NPR's Planet Money just re-ran an episode[1] related to this. In 2005, California ran a pilot program where they sent simple, pre-filled tax forms[2] to a sample of the population. 98% of people liked them and would use them again. In 2006 it would have become standard for California, but failed in the legislature by a single vote. Opposition was from two factions: lobbying by Intuit, and Grover Norquist claiming that it violated a pledge for no new taxes. Fascinating stuff.
Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.
A NOAA employee told me about the time their boss caught holy hell from a Senator because the NWS had the gall to update a particular weather product they offered by adding color to the map. Evidently someone had a business essentially downloading the free NOAA data and improving it by coloring the maps and selling that as a product. When NOAA made it free, they called their Senator in anger. And said Senator slapped NOAA's wrist.
Seems like the same school of thought in a much bigger market.
My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes.
The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.
It’s not really about making people more or less aware of what they are paying.
The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.
The US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.
The second argument is about raising all relevant barriers to submitting your tax return. If I were in this camp I’d be pushing for everyone to have zero withholding and carry cash to a tax filing center. Ideally, there would be very few tax filing centers so you would need to travel far and wait in line. My bet is that within the first year of this taxes would be massively reduced. Also, very few people would actually be able to pay the government.
Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his biggest point was that his goal was to support a system where people paid as little tax as possible, and this current system we have is just that.
> The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.
I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.
Conspiracy theory: what if IRS (the Govt) when designing the free software with all the options--thousands and thousands of pages https://www.politifact.com/missouri/statements/2017/oct/17/r... --lean on the side of the government when in doubt? Intuit, HR Block etc have some sort of guarantee and incentive to save users, IRS not so much. Doesn't even have to be a conspiracy theory ("We need the money so let's make them pay $xx Billion more this year") just the way incentives work. Maybe simplify the code first?
maybe not exactly the same but it is aguable if the majority of people had to write check to pay their taxes instead of having their taxes auto-deducted by their employer they'd push much harder for lower taxes and less government spending
it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k)
PS: don't have an opinion if this would be a good or bad idea. can see it both ways
Congress sells out the american people. Congress doesn't work for the American people. Congress works for moneyed interests (corporations). This is congress aiding crony capitalist theft
Oh man, I've had government provided automatic filings for ages now (Finland). US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems). Or have I completely misunderstood what's going on here?
To be clear the Intuit’s of the world are not acting altruistically, however they’ve created an odd alliance with anti-tax advocates who 1. Think that any government provided system will favor the government over tax-payers and make it easier to sneak in stealth tax changes and 2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.
I've often read headlines noting that the tax-prep lobby spends huge sums to preserve the status quo. But the numbers quoted in the article as evidence don't appear to support that claim. $6.6m seems low relative to these figures https://www.opensecrets.org/lobby/top.php?showYear=2018&inde... *
*I can't vouch for this site or its data
Relevant quote from the Tech Crunch article:
"One reason why folks Congress could be pushing this through is all of the money that H&R Block and Intuit spent to lobby Senators and Representatives. ProPublica estimates that the tax prep industry has spent $6.6 million to advocate for the IRS filing deal. The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."
The perrenial misunderstanding about lobbying in the US is that it's about money. It's not. It's about access. The money spent by lobbying firms is almost always in pursuit of that access. AKA buying a $10,000 plate at this donor dinner gets you a sit down with the Senator.
Not only do lobbyists get more accessible they get more credibility. The lobbyists are high paid lawyers at respected firms. They have degrees from respected schools. They have worked on the issue at discussion at lemgth. So when citizens are stacked up against these people they seem comparatively crankish.
This provision isn't in the bill because Intuit bribed someone. It's because that 6.6 million bought a lot of sit downs with committee members. Sit downs in which lobbyists told a convincing story of how it would actually be better for everyone of the IRS couldn't do this. Honestly they probably made some process argument for this. Something like it would get challenged in court anyway and be a big waste of money. Or about how you should make it illegal so the Executive Branch won't do it on their own and they'll have to take congressional input. And the lobbyist almost certainly believes whatever line their feeding the politicians.
It's like most broken things in life. No one is evil stuff just breaks.
> Neal, received $16,000 in contributions from the two companies in the last two election cycles[.]
This statement is false. If you look at Open Secrets, $16,000 lines up exactly with what H&R Block and Intuit employees donated to Neal in 2016 and 2018. H&R Block and Intuit have tens of thousands of employees--it's not surprising that many donated to a Democrat with a high-ranking committee position.
