The US should do what other civilized countries do and send you a tax bill. They can give you a simple form to tell them a few things that a lot of people have (donations, change in marital status, new dependent, other income like rent, etc) and then you can either pay the bill or file the regular return because your situation is complicated.
90% of taxpayers only have income the government already knows about, and with some simple data about donations and dependents, most people's tax bills can be calculated and billed.
The only people who would need to prep forms would have such complicated situations that they need a professional.
A FOSS alternative might break paid software's stranglehold on US congress. Less money = less lobbying or change of focus for these companies, allowing space for actual change later on.
All this above. Dystopia for you: Track digital exchange or currency at the Fed level, but they still mandate you file a tax return. It's a control mechanism. That and some taxco maybe has a nice condo in the Bahamas for use by friends. It's a whole accounting industry, not just apps. Have to start somewhere I guess, but it won't matter.
What's stopping someone from making an app that creates a printable 1040 that you can mail to the IRS?
You don't have to digitally submit a tax return.
Taxes were complicated before Intuit existed. What was the cause of that? Blaming Intuit really seems to oversimplify the situation.
In reality there are many smaller variables but I think the single biggest factor is how regulation works. You hardly ever see all the rules thrown out in favor of a new system. It takes more buy in than you will ever get. Instead you can just add or remove a few things at a time. Over time cruft accumulates.
Taxes were complicated worldwide before Intuit came along, but then computers came along and made it possible to simplify. In the other countries they embraced computers and made it easy for the citizens. In the US Intuit embraced computers and then lobbied to keep it complicated for their profits.
They also ran a very successful propaganda campaign, it doesn't take long for a "I don't trust the government to do my taxes" proponent to appear when discussing this (despite the fact that they don't have to).
> Taxes were complicated before Intuit existed. What was the cause of that?
Well, people using the tax code to encourage certain moral and political views. Whether that's good or not depends on your political stance, and probably even various between particular deductions/credits.
But I don't think it's relevant. The tax code is however complicated it is. The point is that the government already knows, more or less, all the right answers. Put that information, in bill form, down, and bill the taxpayer; the commenter above you is also attempting allow for adjustments (such as for things the government might not know about, perhaps like a donation) to permit for the cases the government already know about. The question still stands: why can that not be done, thus freeing most people (whose tax situations are simple) from the burden of needing to file using today's system?
To your points about the rules, I think even in a scheme where the government sends a bill, the rules can quite easily change. Most of the rules today fall into either deductions or credits, or how we account for various sources of income. (E.g., normal income vs. capital gains.) That much could stay the same, and then the government can adjust its own accounting.
You point to the nature of the complications. The complicated bits are opportunities to pay less on taxes. As such, simplifications will always hurt people. It’s not evil Intuit trying to inject complexity into the tax system. It’s lots of taxpayers (individuals and orgs) and acting out of their own self interest.
Taxes are just controversial by nature. Every change that raises taxes is going to be opposed by those people who will be taxed more, and when taxes are lowered it will be opposed by a portion of the people that the reduction doesn’t apply to.
The suggestion here is to not change the complexity of the taxes themselves¹. The suggestion here is to change the complexity of filing those taxes. You can keep all the same credits & deductions that exist today, but still move to a system where the IRS says "here's what we know about your tax situation, are there any adjustments to be made?". For a large majority of people, that latter half is pretty small.
But that's a simpler procedure than forcing them to compute most of what the IRS knows from scratch.
¹But if you want to, that's fine too, it's just not what this thread is about.
We're talking about US taxes right? The US tax code has lots of places where the complexity is purely happenstance. I think Vox did a piece recently about some of the silliness that's not some loophole helping a few tax payers it's just what happens when a sprawling tax code is appealing to special interests.
The average American uses (or should use) the standard deduction. Those using complicated tricks to pay less on taxes are a minority.
> Taxes are just controversial by nature
Yes, but that doesn't mean that anything tax related automatically has no solution, you have to look at the specifics. And in this specific case things could be a bit better for many people.
Well … so I do agree, in a minority. But for example, I still took a tax credit due to investing, which isn't terribly rare. The best information I can find on taxable investment accounts[1] suggests that approximately 33% of Americans are in that bucket. While I concur it is a minority, it's not exactly a small minority.
