I live in New Zealand. I don't have to file taxes if my income is a standard wage my tax payments are automatic. My employer deducts them from my wage and they are sent to the IRD (Our government tax dept). My student loan and super payments are also automatic. If there is anything wrong then at the end of the tax year I can file to correct things.
I also get donations rebates, this is a one page form that lists all my charitable donations. Very easy very quick.
All my details are available to me online. All transactions are there and it's very transparent.
Why would anyone oppose a simple system like this?
> Why would anyone oppose a simple system like this?
Because you want to make people angry and upset at least once a year at the government? Because you want to remind people that taxes are something the government takes, instead of letting them think of taxes as money they never earned to begin with.
I love paying my taxes, but if you think taxes are bad (and lots of people do), then the current U.S. system makes total sense.
I'm sort of with you on this. I am proud to know, for example, that my taxes help pay for healthcare for everyone and schools and roads and so on. I like to believe I'll pay in more than I'll get out and that's brilliant.
However. Come bonus time I really struggle with the bit where they say "we're going to give you £x" and then I actually get a bit over half that in the bank. Somehow I internalise the number x and it feels like the tax has been 'taken' in a way I never would for my monthly salary.
It's an interesting if purely psychological difference in my response to taxation.
I completely agree, it's the one time I find paying tax annoying (UK tax payer). My current employer has an option where you can pay any bonus directly into your pension, which is tax free.
If you aren't relying on the bonus for other things it's a good option. It means the bonus sort of 'disappears' psychologically, but then if you have a mortgage it probably just gets swallowed up by that anyway.
Income tax is still very visible in NZ. On your payslip it lists the before-tax value, and then deductions for PAYE, student loan payments, etc. Plus wages/salary are still expressed as a before-tax rate, so you can see the disparity there too.
I get the argument, but whether or not I /want/ to pay taxes, I still have to, so why make it inconvenient? The NZ government finds plenty of other ways to make me angry and upset anyway.
Hidden transactions are a problem in any somewhat free economy, whether it's insurance, club dues, auto payments to service providers, or taxes. The usual sales point is that "But you don't have to think about them!" and the problem is that you never think about them -- when you should.
That's not saying taxes should be onerous or deliberately painful -- any more than paying your bank's monthly fees should be onerous or painful. But none of those should be invisible, either. Transactions that are never consciously reviewed are never scrutinized for value. That's no long-term good to either participant in the transaction.
Nobody's advocating taxes as "hidden" transactions. You used the example of your bank's monthly fees... which is far less transparent than this suggestion. My bank simply emails me a reminder to check my account with them once per month. It doesn't allow me to contest or correct their accounting at all.
Your fear -- that by removing the hassle of tax preparation, people will dwell in blissful ignorance of their tax burden and the government will jack up tax rates -- is not borne out by my experiences in countries where return-free tax filing is the norm.
In what country are you paying taxes? And is your tax rate above or below 30%?
Based on anecdotal evidence, I think that people paying more than 30% rarely ever "love" paying taxes. Below that, it seems to feel much more ok (I'm also below 30% and - while I'm not enthusiastic about paying taxes - it feels like a fair deal).
Let me add another anecdote here. I live in Denmark, which together with Sweden has some of the highest marginal tax rates. I am certainly in the high end of income, and i am happy to pay my taxes.
First of all, it means supporting a robust social system, that have provided treatment for my family member's cancer for free. Something that would likely have resulted in bankruptcy in the US, prior to ACA.
Secondly, being in the high end of the tax rate, means i have a high income as well - and it seems only fair that i pay more in taxes than people who make very little to begin with. Society has to function, and let's make the broadest shoulders bear the largest burden.
40-45% combined rate here. I'm thrilled to be privileged enough to be in this tax rate, and while I disagree on some of where my taxes go to, I'm upset with that distribution more than I am the rate. I do not want my taxes to be lowered.
Tax rate above 30% here. Considering I just finished a master degree education that was virtually free, with even living costs heavily subsidized (both stipend and ridiculously low student loan interest), I pay my taxes gladly. I'm not sure I will be a net positive for the government for another decade at least.
I think free higher education is one thing that really help sell higher taxes to high income earners. Free(ish) healthcare is awesome, but you get the feeling that it mostly benefits poorer and older people. Free higher education is comparatively cheap, but it makes our lives simpler and stress free.
I'm from Sweden, way above 30%, still love to pay taxes. Countries where they avoid to pay taxes at all cost like Greece is usually a reminder of why it is important that the government really enforces tax paying and that the taxes are high.
Actually, Greece doesn't remind us about why high taxes are good. Their taxes are high. The problem is corruption; the money is squandered, and the economy is choked by taxes, favouritism, corruption and nepotism.
Thus, Greece is an example of why we need to remember to keep our politicians at check.
US worker here with taxes above 40% (if you include state). My taxes are not high enough. We run a deficit. Schools don't get enough money. Roads have potholes. We have poor and homeless people who don't get enough to eat. Etc.
What a sophomoric, bad faith quip. What agent of common infrastructure do you prefer? How many dams have they fixed and how much diplomacy do they engage in?
If people in general "loved" paying taxes, then taxation could be replaced with a voluntary system. It is precisely the fact that the people who love paying taxes are a minority that coercion has to be used.
I don't think that's a fair assessment. Time and time again voters approve plans to increase spending on things they want to have. If the people generally really wanted to drastically reduce government spending and reduce their tax burden they could vote for it, but they don't as long as they think they're getting a fair enough share of benefits from it.
Yes, funding a $600 billion military industrial complex [0]. Just think, your complete yearly taxes were probably almost enough for a single JDAM [1] which was then dropped on Iraq, in a war where 13% of all civilians were killed directly by US-led forces [2], and many more in the chaos that ensued from the invasion.
