffer of $3k: you don't owe a return unless the difference between what they have per-calculated and what owe is over that. This would eliminate 95% of returns and tax documents. This is roughly what the UK does.

kodah 4y ago
The IRS already kind of does this. They know that when someone itemizes their expenses and their net income is x while net losses are y that their itemization has an error threshold of +/-z, where z is an already padded number. All that does is decrease the number of non-random audits they have to do. I'm not sure it'd really make taxes any more simple or complicated than they already are. It's probably important to note there's many different camps here: 1. People who want a simpler tax code (eg: flat tax) 2. People who don't want to have to pay tax processors 3. People who don't want the IRS submission to be an exercise in hedging Personally, I'm more in camp 2, because I recognize our tax code is full of levers we use, that change and adapt, to incentivize activity in the economy.

ldoughty 4y ago

They didn't stop the IRS from telling us what they know and what they expect, and if it's accurate and you don't dispute their information, you pay the bill and attest you have no other income. I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.

renewiltord 4y ago

Interestingly, enough, this is yet another thing to add to the list of things that are impossible to do (according to the Internet) but are already done by someone else that I've encountered in the US: 1. Final price including tax 2. Fiber to the home 3. Optional tax returns 4. High speed rail 5. Unarmed alternatives to police Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled: 1. Fiber to the home (I had it) 2. High speed rail (Acela) 3. Unarmed alternatives to police (Camden, NJ) The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.

dqv 4y ago

>This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm. The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is: IRS: "We think you owe $4,200.69 in taxes" Parents: "Not so fast! We had quadruplets this year, we're taking a credit!" IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck." (I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.) It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?" All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill. The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.

klyrs 4y ago

For those incredibly rare events, the IRS doesn't need perfect omniscience. For the vast majority of the population, for the vast majority of their years filing taxes, it can be extremely simple. A checkbox "did you have a kid, get married or divorced, or die this year" will pretty much cover it for most people. Business taxes are different. That's fine. Accountants are a cost of doing business.

kodah 4y ago
16% of the US, or roughly 30M people, also own businesses which take advantage of an evolving and incentivized tax code. That's why I said making it more simple doesn't solve the problems people think it does. An e-file system with the appropriate questions asked could leave our tax system in place and eliminate tax processing fees. Some people have very simple taxes, no doubt, but I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population.
- pessimizer 4y ago
  > Some people have very simple taxes, no doubt Looks like 84% are left unless you want to peel off a few more. > I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population. Nobody is asking you to. I would absolutely do work for 100% of people that only 84% would be able to fully use. Imagine not building roads because only 84% of people drive.
- klyrs 4y ago
  Yep, 84% is a pretty big majority, is it not? You aren't really disagreeing with me. The general proposal is that you'd get a "tax bill" that would typically be for $0 for people thanks to automatic payroll deductions, and can be safely ignored if you file your taxes. Businesses would file taxes, the vast majority of people would not. If your concern is that business owners blindly pay bills without reading bold text that says something along the lines of "if you have additional deductions to report, file your taxes, find more information at https:// https://..." then those business owners weren't going to last a year anyway.

theptip 4y ago

The system proposed above is how other countries such as the UK already do it, so hypothesizing that it’s impossible is an easily refutable position. In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.

Doxin 4y ago
To add on to this comment, For the last 5 years filing my taxes in the Netherlands has involved logging into the tax app on my phone and then clicking the "yep looks good" button. This year I bought a house so perhaps it'll get a smidge more complex, but my mortgage has already been sent to the IRS-equivalent so I rather expect it to stay roughly the same level of complexity.

Teever 4y ago

It must be pretty disappointing to be a tech-savvy American who has a rough idea of the extent of surveillance that the NSA performs yet is also aware of how little benefit you're able to get from it. It's sad that the IRS can't prefile taxes. The information is there.

idopmstuff 4y ago

> For the average tax payer this might be truthy It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulated-returns https://www.vox.com/23055489/irs-automatic-filing-prepopulat... Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.

smileysteve 4y ago

This covers not only the average but the 90%. The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.

repomies69 4y ago

Weird that in other countries it tends to work as described. My experience is from European countries is that most information is automatically filled in, then you fill the corrections. Most years you don't have to correct or add any information as they have already all of it.