There's also state-level taxes, where I took a number of deductions such as from renting, which is also a minority, again about a third, and again from investing², so that same third again. I think those two minorities won't share that much overlap, perhaps even enough to get to a majority.
(I should note too that these are criticisms of the complexity of the tax code itself; none of this invalidates the point that the original commenter above this thread started with: that the IRS knows all this and can simply compute a bill, on top of which — if required — alterations can be made. That seems to stand. But while, yes, many people — myself included — take the standard deduction, there's just enough other junk in the taxes that I feel like you can fairly easily wind up hitting one or two complications.)
²Some states, mine included, do not tax income from US government obligations; this is pretty easy to get into accidentally if you're just doing something like a robo-account (which is how I have this situation). But this information is a PITA to get, because it is not captured in any box on a standardized form.
Sure, but for something that applies to 30% of people, they could either ask you if that situation applies to you and then ask you to fill in the info. Like how TurboTax asks you a bunch of questions. But the government would have to ask you as many questions as TurboTax because they already have a lot of the info.
Did you know that around August/September you can log into your IRS account and download all the forms the government has on you for that year?
They would just have to expose that earlier. Or just make the tax deadline October.
> Sure, but for something that applies to 30% of people, they could either ask you if that situation applies to you and then ask you to fill in the info.
Yes, I'm aware. (That's even the argument you're responding to…)
The point is that there are several credits and deductions; some with with P(it applies to me) of ~30%. The point is not P(a given deduction applies to me), but P(any deduction applies to me), and that that probability, I think, is fairly high. To say "yeah but most people can take the standard deduction" is a true statement, but it ignores where the complexity of taxes is. (Heck, I took the standard deduction, and again, there is information required for taxes that is known to all the relevant authorities — just not me, at least not via any official means. If it's input to the tax code, it should be given a Box on a tax form, a the very least.)
> Taxes were complicated before Intuit existed. [...] Blaming Intuit really seems to oversimplify the situation.
Having a complicated tax code certainly makes things difficult in general, but has very little to do with the issue at hand.
The IRS could send you an email in March every year, where you click through to their tax portal. It would show you a list of all the income and deductions and other miscellaneous things they know about. If you have extras, or if any data is incorrect, you can click around and add and change things. It might also start with a short questionnaire to ask if any tax-relevant things have changed about your life (change in dependents, change in marital status, etc.).
For the vast majority of US taxpayers, they won't have to change a thing, and it would take them minutes to finish up.
Yes, there are a lot of rules in the US tax code that can make things complicated. But -- critically -- these things do not apply for the vast majority of taxpayers. For those for whom it does, yes, they will have more work. But it's still going to be less work than the current regime, and none of this precludes having a CPA take care of it for you if you'd prefer that.
I suspect even many of us tech-job types wouldn't have much extra to do. The main thing we'd have to fill in ourselves would be cost basis adjustments for RSU vests. (But really, law should be changed so that brokers are required to report that info to the IRS as well; so dumb that it isn't the case.) The IRS could easily keep track of capital loss carryover, AMT credits, etc., over many years if necessary.
It feels like the argument is often "this won't 100% work for 20% of taxpayers, so we should make the other 80% suffer... and make the 20% still do more work than they'd otherwise have to do".
There are still really just two main reasons we have to do our own taxes:
1. Companies like Intuit who lobby to make it illegal for the IRS to do it for us.
2. Buttholes like Grover Norquist who actively convince people that it's necessary to feel the pain of filing taxes, lest the government slip in new taxes that we don't notice (largest eye-roll in history).
Yes, for a taxpayer who has a salary, a bank account and a brokerage account, and no other income than salary, interest, and investments, the IRS already has every number needed to compute the tax bill. With the last round of tax changes, very few people will have enough deductions (charitable contributions, local taxes, etc.) to make itemized deductions worthwhile. So the IRS could just do what many other countries do, which is to present the taxpayer with a filled-out form, which the taxpayer can either just accept, or amend (perhaps add deductions or unreported income).
>The main thing we'd have to fill in ourselves would be cost basis adjustments for RSU vests.
The cost basis thing used to be a nightmare. At one point with some old stock that got converted to another company's stock with an acquisition, I just threw up my hands and put in a plausible number. (It wasn't a huge amount of money in the scheme of things.) But these days, the only time I've had to manually provide a cost basis to my accountant was when I was donating some stock.