The problem with that isn't taxation, it's voting in people who approve that spending.
UK tax payer here, so the specifics are different, but I have no problem paying my taxes. We have decent free health care, a capable and I think 'right sized' armed forces for our needs, competent policing and security services and my children get free education. If any of those things were not true I wouldn't necessarily want my taxes to be reduced, I'd want the problems with those services to be fixed.
Right-sized? You have almost no tanks anymore, and the ones you do are 80's era. The Royal Navy is a shadow of a shadow navy. The RAF is woefully under-equipped to protect against Russian incursions.
Its called "chain of numbness". Chasing doesn't murder innocent Iraq children; he is far from it but by aiding financially the army that does murder, are his hands truly clean?
The $600 billion figure is misleading when compared to other countries, as it's not adjusted for cost of living, cost of countries we trust (and therefore buy arms from) also having a higher cost of living, etc.
Why precisely is having the worlds largest military bad? Do you think it doesnt add any value? It seems theres a lot of people outside of America who'd like to see it shrunk for very bad reasons.
Why not keep the military and solve our problems without it? We need it to be safe now, and until we've already solved our problems, we'll still need it.
Obviously it doesn't always work well and it definitely causes problems, doesn't mean we should get rid of or even reduce it.
The bad is there is an opportunity cost of dollars spent. And the US could likely still dominate global firepower rankings at half the current spend, meanwhile this saving could significantly improve the education or health system with that money. Or reduce the tax burden on people. Or simply bank it to reduce the debt and burden of repayment for future years. Lots you could do with hundreds of billions.
"the US could likely still dominate global firepower rankings at half the current spend"
True, but just winning a war or conflict is not an ideal outcome. Overwhelming advantage not only prevents conflict from occurring, it also assures that casualties are low in even low intensity / regional conflicts.
The US operates on the principle that it must outspend the next 2 countries in military spending. It's an insurance policy in case say, Russia and China team up against the US.
Which is madness, of course. Because spending twice as much doesn't necessarily mean Americans see twice the value. I can easily spend twice as much on a worse car than my neighbor owns.
Some people would disagree with you. I believe military and defense spending should actually be one of the only role of governments. Leave healthcare and education to industry. Let the free market decide the curriculum, teachers salaries, and come up with innovative ways of teaching. I see no reason Khan academy shouldn't be allowed to teach our children. Since when did it become common place to allow a government to come up with a path of study, and make it mandatory to send your kid to for 13 years? As governments slowly accept more and more social programs, the government balloons. Value produced slowly stops representing capital. In germany, where social programs are abundant you get a lot of leeches on the economy. Very long unemployment timeframes, with reltively good pay, Full health coverage, unlimited sick time if you have a doctors note. In a system that can be "gamed", there will be a large amount of people who do so.
I don't believe there are systems that can't be gamed. Given that assumption it's probably better to decide policy based on actual results. In places where social programs are abundant you have fewer suffering individuals, it seems healthier to count that as a win and not get hung up on the (truly rather small) percentage of people potentially gaming the system.
Seems like the comment you're replying to is fine with our system that can be gamed by those at the top but is afraid of gaming by those at the bottom.
A large military "in reserve" becomes stagnant, and unable to operate in new real world conflicts. Look at the Vietnam war, or the current conflict in the Ukraine. Tactics change, and large militaries bent on keeping their swollen budgets in tact are poor at responding to emerging threats.
My point is that these smaller conflicts (albeit mostly misguided) are useful to guide and reform strategy, tactics and spending.
So we should kill a couple of hundred thousand people every decade or so to keep our game up? Seems pretty indefensible. I'd rather invest a much smaller amount of money into honest red team war gaming.
I said they're useful, I don't agree or advocate the strategy. Like it or not (I do not) small regional conflicts teach valuable lessons that cannot be learned in training, or during "war gaming". When the enemy possess weapons or tactics that you have not seen used, or demonstrated they cannot be integrated into a war game. Look at the upgraded armor, drone usage, IED detection/suppression, sniper detection developed for and used in the middle east. This barely existed (maybe in concept) before the conflicts of the 00's. Similar lessons are being learned in the Ukraine right now (counter drone operations, active tank armor, electronic warfare/signal jamming etc.)
I think people argue not with having the largest military, but with having military expenses which are 3 times those of China and 10 times those of Russia, and with the rest of the big countries being US allies.
I agree with you completely. There are so many unknown benefits that we gain with having such a large military that its very hard to calculate. Also, one of the worst things that could ever possibly happen in a war is being evenly matched. If one country (or group) isn't completely superior in every way, the war becomes a meat grinder and lasts longer than it should have.
Would you like to pay more? Because that is an option.
edit: OK, I understand the sentiment of being happy to contribute to society, but no-one assumes a perfect equation of their taxes to the appropriate and desired government spending thereof.
I take great pride in paying taxes. It's such a good deal when I look at what it would cost to be American.
I'm not trying to rag on being American. But I've got close ties with the U.S. so often I compare what a life event would have been like, had I been a typical U.S. family of my economic class.
Sweden. Free university, no fee healthcare for kids, a few dollars for adults. But it's a sketchy country... be careful if you go there. #lastnightinsweeden
You'll find sketchy things in any country. "Be careful" is quite the exaggeration in my opinion. Not going to the worst neighbourhoods during Friday nights applies to anywhere.
Southern Sweden seems to have a "last night" problem pretty much every night except when Trump spoke about it.