Fun fact: By the article's parlance "Google" gave more to Neal in 2018 than Intuit. Gasp--Google must be in on the tax filing scam too!
What they receive is only part of the calculation.
What your opponent will receive in the next election or primary is a bigger issue. And that implied stick is much cheaper than giving out carrots all the time.
Those numbers sound about right. It is surprisingly cheap to influence our Representatives and Senators.
Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest, like this issue.
Ugh. If only more of our Representatives and Senators actually worked for the people, rather than for whomever promises them the most money...
As noted by the economist Luigi Zingales in his book "A Capitalism for the People", companies that are receiving subsidies (or other favorable treatment from the government) are highly incentivized to keep receiving those subsidies. For example, if the tax preparation industry stands to lose $100 million if e-file becomes free, they will lobby up to that amount to retain the status quo.
The problem is that those who wish to reform the status quo are not as well funded or financially incentivized to create a counter-lobby. Ordinary citizens, who would benefit the most from making e-file free, would have to form a counter-lobby group and put up at least $6 million in order to have the same level of access as the tax preparation companies.
Zingales' proposed solution is to do away with subsidies and special treatment for individual companies, as they inevitably lead to cronyism.
To me (as a Dutchman) this sounds crazy.
Here in Holland the only way to file your taxes as in individual (I don't know about company's) is to login to the government tax website (with my digid (a government issued digital identity)) and then to simply check if all the information that they have collected on me is correct. It usualy is.
All I have to add is my deduction items, and BAM! it's done.
Also, we automatically pre-pay our taxes because it is calculated and payed for by all employers.
I owe the government $4,600. I received an "underpayment penalty fee of $44" because I did not "pre-pay an estimated tax" each quarter. Something I have never done in the ~25 years I have been paying taxes.
Not only do they want the $4,600 by 4/15 they also want an estimated $1,200 "pre-payment" for 2019 by the same date or I will incur this same fee of $44 next year.Plus 3 more payments of $1,200 each quarter. So they want to hold my money without paying me interest. At least in my bank I earn more than the $44 penalty in interest each year.
This is bizarre. I surely didn't know about this nor did I read anything about new tax laws as I imagine most people don't.
What's preventing a OSS solution to this? What I can think of off the top of my head:
* Lack of e-file permission
* Lack of any kind of legal recourse or audit protection for the user
* Constantly changing tax system
After a casual search on GitHub I see a few calculator projects but nothing serious.
I'd be down to help make a free competitor to Intuit. I see no reason to use a non-static site unless it's to keep previous years data, but that's iffy and sounds like it requires a whole other legal consideration.
The problem is that the system requires constant maintenance every time some tax law changes in any state, and great maintenance is something that only the most well funded OSS projects get. And you need participation from lawyers and accountants, not just software developers.
As the article notes, there are already free solutions for people with basic income situations (W-2, some bank interest, no stock sales) making under $66k. Personally, I don't mind paying $100 to turbotax for the peace of mind of knowing that at the very least, they have a staff of tax experts looking over the details of their filing process.
Now, if the IRS came along with an official app that showed me what information they already had and I just needed to make some small adjustments from there (assuming my tax situation isn't complicated), then yeah, I'd use that. And it's a bit crazy that we don't have that. But unlike many countries, we are taxed at both the federal and state levels, which makes the process much more complicated. And to complicate things further, the two interact: I can deduct some of my state taxes from my federal taxes (though less than before). And don't even get me started with the complications of a move from state to state.
EDIT: thinking about this a bit more. What really annoys me about the current system isn't necessarily that I pay to file my taxes. It's that it's so easy to miss things. Maybe i have a bank account that earned $12 in interest and I earned $20 from money that I put into lendingclub.com two years ago. It's annoying that the government has this information, but on the other hand, it's very easy for me to not see (or forget about) the email/snail-mail that I got about this income and then forget to declare it on my taxes. Yes, I know that the IRS isn't sending me to jail for forgetting to pay $5 in taxes, but in general, the process would be much less stressful if I had some kind of centralized reminder of all the income I made.
I think the biggest reasons are 1) the vast amount of subject matter expertise required, especially with each state having its own rules, and 2) pretty much any risk at all of having an incorrect return because of buggy prep software is enough to deter most people from using it.