> You hardly ever see all the rules thrown out in favor of a new system. It takes more buy in than you will ever get.
Probably for the same reason that it's rare to see entire codebases scrapped and rebuilt from scratch (and that when you do, it's often the case that you end up with something that isn't an improvement). The judgment behind it has a lot in common with "look at all this terrible complicated code, this could be way simpler, let's just rewrite it." Which also sometimes is hard to get buy-in on, and thank goodness the industry has learned some Chesteron's Fence lessons.
The tax code (like other forms of regulation) does stuff, it's a tool for policy as well as revenue, it creates and reshapes incentives. Criticisms of specific things it does or how it does them make sense. Vague criticisms like "cruft" or "complicated" should be for people who don't have a technical or systems mindset.
And that's before we get to other points. Like the facts that for most people with some W2 income and a few investments, taxes aren't complicated, the system for filing them is, and the reasons for this are some specialized interests combined with partisans who suppose an advantage to making filing aggravating. And where taxes do require professional involvement, that has as much to do with the complexity inherent in situational judgments as proliferation of rules.
I'm glad you're calling out that the US in general has had a complicated tax situation well before the Intuits and the H&R Blocks of the world came into being. It's easy to look to a singular demon when the problem is complex and generational.
However, the callouts for tax return preparation companies lobbying against simplification are still valid. It's also fair to advocate for changing the allocation of energy by the US's IRS from auditing underprivileged folks and slapping them with fines to assisting them in validating that they've met their tax obligations.
But how do you simplify it? You get rid of things. The complexity comes from these different carved out exceptions. This will ultimately hurt some tax payers and they will fight it.
That's not what we're suggesting. You get an email from the IRS that looks like so. The best option for you would depend on your circumstances, but you'd be strictly better off having the choice.
Hello nonethewiser,
We have filled proposed tax returns for you. You may either
The problem isn't that taxes are complicated. For most people, they're really not complicated. They're simple enough for most of us that - like OP suggested - the IRS really could just send you a bill calculated from the information they already have and you could just pay what you owe (or deposit what you receive).
The minority of tax payers who have more complicated taxes would still have to file returns like they do now. But the overwhelming majority of those people are probably already going through professionals or using commercial software (like Intuit's) - not looking for FOSS tax software to do it themselves.
For the typical person who has a W2 and maybe one of two 1099s, tax filing is really straightforward although the IRS could absolutely make it even more straightforward. And, as you say, most people with moderately complicated taxes where they can't just straightforwardly fill in some obvious boxes are arguably better off using a professional.
Other countries have this figured out, but I guess it just must be impossible in the USA. Thank God we have Intuit to help us!
No, Intuit's hands are not clean in this, and while corporate taxes might be intrinsically complicated (the information does have to enter the system somewhere), personal taxes are largely not.
How would you simplify it? The complexity tends to come from rules that create opportunities not to pay taxes. I think any simplification will hurt some tax payers who will fight it out of their own self interest.
For the majority of people taxes were not complex before Intuit. I did my taxes by hand before they were a company. Trump's tax reformed made taxes a lot easier for most people, and before that Regan's tax reforms made taxes a lot easier.
At one time the rich in theory paid 90% tax rate, but via deductions that needed an accountant could get their real rate down to the mid 30%. Now most deductions are gone and their real rates are still in the mid 30% range. The rich needing accountants spread the idea that taxes were hard for most people when in fact with basic 4th grade math they were easy for most people.
I do use software. while taxes by hand are not hard, the computer doesn't forget to copy line 13b from form 1234 to line 36d of form 9876 - as I did one time. The IRS caught that mistake, but then I had to redo my state taxes, and the whole thing was a pain - all caused by forgetting something a computer does automatically.
Tax software makes it seem hard by adding a lot of waits while they calculate. In truth any 8 bit computer could do your taxes in less than a second once the numbers are entered - the rest is just artificial waits to make it seem like it is more complex than it is. That less than a second includes calculating all scenarios to see if you can save money with some deduction or not.
The above applies to 90%. There are situations where you need help - but if you don't already have an accountant to help you with your books that isn't you, and taxes are easy.
This so much. Taxes every year consist of me telling the IRS what it 100% already knows and doing the math it does to check my filing anyway. All the income related forms I get are copied straight to them too. It's such a waste of time and stress, just send me the bill, with my status and what they think I made. If I think something looks terribly wrong fine I can deal with that. If not I pay it and I'm done. Same with states.