(Swedish crime rate is still low, at least in homicides it's much lower than the U.S., but Sweden is unlike most Western countries in that the murder rate has stopped going down and has turned upwards, and the politicians sem to be in denial. The police are laying down unsolved murder investigations simply because there are so many newer cases.)
Same here. Every time my son is unwell, I get an almost instant appointment with our local doctor. All his medicine is paid for. He gets a good education, a safe environment in which to grow up, lots of good activities. Taxes might have been lower in Victorian England, but I sure as hell am happy I was born in the 1980s.
I equate this to the first time I paid my own rent. I loved it. I was paying my own money for my own place and it felt awesome. It seems crazy to love paying rent but there was a period of time where I did.
That makes sense if you're a 3rd world immigrant, because the value delta between your old life and your new life is immense. For someone born in a 1st world country, it makes little sense to compare their situation with that of a 3rd world denizen. Reference points are subjective. I take issue with the way my government collects taxes and how it distributes them. I don't care how Africa or India are doing.
When I went to Australia I was surprised at the number of people from my ethnic background who had immigrated as adults and would complain bitterly about taxes. They loved the safety and security, general standard of education, healthcare, amenities, infrastructure, opportunities and their secondary effects (well-educated employees for their businesses, people who showed up to work instead of being home sick and so on). They just couldn't connect with the idea that taxes might be the reason that these were available.
It would guess it's a pretty common thread among people who grew up unused to a properly functioning government.
You were forced to immigrate to this country?! Otherwise... the "force" part here is more like, "I was forced to pay for the meal I decided to eat at the restaurant! How dare they!"
Maybe because in real world the choice is between fixed alternatives and not imaginary scenarios? Even if you think US taxes are way too high and immoral, it's not like you can live in a country like US but without taxes. You can live in a country much worse than the US with taxes, or in US with taxes, or in a country with failed government where there are not taxes but instead people might just kill you on the street. So you might make non-ideal choice, knowing it's not ideal, but it's best of what you have. Every country has its benefits and its flaws, and accepting it as it is doesn't mean one has to be blind to the flaws.
Maybe there's a correlation for a reason? Namely that functional governments which keep the peace and provide services to their citizens need income in order to operate.
What US government is doing goes very far beyond "keeping the peace". Only the discretionary budget is 1.5 trillion dollars. Americans would be a really wild bunch if it required $1.5 trillion to "keep the peace".
Roads are the go-to argument for the value of taxes. But it's a dumb point to make because there are a ton of programs which we fund but do not benefit from. In fact, the vast majority of every dollar we pay in taxes does absolutely nothing to benefit us directly. No one argues against true infrastructure investments, it's all the other b.s. that we hate (immigrants and non-immigrants alike).
Being a dick to someone for seeing what's wrong with the taxes here is awfully small of you.
Not really happy paying high taxes, but I think the alternatives are worse. The definition of "first world country" should include "takes care of the less fortunate ones". Which, when I look at countries with less taxes than mine, doesn't seem to happen.
I have a problem with the rate, collection and spending of taxes. I'd love to see us move away from property and income taxes... Income taxes are at least technically a tax on trade though. I'm not quite sure what the answer is, to be honest. I've just seen so much waste, it sickens me.
Come up with an alternative that's better and I'll happily support it. The problem is that too many people are comparing the current system -- taxes to fund governments -- with a nonexistent utopia.
Yes, I love the command line and want to remind people how it was back in the days when they didn't have these GUIs. Everyone will have to give up the GUI! Its a legitimate cause! : ) </sarcasm>
It's almost that simple in the US if your situation is that simple. What happens in NZ if you make $400 selling vintage cabbage patch dolls on eBay? What if you earned $1k in returns on your investment account? What if you are renting your place out on Airbnb?
If all you have is a simple income in the US, then the 1040ez is a single page and you can file it for free online if you make under a certain amount. You can pay a few dollars to file online if you make more.
Obamacare has added an extra level of complexity now, but that is also very simple if you don't need or want the subsidy.
In practice, the difference between US and other countries is still pretty big.
In US, about 60 percent of individual tax returns are filed by a professional tax preparer, at every income level. People who owe no income tax still have to file tax returns to receive tax credits. In many other modern countries, _the_majority_ of the tax payers file no tax returns at all.
60 percent? That's kinda high. Maybe force of habit, since I don't believe 60% of returns need a tax professional. TurboTax or analogous software probably can do most of the middle class returns. That's what tax preparers are use most of the time anyway - they just ask proper questions, get the docs, put them into software in the right places and file the result. May save some time, and knowing where to put the numbers requires some knowledge, so no problem with that, but I doubt it really needs that and can't be done by a good software.
> _the_majority_ of the tax payers file no tax returns at all.
I think there's a confusion here. Maybe several. First of all, in US filers and payers are not the same, as you may pay federal taxes (e.g. by deductions) and still not have to file (e.g. low income). Second, there are state taxes, which most countries don't have. Third, many countries just don't have the tax return as a thing - if you got something deducted, it's gone, good luck getting anything back. In US, you get stuff back for mortgage interest, state taxes, property taxes, charity donations, etc. etc. - you can get quite a decent amount of money back. I think it's better than just sending it over and getting nothing back, even if it could mean a bit more work.
In India mostly people prepare their own tax statement. If you are a govt official then your taxes are auto deducted AFAIK, if you are working in pvt then there is less than a three step procedure if you are willing to do your statement yourself else upload form16 on a online site to pay tax. Mostly those who earn an awfully large income use tax professionals.
My favourite part of our tax system is the advice to file if you have "income from an illegal enterprise"
EDIT:
Just as a reply to the original point. I'm not sure how complicated the US system is. I'm not trying to say it's bad either, it just seems to me that we have a system similar to the one that is getting lobbied against. And I like our system, it works well for me..
