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To those saying "We should be more like Sweden/Finland!", I'd ask whether those countries have a tax system that is also based on using tax credits and deductio

To those saying "We should be more like Sweden/Finland!", I'd ask whether those countries have a tax system that is also based on using tax credits and deductions to lower your tax due? I don't know the tax codes in those countries but my guess is that, because they use the tax entity-created system, they do not have such a complicated tax code as the US. In the US, you have two sides of this: (1) the IRS, and (2) CPAs, CPA firms, and software firms like Intuit who profit from helping customers file taxes. The question always is, "Why would I pay someone to file my taxes?" The answer is, "If they can save you more than their fee, it's worth it." In other words, if they charge $100 but save you $101 in "tax due", you have a net "win" of $1 thus you should hire a professional. Why does this work? For the CPAs, CPA firms, and software firms like Intuit, you have a professional who is taking your money and offers a reasonable expectation that, as a result of using their software, you will save more money than you pay in fees because they will help you find deductions and tax credits that you would've been hard pressed to find yourself. These companies compete in a free market for your money, both with other software companies and with CPAs/CPA firms. The "winner" (for a particular user/client) is the one who (a) has the best reputation of not getting you audited, and (b) who gets you the best price:deduction ratio. On the other hand, you have a government entity whose sole charge is to collect revenue. Is their system going to be designed to help you get as many deductions as possible? Are they going to prompt you to deduct moving expenses (just to pick one example)? Maybe, maybe not. The question is legit though and thus causes us all to say, "Wait a minute... maybe, since there is a financial incentive for them not to show me deductions, that they will hide some of that (or make finding it as complex as the tax code)." If Intuit/et al help you save $5000 in taxes this year by helping you deduct all that you can, Intuit/et al do not make one penny more - that money simply stays in your pocket. And you probably smile, buy a new car/vacation/etc. And you certainly tell your friends, "You should use Intuit!" If the IRS helps you save $5000 that you would have otherwise paid (b/c you did not fully deduct all that you could have), then the IRS loses $5000. That in and of itself highlights the problem. Do you trust the IRS to say, "It's okay if we lose $5000 - you're happy, right? That's what matters!"? Of course not. Having the separation works in the US for this clear conflict of interest. Again - I don't know the tax code of the Euro countries but I'd be interested to hear if they have a similar setup and how they work around this. It's logical to think that the IRS could invest $500 million building such a system and then no one uses it because paying $30 to Intuit/etc results in a higher refund for the above reasons...

maxerickson 14y ago
So you're proposing that ~$3 per taxpayer is a huge risk? I think lots of people will see your point and still believe that a system where the IRS tells you what it thinks is true would be an improvement over the current system (somehow, pre-filled forms, whatever).
MBCook 14y ago
Ignore all the deductions and other stuff. It's a mess and should be fixed, but for this simple issue, it's not relevant. I get W2s, 1099s, 1099-Rs, 1099-INTs, THX-1178s, ABC-123s, etc. I have to manually copy the stuff from boxes 1-30 on each of those onto my returns. I'd file my taxes in January expect it takes weeks for all the various organizations I deal with to make those and send them through the mail. I shouldn't have to enter any of that. The government already knows it, they'll check my return against it. When I start my return, it should be pre-filled. It's sad that Intuit and H&R Block fight this; though I'm not surprised. I'd say the government should provide a direct copy of the 1040 form online with this boxes pre-filled. Intuit and H&R Block should make their money by making easier forms and providing guidance. Note that "keeping the government forms complex" doesn't count as "making easier forms".
- ScottWhigham 14y ago
  I wish all of those would get reported/filled in automatically also. If you have to file for yourself, it's a massive PIA to get all of that info. And in 2013 it's far harder - in the past, I used to get paper copies of everything but this year I received lots of "Please create an account here and then you can download your ABC-123". It takes a day to collect and collate all of the ABC-123s. PIA indeed. And the IRS already has that info - it's double-entry accounting except that it's worse since you are judged on your ability to do it correctly. So yeah, that part of it could certainly be improved!
- smsm42 14y ago
  I don't think they were fighting against online access to IRS data. I think they fought against pre-filled 1040 forms becoming default return without you actually having to do almost anything. The former is innocent and useful, the latter may be a bit more controversial, since the incentive of the IRS is to maximize the taxes, having IRS create the returns may not provide the best option for the people who use it.

maxerickson 14y ago

So you're proposing that ~$3 per taxpayer is a huge risk? I think lots of people will see your point and still believe that a system where the IRS tells you what it thinks is true would be an improvement over the current system (somehow, pre-filled forms, whatever).

MBCook 14y ago

Ignore all the deductions and other stuff. It's a mess and should be fixed, but for this simple issue, it's not relevant. I get W2s, 1099s, 1099-Rs, 1099-INTs, THX-1178s, ABC-123s, etc. I have to manually copy the stuff from boxes 1-30 on each of those onto my returns. I'd file my taxes in January expect it takes weeks for all the various organizations I deal with to make those and send them through the mail. I shouldn't have to enter any of that. The government already knows it, they'll check my return against it. When I start my return, it should be pre-filled. It's sad that Intuit and H&R Block fight this; though I'm not surprised. I'd say the government should provide a direct copy of the 1040 form online with this boxes pre-filled. Intuit and H&R Block should make their money by making easier forms and providing guidance. Note that "keeping the government forms complex" doesn't count as "making easier forms".

ScottWhigham 14y ago
I wish all of those would get reported/filled in automatically also. If you have to file for yourself, it's a massive PIA to get all of that info. And in 2013 it's far harder - in the past, I used to get paper copies of everything but this year I received lots of "Please create an account here and then you can download your ABC-123". It takes a day to collect and collate all of the ABC-123s. PIA indeed. And the IRS already has that info - it's double-entry accounting except that it's worse since you are judged on your ability to do it correctly. So yeah, that part of it could certainly be improved!
smsm42 14y ago
I don't think they were fighting against online access to IRS data. I think they fought against pre-filled 1040 forms becoming default return without you actually having to do almost anything. The former is innocent and useful, the latter may be a bit more controversial, since the incentive of the IRS is to maximize the taxes, having IRS create the returns may not provide the best option for the people who use it.