I agree that's the main problem that needs to be fixed, but even so some people and most business will still need to file taxes because the federal government isn't omniscient. It would be better if those people had free software to do do their taxes on.
I could imagine a scenario where everyone from your average taxpayer to a large corporation uses the same desktop application to pay taxes. For most taxpayers, they'd fire it up and it downloads all the relevant data from the IRS and asks you if it's correct -- done in five minutes. If people need to add more information they can enter it.
You could accomplish the same thing with an IRS website, but I think it's a little better if there's a desktop app that talks to the IRS over a standardized API, as it means users aren't locked into using the app if they don't want to, and if the source code is available then if someone wants to add features or improve the interface, they can. It's also good to have the business logic be out in the open in a way that users can inspect and change.
(Best case might be an app that can run either as a stand-alone desktop application, or as a web app. The IRS could run their own instance for users who just want a website with the default experience and don't want to install software. States could also run their own instances with whatever extensions they need so you can figure out state taxes at the same time.)
On the contrary, I think this is the only solution that will actually occur.
The reality is America is incredibly difficulty to change. There are just too many people and groups with interest.
And I don't even mean this in the conspiratorial way--it's just that simple taxes are in opposition to some of our other goals.
For instance, we want simple taxes. But we also want to use the tax structure to incentive certain actions (having kids, buying an electric car, or whatever). Every exception is another check everyone else has to do. This is why every year you need to select whether you were a member of the railroad workers union, or invested in tribal lands, etc.
I just am very pessimistic about America's ability to adjust. America is legacy software.
By analogy, there's no way we could have reformed the taxi system. It was only by flanking the issue that anything changed.
The IRS already figures out your taxes, but they only tell you after the fact if they disagree with your own filing.
It seems like it should be possible to do so up front and pre-fill the form online on freefilefillableforms. Then you could either accept it as-is or make changes as needed.
At that point what keeps companies from leasing stuff instead of selling it? That approach sounds like the easiest way to avoid taxes ever, and it has the side effect of making ownership for poorer classes unnecessarily more difficult.
There are a number of influential libertarian & fiscal conservative lobbying groups that have significant sway, that argue that doing so means people become unaware of how they're being taxed, and for how much. Signing the form becomes a tick box exercise.
I can see and empathise with their concerns, but... eh. Just let me have my form thank you.
A tax bill that includes everything you have to pay but no deductions. So you have to pay for tax software or someone to do your taxes anyway or you get ripped off by the government. I would rather get ripped off by a corporation.
I think the FSF's heart is in the right place here, but the real travesty is that the tax code and forms are so complicated for average people to navigate, and the consequences for a mistake can be so great, that even poor people with standard income sources feel they absolutely need professional help filing taxes.
This is absurd. Particularly with W2s and 1099s and the like, the government knows what your tax bill should be anyway and is just sitting there waiting for you to mess up complicated forms and penalize you.
In my (admittedly limited, personal) experience, the consequences are not so great. They send you a letter letting you know what the mistake was, and how to fix it. And then you fix it. The IRS isn't out to punish you, they just want what they're owed.
Playing it up like screwing up your taxes will get you the death penalty is a myth perpetrated by the tax prep lobby.
It's somewhere in between. I know of second hand stories where folks were unintentionally strung along by the IRS. They'd get a notice that they underpaid by $X and it had been Y days with Z% interest being applied. So they send in a check. They get back another notice that their payment was received but the amount due had increased due to interest in the interim so a small balance still remained. Back and forth a few times until finally the person overpays significantly just to end the whole drama until the IRS finally sends a refund.
Is this the end of the world? No. It is stupid, stressful, and potentially ruinous given the economic reality that huge swaths of people can't sustain a surprise bill (outdated and likely worse by now: https://www.cnbc.com/2019/07/20/heres-why-so-many-americans-...).
Now, the cohorts who can't absorb a surprise tax bill likely fall into two camps: unlikely to be hit with a surprise tax bill - their taxes just aren't complicated enough, they don't earn much, etc. But at the same time, surprise 'income' like debt forgiveness can still hurt people.
What happens in the other 20% of cases? It feels like you're just handwaving away a large part of the story and how people react to dealing with the IRS.
And again, if the government already knows your income to this level, why don't they send you a tax bill and completely eliminate the time, energy, and stress that average people face preparing taxes.