FYI - At various stages of my life I've filed in New Zealand, Australia, UK, Switzerland and the US (California).
I can't generalize to all persons, but I do have a decent spread of countries in my own experience - and the US was by some serious margin the most complicated.
It isn't that bad in the US using turbo tax. Just remember to answer no to receiving payments from the "Ottoman Turkish Empire Settlement". (Actual question).
Kind of an ironic comment on an article about how the maker of said software is lobbying to keep taxes complicated so they can continue to sell you their software, isn't it? :)
A counter viewpoint - maybe the system has to be complicated to provide all the various incentives that voters want taxes to do, and to patch all the loopholes that would otherwise be open. Maybe such a system is too complicated for a lay person to understand so they delegate the understanding to private enterprises which can compete to provide the cheapest or easiest interface to the complicated system. If it wasn't the taxpayers paying for the complexity directly, it would be the government which would charge everyone via those same taxes to implement their own clunky government computer system that people would hate even more.
Countries with simple tax rules don't get to micromanage their economy so much.
The system can be complicated, but all those complications can be handled by the tax agency. For the vast majority of people out there, all the data that you put into your tax return is something that IRS already has, or can easily obtain. And when that is not the case, you should really only need to tell them once (and then update if it ever changes, like the number of kids you have).
Tax filing in US is a huge waste of people's time. I wonder if anyone ever computed the amount of people-hours spent on this malarky, and how much productive output it could generate if used for something else.
HR Block is free if you just file a 1040, the "professional" version is $40. If you're paying $100, either you are seeing a tax professional in person or you are vastly overpaying. Presumably you would only meet with a tax professional if your situation is significantly more complicated than most.
I pretty much have to pay the higher amount for preparation, lest I end up in a legal quagmire over the few thousand I earn on the side a year via 1099 income. I can handle the EZ form, but the stuff for business expenses and income become interesting to say the least.
Although I guess it could be worse... I generally have extra taken out of my regular paycheck so I don't have to make quarterly payments. But it's just guesswork for the most part, as I just don't know where things will be precisely. Some years, I'm happy not owing anything, or at least much (I've owed the state a couple times), Other years I get more back than expected.
This advice is probably not explicitly given by the IRS, but it is what any decent tax attorney will tell you. They got Al Capone not for his other crimes, but for tax evasion.
"Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."
"If you receive a bribe, include it in your income."
"You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity."
"If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner."
Im not sure if there is anythng special about it. You can take a bribe, get caught and sentenced but that doesn't excuse you from paying taxes. IRS just wants their cut; they are not criminal law enforcers, just a collection agency.
I think the common expectation is that the illegal income/property will be seized by the state and hopefully returned to its rightful owner. No need to tax anything since the thief won't have anything left at the end.
The IRS seems to account for that with "unless in the same year, you return it to its rightful owner."
I wonder what happens if you steal something, keep it until the next year, and then return it? Do you declare it as income in the year you steal it, and a loss in the year you return it?
(Probably not. I'm too lazy to look it up, but I recall another document that explains that, while income from illegal activities is taxable, expenses for illegal activities are not deductible.)
I'm also a kiwi and have been working for over 15 years and have a student loan. The only time I have to do anything is when I file an optional personal tax summary to see if i/them owe anything. It takes less than 5 minutes online and is free.
I'm in Japan, not NZ, but the system here is similar to what grandparent described.
In over 10 years here I have never needed to do anything more than to sign a couple of forms provided (and pre-filled-in) by my employer, once a year.
If you make only the equivalent of U$400 in extra income, there's no need to declare it. I think the cap is around U$2000.
If you own a standard investment account, your broker will automatically levy taxes on your dividends and capital gains (rates are the same, BTW). You can still open a different type of account if you want to pay the taxes yourself. But if you're just investing for retirement and going buy-and-hold-forever there's little reason to do so.
In NZ we have virtually no deductions ... No carve outs for special interests. So no schedule A .... But more importantly that means that employer withholding is simple. As an employer it's also trivial to do PAYE and get it right.
Also we have no capital gains tax (a mistake IMHO). Tax on interest, (and a second income) is withheld by banks at our nominal marginal rate.
In practice if the govt doesn't care about the tax on your cabbage patch doll, unless you are selling thousands of them it costs more to collect that tax than they would receive
And if you incorporated your ebay business, it would likely pay very little in taxes too. But then you'd take the same income as wages and pay the same income taxes you did before you had a legal title on your business.
At least in the Netherlands, that is not allowed.
With an LLC you have to give yourself a living wage. Also, if you mark them as profit (not pay them to your employee (yourself)) you have to pay corporate tax.
You also can't just deduct your breakfast.
In fairness most corporations shouldn't be paying taxes... their investors and customers do though. Also, corporations shouldn't have legal "personhood" or rights to invest in political agendas either. Also, corporate owned property that is unutilized or underutilized should probably be subject to forfeiture for better use.
But that's because I feel that corporations should be mostly about collective ownership and protection from direct liability. It shouldn't be a carte blance.
Well, whether or not corporate income taxation is a good thing or not is up for debate, and it has to do with your own politics. However, I think it's crazy that we have it written in law that corporations should pay income tax, but there's enough lawyers and loopholes that 1/5 of them don't. Meanwhile making some side-cash on ebay could possibly garner attention from the IRS..? It's a misalignment of incentives.
A VAT and tax on currency exchanges instead of income taxes would probably work out better all around... But that would be a huge shift. But in general, corporations serve as collective ownership and have dividends, labor, and other purchases and expenses. These can/should be taxed.. but income tax on a corporation is kind of counter-intuitive to me, only because a "corporation" doesn't actually pay tax, it's their customers. It doesn't come from, or go to nowhere.