Those are the first three. If you want to offer state income taxes, that means you’ll need to also implement those rules. There are also a ton of legal restrictions on handling data, that if done wrong send you to jail.
One thing I don't understand (possibly as a Canadian, possibly just as a conscious person) is how little it costs to bribe your highest-ranking politicians.
The article suggests that tax filing is an $11B industry and that companies spend ~$6M lobbying your corrupt senators. The chair of the Ways and Means committee received ~$16k in donations from Intuit/H&R.
Wait, what?
Never mind how inexcusably transactional this political 69 sesh is... it's obviously table stakes for these people.
What I can't process is that $11B of revenue only spent $6M to bribe these guys. Why not spend $100M? Why not spend X? Are the senators just selling themselves short?
For perspective, $6M is like 10-12 totally normal homes on my totally normal suburban street.
If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.
Meanwhile, in my little country (NZ), as a regular salaried worker, I only had to interact with the IRD in the years that I had a few side gigs in addition to my regular employment.
Most years I don't interact with them at all. Don't even have to file.
I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?
I'm self employed and had to explain to my kids why taxes in the US were so complicated and took hours to do over the weekend.
There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it.
It's truly an abysmal system and I hope my kids don't have to do a giant math problem every year when they're adults.
> There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it
They don't actually try to pass a flat tax because it is not feasible to actually do a flat tax in a country like they US with such a wide range of incomes. Even with a low rate, there will be people poor enough that paying the tax is a major hardship. So every even remotely serious "flat" tax proposal has some cutoff and only applies to income above that cutoff.
But then it is not actually a flat tax. It is a progressive tax with two brackets. Once you get there, it is really hard to come up with a convincing argument that two brackets is better than more brackets.
If the calculation wouldn't mystify most taxpayers, what would probably be the most sound theoretically would be a continuous bracket structure.
The other reason they don't do it is that the flatness of the rate structure has pretty much nothing whatsoever to do with the complexity of a tax return. If you changed the rate structure from a progressive rate with several brackets to an actual flat rate, or a more realistic two bracket progressive system, that would shave about 1/4 of a page off the several thousand pages of the tax code and tax regulations.
The complexity of it is all in figuring out which income is taxable. Once you've got all the income classified into the various relevant tax categories, the actual calculations where you use the rate structure is trivial.
The republicans haven't bragged about it, but I'm guessing limiting SALT deductions to way below the standard deduction will drastically reduce the number of filers itemizing deductions. That leaves you with form 1040 which is roughly half a page front and back, not much bigger than a postcard. Certainly, if you have capital gains or other things, you'll need extra schedules, and maybe you need to send w-2s, so it's not necessarily their ideal, but it's actually a large change.
They did, technically. The Form 1040 this year is only half a page. However, many people need to attach at least one schedule, which is just the rest of the form broken up into multiple pages. It's less of a dramatic change and more of a weird format shuffling.
A flat tax will never happen: people want the tax code to have a bunch of deductions and rebates, and codifying those will always result in complexity.
This is deeply frustrating. I can not tell you how many people I see paying $200-300 for some random "tax preparer" set up in a corner mall or the front of a WalMart simply because they do not understand there are a number of free resources that would prepare their 1040EZ for them at their income/complexity level.
These same people get back a $1500 "return" so they think they are getting a good deal. Its pure greed and theft from some of the most needy members of our society. Absolute shame on everyone involved in this process.
I just filed my taxes in 10 seconds using the tax authority's smartphone app. It had pre-filled all my deductions such as interest using info reported from my employer and banks.
Apart from bribes from those who make tax software (which should be pretty easy to expose) I can't understand why congress wouldn't want to make paying taxes simple and efficient?
> The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.
During the years I was eligible for this program, I used TurboTax for free through it and it worked fine. It was a basic version that didn’t support complex transactions such as capital gains but for most people making under 66k it would have worked fine.
Very interesting to see only 3% use it. It would probably work well for a lot more of those 70%.
The paper forms are also easy enough to do manually, but can’t be e-filed and so the refund comes slower.
If I read this right, you can still use the free service the IRS provides if you make less than $66,000.
Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.
I also know many cities offer services to help people file simple taxes for free.
I believe this bill also states the IRS cannot send debt collectors after people making less than $66,000.
This bill may not be as bad as it looks. I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge. I question if it's necessary to bar it, but I'm guessing that was to keep their deal with the Free File software.