The other 20% are where they might actually suspect you of something, but even those are much easier to deal with than people expect.
The only one I know of personally was a friend misfiled his taxes and didn't allocate cost basis for day trading so the IRS had each sale marked as a cost basis of zero, and they sent a letter saying "you owe $800k in taxes based on this" but all he had to do was dig out the cost basis and refile.
And yes, for the vast majority of people who do NOT own a business, they could just send you the 1040 already filled out (there's actually a way to get them to do that IIRC, something like you file for an extension and then request "what tax info do you have on me and the result is basically a filled out 1040).
Same. Every time I got the EIC, I never understood why, but the IRS sent me a check saying, I should have gotten it.
Even the year that I screwed up massively by not realizing I needed to pay the AMT, they just sen me a bill.
The experiences left me thinking that the people that constantly fear monger about the IRS are just out and out committing massive tax fraud. Probably not a coincidence that these are the same people complain the loudest about tax enforcement.
Poor people don't need professional help. There's certainly any industry telling people that they need professional help, but honestly, poor people just take the standard deduction, and if they have kids the Earned Income Tax Credit.
If you can read a W2, and can do basic arithmetic, you're done. As my parents said years ago, "You think it's really that hard when they just grab a bunch of people off the street, stick them behind a folding a table call them H & R Block?"
It's only when you start having to deal with itemized deductions, self-employment, multiple investments, and all the stuff that quite frankly poor people can't afford, do you start to need help, and even then, the filing isn't that big of a deal. It's the structuring to reduce taxes prior to tax day that's complicated as hell.
This comment was absolutely painful to read. It's just so out of touch, it's unbelievable.
There was a time in my life when $100 was my monthly food budget. I had to get dental work done, and even with insurance, it was $400. I had to take out a god damn credit card to pay for it and cut my meager food budget even further to make payments.
I'm on the opposite side of the fence here... Intuit is a business, and can choose to do business as they please. If the FSF doesn't like that, they can write their own tax software. (And not on the IRS' dime/time)
If that's too hard, that's not Intuit's problem. They shouldn't be forced to go FOSS if they don't want to.
Taxes in the Netherlands: go to website, log in with digital ID. Next, next, next, next, finish. Done. Less than 5 minutes. Income, savings accounts, mortgage, all prefilled.
For businesses, complicated households, people dealing with particular life events (divorce, inheritance, special medical deductions) it's a bit more work but still doable.
Our government is strongly incentivized to make taxes easy and even came up with a slogan: "taxes. we can't make them more fun, but we sure can make them easier".
It's clear why they want to make it easy: it takes an army of very expensive staff to address endless questions. And then some even more expensive staff to address tax appeals.
Why couldn't the FSF just develop such software on their own?
You don't even need to make it complicated and walled-garden with eFile, just have the program end up with a printable PDF that you mail to the IRS.
Want to incentivize the IRS to open their eFiling system so someone like the FSF can eFile or make their own ? Just send 10,20,30m paper 1040 forms. That will quickly cause the IRS to want alternatives. This will never work for a simple reason.
The problem, as I see it, is that people misunderstand what value online eFilers offer their customers.
I could have gone on TurboTax website the day I got my W-2, filled out their forms and "get your money in as little as 1 minute," deposited directly into their bank account where you get a virtual debit card. Regardless of your opinions about that scheme, many people are very attracted to it and in my hypothetical paper filing logjam scenario it might take 6 months and legislation to resolve it, nobody wants to wait for their refund, not even for the week or two it takes the IRSs normal ACH, I want it in 1 minute! This is (part of) the real perceived value from companies like TurboTax. Is the FSF going to fund advances like this? Of course not.
The other half of the value proposition from them is protection against mistakes. Again, regardless of the actual utility of these claims, some people are very afraid of making seemingly minor errors on their tax return and being faced with a huge tax bill with huge fees and fines and penalties. Yes, I know that the IRS is actually a semi-reasonable organization and for the average filer the chances of having something like this happen is effectively nil, but, people are attracted to the security of those protection guarantees. Is the FSF going to back their software with a similar liability promise?