I have filed in four countries in my lifetime: US, UK, France, and Germany. No matter how you put it, the US is the worst in terms of complexity. Even people on a regular salary use assistance to avoid making mistakes.
Same here in Norway. They send me the form to fill in but it is already filled in so all I have to do is correct anything that is wrong or missing. For me that is only property and money held off-shore.
And, of course, I can make the corrections on-line using the tax department web site and I get an immediate estimate of how much tax is due (or overpaid) after the corrections.
Of course Turbo Tax would be against a system like this because for most people it would mean that they don't need to pay Turbo Tax.
So in other words, the free market has produced a pile of jobs that we don't really need? Lobbyists get paid money to get politicians to supply a deduction as a line item on some obscure form, which increases red tape, which requires a need for a free market service, the revenue from that service in turn goes to feed more lobbying for more red tape. This is basically collusion, using the worst aspects of the free market and government, in simultaneous failures.
Meanwhile, the accounting and tax lay industry is part of the lobbying effort to grow their business on the back end, rather than making the case to the customer on the front end. It'd double dealing.
So I'm hardly sympathetic, but yes considering there are an ass tonne of jobs that would just vanish overnight, there'd maybe need to be a transitional phase, just avoid an abrupt change. But how do you shrink a market in a non-disruptive and fair way considering it grew in a distruptive and unfair way in the first place?
So in other words, the free market has produced a pile of jobs that we don't really need? Lobbyists get paid money to get politicians to supply a deduction as a line item on some obscure form
Politicians protecting an industry through action or inaction, no matter if its lobbyists or others suggesting that they do, isn't the free market.
The free market will necessarily reward a small number of winners way out of proportion to everyone else. These companies will have a much larger lobbying war chest. Stuff like this is not somehow a betrayal of market principles, but the perfectly predictable result.
It is all very well excluding corporate lobbying from your scholastic definition of a free market. Such a market will never exist anywhere for more than five minutes.
I think the implication is that countries that espouse their "free market"-ness end up with a lot of regulatory capture. This, telecoms, healthcare.
A bunch of people with a lot of money have been able to lock in their positions. It sure feels like pulling out of the church of laissez-faire economics would let us, say, pass laws with things like price controls (or just nationalizing the whole industry!).
An aside: complicated taxes aren't the opposite of "free market". For example, giving tax incentives to new companies can help make a market more free by reducing the cost of entry.
Sorry, you're never going to have a society where the government is a 100% neutral referee and everybody else is a part of the 'free market'. As long as there is an incentive to rig the game, people are gonna rig it.
Housing is very far from free market, from zoning regulations to building codes to property taxes and school districts to rental regulations. Banking is also pretty much the opposite of it, from the Federal Reserve dependency to Fannie and Freddie loan guarantees.
Fair, but both are significantly more free than others.
Rent is not really heavily regulated outside of California and New York. Similarly, banking is indeed regulated in specific sectors, but not really across the board
It might be helpful to think of "free market" as a scale instead of an absolute definition. Level one free market: socialism, where people were still using money from a salary to buy everyday goods from people-owned "enterprises". Level ten free market: you buy protection at market rates or someone takes away your sandwich, if the protection takes the sandwich don't buy from the same vendor again.
I imagine discussing relative merits within the range of roughly level four to level eight would be far more fruitful than the usual "my free market is tougher than your free market" posturing.
Why shouldn't they have to adapt to rapid changes in the "free" market like we do? Notice it wasn't called anything like the "dot-com gradual-and-not-too-painful realignment." Why the special consideration for tax people? I mean, if we're going to vaunt the free market, let's let it splash everybody, not just the little guys.
I think that we have a cultural problem. People chose to take out loans for their tertiary education because of our beliefs in the tertiary educational system. College is to get a job, but we believe it's there for us to "discover ourselves." And that's how we end up with accountants.
Sometimes I wish there was some website where non-partisan smart people scientifically identified the current problems and come up with a finite, exhaustive list of possible problems. And then, determine the amount of money it would take to test a hypothesis. If they do and it fails, then they must take into account that hypothesis and correct for it.
How much money would need to be raised?
It's just too bad that I've never encountered anyone in real life that thinks like this. It feels so intuitive when you approach it like a computer problem.
I think the problem is that that political science is paradoxical in itself and goes against on of the most important tenets of science and reason: that we must give up our beliefs if the evidence proves them wrong.
Is there anyone out there who is balanced enough to actually be bipartisan? How would one search for such a unicorn? Is it really impossible?
Such a list isn't possible because of differing interpretations of reality and basic facts and differing interpretations of what even constitutes a problem.
The United States has a complicated tax code because it attempts to make things more "fair" for some people. Some of these are things people like, such as deductions for people with children, paying mortage, etc. Some are more dubious.
One difficulty is that it's easier to pass a tax break through a budget process than to pass an equivalent "handout" through a separate one.
For example, in France if you have more than 3(?) kids, you get 70% off all train rides. That required this whole process to get set up (I imagine it was more through regulation than law but you at least need the budget to the SNCF).
The easiest way to get an equivalent thing through the US legal bureaucracy would be to do: "If you send us receipts of your train tickets and have over 3 kids, we'll deduct them from your taxes at 70%".
It "pays for itself" in the sense that the government doesn't have to give money to Amtrack, just give back money that was just given to it by the taxpayer. It doesn't require intergovernmental coordination, just the IRS. It can be passed through the huge budget process. Much easier than many other regulatory schemes.
Well, yes. For instance, Finland, where I live, has a very much simplified income tax collection procedure. Deductions for people with children have been eliminated. Deductions for mortgages are being eliminated. All this in the name of simplicity and, yes, fairness.