Either way it would be nice to see representatives state their position & reasoning behind this bill. It seems it has wide support across the aisle which is rare these days.
One rather insidious thing about H&R Block's online tax filing website is that, once the hapless user has chosen to have a real human "tax pro" review their tax return (for an additional fee), the user cannot un-choose it! The website does not offer you that choice.
Even worse, when the user calls the H&R Block help number, a computerized voice does offer the user the option to downgrade, but notes that it will have to delete all of the data the user entered!!!
If you follow down the original on ProPublica and find comments there, you will see that there was no such provision. And the one that actually referencing IRS is says that IRS should continue to cooperate with private sector to make free tax filing and must maintain free portal. I would like to see actual provision to which this website referencing, otherwise it is click bait.
When a highly-respected group of reporters like ProPublica run a story, it’s reasonable to assume they’ve done more research than the average commenter. In this case:
> The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.
That statute states IRS should continue the program (67 Fed. Reg. 67247), "including any subsequent agreements and governing rules established pursuant thereto."
In 67 Fed. Reg. 67247: "During the term of this Agreement, the IRS will not compete with the Consortium in providing free, on-line tax return preparation and filing services to taxpayers."
Headline is a bit misleading: The IRS does not currently offer free online tax filing, and bipartisan Congressional leaders are seeking to codify this status quo.
[+] [-] ddlatham|7 years ago|reply
Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.
1. https://www.npr.org/templates/transcript/transcript.php?stor...
2. https://en.wikipedia.org/wiki/ReadyReturn
3. https://www.ftb.ca.gov/online/calfile/index.asp
[+] [-] xbryanx|7 years ago|reply
A NOAA employee told me about the time their boss caught holy hell from a Senator because the NWS had the gall to update a particular weather product they offered by adding color to the map. Evidently someone had a business essentially downloading the free NOAA data and improving it by coloring the maps and selling that as a product. When NOAA made it free, they called their Senator in anger. And said Senator slapped NOAA's wrist.
Seems like the same school of thought in a much bigger market.
[+] [-] Calloggs|7 years ago|reply
My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes.
The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.
[+] [-] jacobolus|7 years ago|reply
The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.
[+] [-] ransom1538|7 years ago|reply
[+] [-] RayVR|7 years ago|reply
Again, this is just for the sake of argument.
[+] [-] rattlesnakedave|7 years ago|reply
[+] [-] dwighttk|7 years ago|reply
[+] [-] guelo|7 years ago|reply
[+] [-] Dig1t|7 years ago|reply
[+] [-] tathougies|7 years ago|reply
I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.
[+] [-] fattire|7 years ago|reply
https://www.npr.org/player/embed/708195702/709698927
[+] [-] onetimemanytime|7 years ago|reply
[+] [-] tokyodude|7 years ago|reply
it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k)
PS: don't have an opinion if this would be a good or bad idea. can see it both ways
[+] [-] HashThis|7 years ago|reply
[+] [-] fsloth|7 years ago|reply
[+] [-] cascom|7 years ago|reply
To be clear the Intuit’s of the world are not acting altruistically, however they’ve created an odd alliance with anti-tax advocates who 1. Think that any government provided system will favor the government over tax-payers and make it easier to sneak in stealth tax changes and 2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.
[+] [-] danielhughes|7 years ago|reply
*I can't vouch for this site or its data
Relevant quote from the Tech Crunch article: "One reason why folks Congress could be pushing this through is all of the money that H&R Block and Intuit spent to lobby Senators and Representatives. ProPublica estimates that the tax prep industry has spent $6.6 million to advocate for the IRS filing deal. The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."
[+] [-] DubiousPusher|7 years ago|reply
Not only do lobbyists get more accessible they get more credibility. The lobbyists are high paid lawyers at respected firms. They have degrees from respected schools. They have worked on the issue at discussion at lemgth. So when citizens are stacked up against these people they seem comparatively crankish.
This provision isn't in the bill because Intuit bribed someone. It's because that 6.6 million bought a lot of sit downs with committee members. Sit downs in which lobbyists told a convincing story of how it would actually be better for everyone of the IRS couldn't do this. Honestly they probably made some process argument for this. Something like it would get challenged in court anyway and be a big waste of money. Or about how you should make it illegal so the Executive Branch won't do it on their own and they'll have to take congressional input. And the lobbyist almost certainly believes whatever line their feeding the politicians.