I can read tax law, but the problem is you get a month between when the IRS release the rules and when you have to be done - and correct. The big companies put in a lot of work to enter all the rules in the month, and then even more work to validate they are correct. That is boring work that needs to be done every year. If you get something wrong it is the users who find out when the IRS rejects their forms. While it isn't a big deal for that to happen to one person, it is still annoying, and if there are lots of users who hit the same typo that is a lot of annoyed users.
The FSF just doesn't have the ability to do a good job with tax software.
Up until a couple years ago, I used to do my taxes myself. I would just open Excel and start doing one line at a time. The value that goes on the form was the left-most column, and cells to the right of that would be for additional values and calculations. Worksheets and schedules became additional sheets within the workbook. Any change to a value would automatically propagate through the entire thing.
Actually, I saw a comment on HN a while back where someone posted a link to a github repo maintained by some government agency (maybe the CBO? but I think it was more obscure). It was a complete and up to date implementation of the US tax code! They used it to run simulations and estimate tax impact on proposals.
That is comprehensive, but I believe I benefit from the current system in the US.
There is no one single professional, bureaucrat, or representative that understands the simultaneous and interrelated parts of the tax code.
And from I can tell, telling people what compliant thing you found almost guarantees that it changes.
There is an incentive to let the rest of people operate in ignorance and disbelief, while they squabble over “fair share” without defining what that is.
This seems like a surprisingly fix easy for politicians to swallow compared to the real issue (Intuit and H&R block constantly lobbying for a complex tax code). If a free alternative is available we can slowly suffocate those two bad actors until they lose the money to lobby with and then implement a real solution.
This year I found ustaxes.org (AGPL) which could handle federal taxes. For state I used the same method I've heard Stallman uses. Downloaded the form(s) I needed as PDFs (weirdly hard to find, after getting lost on the official site, I found them on another site that just collects and hosts tax forms) and modified them with xournalpp. The remaining gotcha is that I didn't know how to e-file in a libre way, so I had to print off the documents to mail them. I would very much like to see things improve more in this space. I believe I had very simple taxes, and I didn't much care about how much I got back. I would gladly give up the potential return to not have to do this at all.
I started an LLC for my side business and the taxes for that were way more complicated than they should have been even with me paying for software (TaxAct) to help me. In the end I had to go to H&R Block because I was worried I was going to mess something up and over/under pay (more worried about underpaying). I ended up watching someone else enter data into a computer (they messed up my address and my phone number so I had to correct some forms) and while they were able to e-file some of it, other parts I had to send in (paper). It's absurd and my business is tiny and relatively simple.
The fact that I couldn't even find the info I needed online for /what/ I needed to file (let alone /how/) makes me furious. Having to pay ~$400 for someone else to enter basic info feels like robbery. I think for next year I can figure it out but I'm still wary (TaxAct kept asking for all these forms I didn't have and couldn't tell if I needed to "generate" them from my LLC to myself or if that was only for partnerships/corps).
I have zero issues with paying taxes, in fact I'm somewhat happy to pay them but figuring out what I owe is miserable and fills me with anxiety and dread that I might mess up something and get in trouble.
You should have an accountant for that side business who will do taxes for you as part of services. They already have an unlimited account with someone for tax filing that can read from their computer so it is very quick. Plus there actually is good advice an accountant can give you.
Yeah, this is my other plan for next year. I didn't do it this year because I waited too late (I thought I could figure it out) and I didn't look forward to being told I was doing it all wrong (turns out I don't think I was based on what H&R Block said).
Those tax entry people are a scam. Don't ever use them. They're a tax on the computer illiterate and do nothing to indemnify you. They will get things wrong worse than you will and you will have no recourse.
I applaud this. The old official German tax software (ElsterFormular) for doing my taxes was the only reason I kept Windows around on some machine. There used to be a free equivalent with less functionality (Geierlein) developed by a nice person, however the option to communicate with the government backend was shut down for free software (I'm simplifying a lot here, the whole storry is interesting and there's also the ORacle Java required issue etc. etc.).
Germany has since moved to a web based solution (Elster Online) so I can now happily run Linux everywhere. Personally I feel like all government software should be libre because it's paid for by the people so I don't see why it shouldn't be open to the people. At the very least they should provide a clear and freely usable API to communicate with servers for transmitting data.
Humerous sidenote I always thought it was kind of funny that the software is called Elster (magpie). At least someone in the government had a sense of humor.
> "So you can learn how it works and verify it and maybe even make some improvements or find bugs?"