After all, if you can afford a mortgage, you are clearly well-off, so you should be taxed more.
(And there is a good point: Mortgage deductions distort the housing market. But rent subsidies distort it even more.)
Why is it fair to give a deduction for mortgage? Buying a home instead of renting is just choosing to invest in real estate instead of anything else you might invest in. Why artificially subsidize one extremely illiquid and volatile type of investment?
If you think that is bad, wait until you discover the situation in Australia.
In the US, you get a deduction for interest on your primary residence. In Australia, you cannot do that, but instead, you get to make a deduction of interest in any investment property you own against your personal income! Plus investment properties have a lower capital gains tax rate than other asset classes.
Can someone from US confirm the tax treatment of interest on investment loans? Are they counted as an expense? Can losses from an investment property be deducted against other income?
Also, in US is there any capital gains discount for property?
because you want to incentivize homebuying. Homebuying isn't just an investment. When your mortgage is paid off, it also means your cost of living when you can no longer work is much lower. It also means that you're less likely to be homeless or rely heavily on social services when you can no longer work. Homebuying also spurs a MASSIVE industry of homebuilding, and home furnishing, upgrading, etc.
If I buy real estate as an investment, I can deduct the mortgage like any business loan. Why artificially penalize owners who want to live in their properties over owners who don't?
One could argue that by subsidizing home ownership you redistribute profit from people that rent out housing to those that would have been renting that housing.
Mortgage interest is also deductible for rentiers. If owner-occupied mortgages were not deductible, it would be redistributing income from those who live in the properties they own, to those who own property and live elsewhere.
Yes, and by the same logic, subsidizing buying Apple shares redistributes profit from people that make iPhones to people that buy them. Why don't we do that instead?
That's isn't actually what subsidizing apple shares would do?
But the answer, is that people who buy and rent out property are generally better off than those renting, so redistributing income between them decreases income inequality.
This, in general, shouldn't affect most folks' ability to have a simple tax filing system.
Your bank already has records of things like mortgages which they [can] report to the IRS. You can figure out two-earner tax rates with a program or chart. People already report their children in the W2's. The IRS already has the information on file and I imagine they use it to filter out folks that might need audited.
Even with tax credits, a complicated tax system, and all that, there isn't a reason why this can't just be done upfront instead of after the fact - at least for most folks.
The UK has a similarly simple tax system as New Zealand. Taxes are taken out of pay every month, and that's it.
Every individual gets assigned a tax code, and that tax code defines how much is taken from your pay. That tax code takes in to account how many kids you have etc. etc.
The UK tends to approach tax deductions in a different way, preferring to subsidise stuff up front instead, so you never have to remember to file or figure out what your deductions are. You never paid out the money in the first place.
Do you get any kind of deduction for giving to non-profits/charities? I give about 12-15% of my gross income to non-profits/charities every year and get a generous tax deduction for doing so. The other thing that tends to be complicated with my taxes is selling stocks. How does the UK handle things like that?
People don't tend to invest so much in stocks, instead settling for other instruments, like ISAs that already handle the tax end of things (https://en.wikipedia.org/wiki/Individual_Savings_Account). ISAs are an attempt by the UK government to encourage saving / investment by providing tax incentives to do so. Again, tax considerations done upfront vs after-the-fact.
If you do invest in stocks, you're liable for capital gains tax, just like in the US, but whether you need to file or not is dependent on how much you actually made.
If you make too much, you'll have to file taxes yourself, but it's relatively straightforward.
The point is not that the system is perfect, but that it handles the case for probably >90% of the population, without stress or complications for them.
It depends how you donate, but for payments direct from payroll (if your employer supports it) you essentially pay out of your pretax income.
For cash gifts the charity can claim back 25p in the £ on your gift. For property, land and shares you deduct it against your tax payments at the end of the tax year and claim for a refund.
In the UK people tend not to own stocks directly but through one of the various investment "wrappers" such as the ISA (individual savings account), which are tax-free for up to £15k/year investment paid in.
Stocks shouldn't be complicated; you've got a cost basis, a date of acquisition, a date of disposition and a final sale price. Withhold based on the deltas and you're all set right?
ESPP are complicated for me because my company withholds the taxes already, but that isn't reflected in the form I get from the stock company so I have to spend significant time every year refiguring out how to adjust and report everything while cursing myself for not taking notes the previous year.
I doubt that it is the only reason, but I can tell you that it is the dominant force also outside the United States. I could not think of a better example for "perfection is the enemy of good" than tax systems.
Just throw it all out and call it good enough. If you really need deductions for expenses, found a business. For persons, expenses are indistinguishable from consumption.
One thing that makes it even more complex is state deductions. For example, in Massachusetts you can deduct rent payments to your landlord from your taxable income.
Yep, same for Australia - taxes are withheld automatically from your pay and then at the end of the year, you put and extra income and your deductions into the free web app that the tax office provides. I don't think I've ever spent more than an hour filing my return.
Yeah,,, consider yourself lucky that you were never employed by a employer who didn't provide PAYG summary. That is all-ways a interesting conversation with the ATO and your accountant.
I've been reading this thread and it's insane. In technology impaired Croatia since this tax season I don't even have to report any tax returns, everything is completely automatic.
"Paying taxes" is a number on my paycheck that says how much money went to healthcare, tax authority etc.
because far too many people vote against their own interest just so gay people can't get married, or transgenders using the right bathrooms or to stop the war on christmas or whatever fake crisis was invented for that election year.