It's like most broken things in life. No one is evil stuff just breaks.
[+] [-] rayiner|7 years ago|reply
This statement is false. If you look at Open Secrets, $16,000 lines up exactly with what H&R Block and Intuit employees donated to Neal in 2016 and 2018. H&R Block and Intuit have tens of thousands of employees--it's not surprising that many donated to a Democrat with a high-ranking committee position.
Fun fact: By the article's parlance "Google" gave more to Neal in 2018 than Intuit. Gasp--Google must be in on the tax filing scam too!
[+] [-] TomMckenny|7 years ago|reply
What your opponent will receive in the next election or primary is a bigger issue. And that implied stick is much cheaper than giving out carrots all the time.
[+] [-] cure|7 years ago|reply
Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest, like this issue.
Ugh. If only more of our Representatives and Senators actually worked for the people, rather than for whomever promises them the most money...
[+] [-] chillacy|7 years ago|reply
[+] [-] _gi12|7 years ago|reply
The problem is that those who wish to reform the status quo are not as well funded or financially incentivized to create a counter-lobby. Ordinary citizens, who would benefit the most from making e-file free, would have to form a counter-lobby group and put up at least $6 million in order to have the same level of access as the tax preparation companies.
Zingales' proposed solution is to do away with subsidies and special treatment for individual companies, as they inevitably lead to cronyism.
[+] [-] peteretep|7 years ago|reply
[+] [-] janandonly|7 years ago|reply
All I have to add is my deduction items, and BAM! it's done. Also, we automatically pre-pay our taxes because it is calculated and payed for by all employers.
[+] [-] jason_slack|7 years ago|reply
I owe the government $4,600. I received an "underpayment penalty fee of $44" because I did not "pre-pay an estimated tax" each quarter. Something I have never done in the ~25 years I have been paying taxes.
Not only do they want the $4,600 by 4/15 they also want an estimated $1,200 "pre-payment" for 2019 by the same date or I will incur this same fee of $44 next year.Plus 3 more payments of $1,200 each quarter. So they want to hold my money without paying me interest. At least in my bank I earn more than the $44 penalty in interest each year.
This is bizarre. I surely didn't know about this nor did I read anything about new tax laws as I imagine most people don't.
[+] [-] 0xfeba|7 years ago|reply
* Lack of e-file permission
* Lack of any kind of legal recourse or audit protection for the user
* Constantly changing tax system
After a casual search on GitHub I see a few calculator projects but nothing serious.
I'd be down to help make a free competitor to Intuit. I see no reason to use a non-static site unless it's to keep previous years data, but that's iffy and sounds like it requires a whole other legal consideration.
[+] [-] chadash|7 years ago|reply
As the article notes, there are already free solutions for people with basic income situations (W-2, some bank interest, no stock sales) making under $66k. Personally, I don't mind paying $100 to turbotax for the peace of mind of knowing that at the very least, they have a staff of tax experts looking over the details of their filing process.
Now, if the IRS came along with an official app that showed me what information they already had and I just needed to make some small adjustments from there (assuming my tax situation isn't complicated), then yeah, I'd use that. And it's a bit crazy that we don't have that. But unlike many countries, we are taxed at both the federal and state levels, which makes the process much more complicated. And to complicate things further, the two interact: I can deduct some of my state taxes from my federal taxes (though less than before). And don't even get me started with the complications of a move from state to state.
EDIT: thinking about this a bit more. What really annoys me about the current system isn't necessarily that I pay to file my taxes. It's that it's so easy to miss things. Maybe i have a bank account that earned $12 in interest and I earned $20 from money that I put into lendingclub.com two years ago. It's annoying that the government has this information, but on the other hand, it's very easy for me to not see (or forget about) the email/snail-mail that I got about this income and then forget to declare it on my taxes. Yes, I know that the IRS isn't sending me to jail for forgetting to pay $5 in taxes, but in general, the process would be much less stressful if I had some kind of centralized reminder of all the income I made.
[+] [-] castlecrasher2|7 years ago|reply
[+] [-] gpapilion|7 years ago|reply
[+] [-] alexkavon|7 years ago|reply
I see a lot of criticism of the idea, but there's more than one way to skin a cat.