That there, yes! Since it benefits all citizens there is no reason why it should not be able to continually improve and become better so that said benefit grows over time for all concerned. If closed source and / or proprietary, those things will almost certainly only happen in ways that benefit a small select group (the owners of the "IP" / source). If open source / FOSS, then anyone who understands code, or who can hire someone who understands code can contribute improvements and bugfixes that benefit the "greater good". This is one of the "superpowers" of FOSS that few seem willing or able to grasp.
What would it cost the US government to buy out the major tax prep providers? The IRS could then provide free tax estimates to a large percentage of filers, and hire many former tax prep workers as IRS agents.
The government wouldn't have to buy the rest of Intuit. They could just buy the parts necessary for filing US federal income tax returns. Intuit can't actually say no if the government is willing to use the eminent domain power. Yes, just compensation would constitutionally have to be paid, but it would be just compensation for what the government purchased, not for all of Intuit. If somehow this isn't upheld in court (though I think it would be), they could pre-arrange one or more buyers for the rest of Intuit and use the money to be paid by the other buyers for those divisions to fund what would initially be a purchase of all of Intuit.
To save even more money, I wonder if they could even take a page from real estate law where easements for public benefit are sometimes purchased either through the free market or via eminent domain. Under this theory, they wouldn't even have to purchase full ownership of whatever's necessary for US filing purposes, they'd just need to purchase an easement transferring to the federal government Intuit's right to charge US citizens and resident noncitizens for US federal income tax filings via TurboTax, as well as the right to deny these groups TurboTax's US federal income tax filing services. And then the federal government would decline to exercise these two transferred rights.
But yeah, I have no idea if the easement idea would hold up in court, and in any case I doubt the government would be politically willing to use eminent domain against Intuit despite indisputably having the right to do it.
I think a broader issue is that, after the purchase, those decently-well-paid Intuit employees would now be paid according to federal government salary bands, and many of them -- likely many who are critical to the operation of the company -- would quit and find a better-paying job.
We should set our aim higher than hundreds of millions of people spending six+ hours doing math that IRS has already done. Why not go for a pre-filled return at that point? 90% of the population won't need to do much of anything beyond that.
How about 0%(poverty line or below) - 18%(max for anyone) income tax and we forget all other taxes? Income happens when it is realized or upon transfer. I'm sure there's some other definitions that need to be added to this but this is the fairest way I can think of supporting savers, supporting investing, supporting small businesses, and allowing the wealthy to be taxed at a reasonable rate. This also incentivizes congress to actually grow the GDP and work within a budget.
That would likely significantly lower federal tax revenue and shift an even bigger burden of taxes onto lower income folks. We could adopt a graduated taxation system with 1000 gradients of slowly increasing brackets - as long as a computer can "if 18 < x AND x < 20" through the whole list having a reasonably progressive tax bracket system isn't a real cost - it's all the exemptions and BS that make things a pain... basically "I'm sure there's some other definitions that need to be added to this" is where the demons live in your idea - and they're big demons. The basic graduated tax brackets are as clear as water and trivial to implement.
I build software for a living - building a program to take a list of 1000 brackets and compute the graduated tax rate would take about fifteen minutes (in a vacuum).
This is not a real problem.
(In response to your edit)
Do you think accountants are currently working by slide rule? The tax code is currently extremely corrupted by loopholes and exceptions. My original hyperbolic statement was to highlight that the graduation of income tax is dirt simple. We've currently got seven tax brackets and it is trivial to calculate what you're going to owe based on them, even if we pushed seven to a thousand it's still a trivial calculation to run.
There's a lot of people who want the government to stay out of medicare ...
People might feel like not-heres-ville shouldn't get government funding for whatever project but when it comes to any less funding for heres-ville there will be complaints. Its basically reverse NIMBY. You think Iowans want the government to do less weather prediction or crop testing?
> How about 0%(poverty line or below) - 18%(max for anyone) income tax and we forget all other taxes?
How about no? How’d you pick those numbers and a two-tier system? (“Let’s set the top marginal rate of our only tax to approximately the lowest tax-to-GDP ratio of the OECD” is, I suppose, a choice, but its a very odd one.)
> Income happens when it is realized or upon transfer.