It works the other way around as well. The left votes for social issues that upset the established cultural state, and which in the grand scheme of things will have minimal real impact (like transgender people using any specific bathroom). Social issues are a dividing force that occupies both sides of the spectrum, it's conveniently used as a means to divide and conquer. It's why most politicians will take on social issues as their political battle cry and shy away from issues that will impact financial markets. It's easier if you don't bite the hand that feeds you (wealthy donors).
> because far too many people vote against their own interest
You don't get to decide what other people's interests are, and you certainly cannot make an empirical case that the interests of all individuals would be better served by voting one way or the other. This sort of reductionism and failure to interact with people you disagree with in good faith ought to have no place on a professional forum like this.
>You don't get to decide what other people's interests are,
I absolutely can,there are far too many voters who are now upset that obamacare & the aca are the same thing and they're going to lose their health insurance.
In the US, taxes are usually deducted from your paycheck- however, you have to file every year because the amount deducted is rarely even close to the actual amount owed. Not sure how it breaks down, but I would not be surprised if the majority of people in the US get refunds every year because the Government takes more than they are entitles to. This gives the Government free float. It would be wonderful if we had a more simple tax system where the withholdings could be accurate without needing to tell your employer too much about your private affairs.
Pretty much same system here in .dk. I remember when I was a child back in the 1980s and my dad went through the annual ritual of filing taxes. It was a big hairy mess of papers accompanied with colourful cusswords. These days it's just a quick glance at a prefilled form (we can correct values but we usually don't need to).
U.s. govt uses tax code to incentive behaviors. We have 1040ez which is almost as simple as the NZ system if citizens don't want or have any deductions.
This really has nothing to do with the topic, every country uses tax codes in that way we just have a simplified system to calculate and pay taxes in other countries
I think the comment has everything to do with it: every time you use the tax code to legislate the behavior and choices of the people, it causes the tax code to become less simple by the very fact that the citizen now has to track that behavior. For example, take charitable donations. Because they're tax deductible, I have to track them, or forfeit the deduction. That's extra, manual work that must be done. Now multiply that out for every behavior that some congressman thinks should be encouraged, and it shouldn't be surprised that the taxes are complicated.
A tax form is essentially a giant function, but one with tons of inputs. It can only be automated once all the inputs are known (essentially, that's the job of tax software). The only person that has all of those inputs is you, so you're forced to buy TurboTax to be able to reasonably input and evaluate taxes.
If you're thinking that all these inputs could ever be tracked by the federal government in a giant database, I still think it's crazy: you'd need a database for student loan interest paid, which every loan organization reports to, for charitable donations, for stock purchases, for stock sales, for dependents, etc. (I don't even know how you'd begin to track dependents, aside from how we do it now: manually.)
Complexity counters incentives, though. Unless the only incentives you care about are the ones available to wealthy individuals and large corporations with tax lawyers. If you burry the incentive in a pile of complicated forms, it's not an efficient incentive anymore.
The 1040EZ has a long list of requirements that can exclude someone from filing with it; including, in some circumstances, those with otherwise simple tax situations (1 job with 1 income).
Intuit certainly does this, but blaming them for our overly complex taxes is wrong. They might move the needle a little bit but they aren't the primary driver. The primary driver is all the constituencies of all the little things in our taxes that add up to make them complicated.
Like ObamaCare? That came with two additional forms.
Live in a high tax state and like deducting your state taxes? That makes things more complicated.
Big fan of deductions to for education or child care? That comes with complexities.
I could go on and on....
Now maybe your answer to all of these questions was "no", but there are a lot of people that say "yes" to a lot of these questions. It's really hard to upset that apple cart. Lobbying doesn't have much to do with it.
That's not the point of the article at all, nor of Intuit's lobbying. Even with the current complexity of the tax code, the IRS could easily auto file your taxes for you if your income is below a certain very high level and you do not have any special complications. Such a system would work for 98% of Americans. This has nothing to do with what deductions are available or whatever complexity they introduce into the system. There is simply no reason whatsoever not to implement return-free filing, beyond the large dollar amounts tax industry lobbyists spend on the Hill.
> There is simply no reason whatsoever not to implement return-free filing, beyond the large dollar amounts tax industry lobbyists spend on the Hill.
It's not all Intuit lobbying. Many politicians of a particular faction oppose return free filing because they want to keep tax proxess as painful as possible to make people emotionally susceptible to anti-tax and, more generally, anti-government rhetoric.
> We are governed by people who don't believe in government.
This is more true now than ever. An EPA head that doesn't accept climate change, or believe in the EPA at all. A DOE head that wanted to eliminate a specific department that he heads, but can't quite remember what it is; an FCC head that wants to remove most FCC regulations (this is not as bad as the other examples, though), a SoE that doesn't believe in public education...
Intuit's lobbying isn't limited to opposing return-free filing. They also lobby to keep the tax code at a certain level of complexity that puts the most Americans in the sweet spot between too complex to feel comfortable using software and too simple to need software.
FWIW, the reason that Intuit believes that return-free filing is a bad idea is that they believe that you need someone who advocates for the biggest refund/smallest tax bill and the government isn't in a position to be that advocate since its revenues depend on tax collection. I don't generally agree and this sort of lobbying was the one area in which I questioned Intuit's "Integrity Without Compromise" core value during my time working there, albeit not on TurboTax. However, I did meet many people that did work on TurboTax and they all believed this strongly.
As the Sinclair quote goes, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."
Intuit has a $3b/yr interest in thinking that return-free filing is a bad idea. I think this country would be better off if people didn't have to spend that money and the inordinate time commitment that filing taxes currently consumes. And I think that Intuit not believing this is a rationalization of the need to protect that revenue stream.