[+] [-] peteforde|7 years ago|reply
The article suggests that tax filing is an $11B industry and that companies spend ~$6M lobbying your corrupt senators. The chair of the Ways and Means committee received ~$16k in donations from Intuit/H&R.
Wait, what?
Never mind how inexcusably transactional this political 69 sesh is... it's obviously table stakes for these people.
What I can't process is that $11B of revenue only spent $6M to bribe these guys. Why not spend $100M? Why not spend X? Are the senators just selling themselves short?
For perspective, $6M is like 10-12 totally normal homes on my totally normal suburban street.
If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.
[+] [-] indemnity|7 years ago|reply
Most years I don't interact with them at all. Don't even have to file.
I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?
[+] [-] everdev|7 years ago|reply
There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it.
It's truly an abysmal system and I hope my kids don't have to do a giant math problem every year when they're adults.
[+] [-] tzs|7 years ago|reply
They don't actually try to pass a flat tax because it is not feasible to actually do a flat tax in a country like they US with such a wide range of incomes. Even with a low rate, there will be people poor enough that paying the tax is a major hardship. So every even remotely serious "flat" tax proposal has some cutoff and only applies to income above that cutoff.
But then it is not actually a flat tax. It is a progressive tax with two brackets. Once you get there, it is really hard to come up with a convincing argument that two brackets is better than more brackets.
If the calculation wouldn't mystify most taxpayers, what would probably be the most sound theoretically would be a continuous bracket structure.
The other reason they don't do it is that the flatness of the rate structure has pretty much nothing whatsoever to do with the complexity of a tax return. If you changed the rate structure from a progressive rate with several brackets to an actual flat rate, or a more realistic two bracket progressive system, that would shave about 1/4 of a page off the several thousand pages of the tax code and tax regulations.
The complexity of it is all in figuring out which income is taxable. Once you've got all the income classified into the various relevant tax categories, the actual calculations where you use the rate structure is trivial.
[+] [-] toast0|7 years ago|reply
[+] [-] InvisibleUp|7 years ago|reply
[+] [-] ascagnel_|7 years ago|reply
[+] [-] purple-again|7 years ago|reply
These same people get back a $1500 "return" so they think they are getting a good deal. Its pure greed and theft from some of the most needy members of our society. Absolute shame on everyone involved in this process.
[+] [-] alkonaut|7 years ago|reply
Apart from bribes from those who make tax software (which should be pretty easy to expose) I can't understand why congress wouldn't want to make paying taxes simple and efficient?
[+] [-] valleyjo|7 years ago|reply
[+] [-] javagram|7 years ago|reply
During the years I was eligible for this program, I used TurboTax for free through it and it worked fine. It was a basic version that didn’t support complex transactions such as capital gains but for most people making under 66k it would have worked fine.
Very interesting to see only 3% use it. It would probably work well for a lot more of those 70%.
The paper forms are also easy enough to do manually, but can’t be e-filed and so the refund comes slower.
[+] [-] mattferderer|7 years ago|reply
Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.
I also know many cities offer services to help people file simple taxes for free.
I believe this bill also states the IRS cannot send debt collectors after people making less than $66,000.
This bill may not be as bad as it looks. I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge. I question if it's necessary to bar it, but I'm guessing that was to keep their deal with the Free File software.
Either way it would be nice to see representatives state their position & reasoning behind this bill. It seems it has wide support across the aisle which is rare these days.
[+] [-] HillaryBriss|7 years ago|reply
Even worse, when the user calls the H&R Block help number, a computerized voice does offer the user the option to downgrade, but notes that it will have to delete all of the data the user entered!!!
Talk about sleazy.
[+] [-] Nikbul|7 years ago|reply
[+] [-] acdha|7 years ago|reply
https://www.congress.gov/bill/116th-congress/house-bill/1957...
> The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.
https://www.govinfo.gov/app/details/FR-2002-11-04/02-27909/s...
> during its term, the IRS will not compete with the private sector by providing free on-line tax preparation and filing services to taxpayers
[+] [-] j16sdiz|7 years ago|reply
That statute states IRS should continue the program (67 Fed. Reg. 67247), "including any subsequent agreements and governing rules established pursuant thereto."
In 67 Fed. Reg. 67247: "During the term of this Agreement, the IRS will not compete with the Consortium in providing free, on-line tax return preparation and filing services to taxpayers."
[+] [-] rosstex|7 years ago|reply
[+] [-] Brendinooo|7 years ago|reply