In any progressive (including a two-tier like this, which, while far less progressive than the status quo, is still technically a progressive system) system that brings LTCG in line with general income taxation, you also want to allow advance recognition (for sure) and maybe deferment of income spikes, otherwise you end up taxing income that takes multiple years and is nonrepeatable the same as current and repeatable ongoing income, which is unfair to people with irregular income through capital. Doing this, and applying equally to regular income, also is more fair for people with irregular non-capital income, which may be a less-common pattern, but definitely happens.
> this is the fairest way I can think of supporting savers, supporting investing, supporting small businesses, and allowing the wealthy to be taxed at a reasonable rate.
It radically cuts taxes on the wealthy, and "supports" all those things by cutting taxes on the wealthy people doing them. Its just a giant downward shift of net tax burden that also is a massive cut in overall tax revenue.
> This also incentivizes congress to actually grow the GDP and work within a budget.
No, it doesn’t. (I mean, there are incentives to both of those, especially the first, that exist independently, but this doesn’t add to any of them.)
This would cut US Government revenue by over 70%, and would not allow Social Security and Medicaid to be paid out, ignoring all other governmental programs. Nonstarter.
Who here looks at the current US government and thinks “this is working great, let’s have more of it?” Because that’s what more taxes does. It doesn’t fix deficiencies.
Didn’t take 5 minutes before the “roads are good” straw man emerged.
We've got some seriously great government programs. I won't stop you from criticizing the visible parts of the government (politicians can be quite frustrating) but Medicaid and Medicare are both extremely efficient and Social Security is basically why we have such a high expected lifespan. Personally, I am quite thankful for the roads, rail lines, sewage and all the other things living in a modern society gives us.
The construction of roads and rail lines though is enormously overpriced though. It's not like they'd just disappear if we stopped paying taxes.
Instead why not just pay for them directly and get _a lot_ more of them? What if your AAA membership built the actual roads you're driving on and you could buy an unlimited pass, or a pass based on your actual mileage or something like that?
Does your vision involve a single large government mandated corporation (i.e. like a crown corporation up here in Canada) or by individual private companies?
It doesn't take much of an imagination to see how poorly such a world would end up.
We don't need parallel highways built just so corporations can compete on who has the best roads.
And I'm imagining a scenario where one company sells their road network to another, and the new one decides they hate SUVs and so won't allow SUVs on their network, and suddenly my neighbor can't leave the neighborhood because he drives an SUV for work.
Not to mention the extreme number of tolls booths you might have to set up.
the government can figure out how pay interest on its borrowings any way it wants, its just not desperate enough to figure it out thanks to its rent seeking behavior
How can you possibly claim the income tax is on shaky legal ground when there's a Constitutional Amendment that explicitly makes it legal?
How far to the right do you have to go when you start considering the Constitution is shaky? I mean, yeah, people quibble over interpretations, but the 16th Amendment is pretty explicit.
> How far to the right do you have to go when you start considering the Constitution is shaky?
Not that far? For example, the GOP in Texas's Senate passed a law requiring the Commandments in public schools. I find that hard to view as anything other than direct contempt for the Establishment clause. The only pragmatic reading of such a law, should it become law, in today's political climate, is that it exists solely to be challenged, on the hopes that the Supreme Court will … IDK, strike that portion of the 1A or otherwise reinterpret it as completely ineffectual? The Establishment clause is also quite clear (though I grant, not as clear as the 16A, but not as vague as say, "A well regulated Militia" makes the 2A). That's not the only such law, or portion of the Constitution, either, though I'd certainly say it's one of the more clear ones…
FOIA requests take time, though. Financial institutions usually haven't sent in all their data on everyone until February or March; you wouldn't get your information back in time to file your tax return in April.
A simpler tax system will take power away from those currently in charge (whether they are public facing like Senators or Presidents, or they are behind the scenes as in 'deep-state' bureaucrats or donors).
This is why attempts to simplify the tax system never go anywhere.
A better way to convince the IRS is to give them real money under the table. This method works better than ANY other method. Which is basically what intuit is doing.
The US should do what other civilized countries do and send you a tax bill. They can give you a simple form to tell them a few things that a lot of people have (donations, change in marital status, new dependent, other income like rent, etc) and then you can either pay the bill or file the regular return because your situation is complicated.
90% of taxpayers only have income the government already knows about, and with some simple data about donations and dependents, most people's tax bills can be calculated and billed.
The only people who would need to prep forms would have such complicated situations that they need a professional.