As someone who was employed by a company that was acquired by Intuit, I've been very conflicted about my own good fortune being connected with Intuit's activities in this area. About 6 months ago, I decided to divest all my Intuit stock, not because I felt it wouldn't perform well, but because I don't want to be making money off what I see as unethical behavior. Intuit is, in most respects, a very ethical company. But in this one area, I don't think they are.
So, just for a different perspective, Taiwan has a relatively simple tax filing experience, and the government invests significant resources to make as simple as possible (which does result in many people paying their taxes properly, on time).
While their digital tools for filing taxes make the telegraph feel modern, the "in person" experience is full of helpful people and takes about 90 minutes including travel time.
My main criticisms of the filing process:
1. Tax bureau has a one month timeframe where you can go, in person, to file "on time", but only during business hours. Any 9-5 worker must take time off to go file in person. It's a pretty nice customer experience - The volunteers in the bureau help you file your taxes with highest deductions possible, it gets crosschecked by a government tax clerk, and you're done.
2. Make the software work better on a modern OS and give it modern usability. It's _really_ crap UI, and I only run it in a VM just in case because the download site is also shady looking.
3. Locals gaming the system can make your life harder as a working-from-home small business owner. Many landlords don't pay income taxes on their properties, which means tenants cannot register business addresses at their homes, and must "rent" an address for about $100 / month.
4. Withholdings on foreigners, by default, are artificially high as a "precaution".
5. Refunds process in August after filing in May. Because they still process every return much by hand.
6. Double taxation on people like US citizens. The tax clerk has asked friends of mine, while filing, to show their US tax return to make sure there are not more taxes owed. They can ask, but it's not enforceable. So why do it? Because the tax rate on that income earned elsewhere can be as high as 30-40%! The tax clerk gets to decide how bad of an offender you are. GLHF.
7. If your income goes down compared to the year before as a foreigner, you will probably pay a penalty for "making less money" because they suspect tax evasion. Pay the fine (less than $USD 100) and walk away, or they dig your records hard and you could wind up in a situation like #6 above.
That's America that's out of step. Almost all other countries only tax their residents, not their residents plus citizens. It's normal to tax worldwide income.
I told the British tax office that I'd left the country. They sent a refund and final statement a few months later, and we haven't communicated since.
If I had, for example, a house in Britain being rented out, I'd need to declare that income to my new country.
Serious question: Is it possible for society to criminalize rent seeking behaviors like this? It seems clear that there's no benefit to keeping the status quo tax filing system except for the benefit of tax preparers. What's stopping the US from creating a law that says if a company attempts to lobby for something in bad faith (like the tax example), they will face sanction?
Fair question and I dislike this sort of thing as much as anyone. And of course such an opening comment means there is a "but..." coming.
What you're asking for is to criminalize certain petitions of government. So how do you choose whom to discriminate against such that they cannot petition their government in regards to law making without, at the same time, simply institutionalizing the viewpoints of the other side? Maybe we shutdown corporate lobbying, but then do you need to shut down other associations of individuals (consumer groups, unions, etc) from lobbying government in order to keep equity, or tacitly assume those other organizations must be right anyway? There are many ways to play that game and the only options are those that simply favor one interest group over another... sure, the winning side probably won't complain about undue influence or insensitivity to the concerns of the losing side... but when has it ever been that way?
If you want a real solution to problem you're talking about without explicitly shutting down the give and take of ideas (good and bad) that are required to make the democratic aspects of our system function, your only solution is to limit what power the government has to influence preferential outcomes for anyone that would lobby it and increase the rights of individuals to act on their own accord or in trade with other, similarly free individuals. Without the power to deeply intrude into the economic lives of people (regardless if employee or shareholder), lobbying government for favors simply wouldn't be a good investment. Indeed, it is ironic that you ask to outlaw this sort of thing... because any time you expand the government power to regulate or influence outcomes you make the lobbying dollars just that much more worthwhile. Going further, you simply are considering a totalitarian systematization of your ideas: something worse than the rent seeking you rightfully decry.
I think "only solution" is far too strong. It seems to me there are two sorts of lobbying: positive sum informing of legislators, and zero/negative sum jockeying for societal advantage. We want to keep the former and minimize the latter.
So my proposal is:
1. Make all paid lobbying illegal. Make corporate donations to candidates, campaigns, and parties illegal. Eliminate revolving doors. Strongly limit individual donations. (And, while we're at it, maybe add federal funding of elections with spending caps.)
2. Industry groups, consumer groups, and the like can exist and publish what they want on their websites, but may not have private contact with legislators, their staffs, etc.
3. Legislators can communicate with outside groups to request information, opinions, and the like, but all requests and responses must be published in a permanently maintained record.
4. We increase the budget for congressional staffing and for neutral research groups like the CBO, so legislators have the resources necessary to make good law without having to lean on paid lobbyists.
I'm sure there are plenty of other proposals that could be made as well. The flow of ideas isn't the problem. It's the flow of money and power.
Regulatory capture is a problem, but I think you'd have much worse problems regulating complex industries without talking to them.
For example, the FCC doesn't really exist to protect consumers from anyone, but to be the "traffic cop" protecting manufacturers and operators of radio equipment from each other. I have a hard time believing the FCC could make coherent rules and spectrum allocations without the affected parties being able to raise issues to it.
Ditto, for example, airlines and pilot unions being unable to raise concerns to the FAA.
Ideally, lobbying is a way to say:
"Hey! We do this thing you want to ban [guns | amateur radio | general aviation | take your pick], and here's why, and by the way, we vote."
"Hey! We have this serious problem in our industry, one of our peers is behaving badly, can we do something about this?" Net neutrality regulation, for example, comes from companies like Netflix advocating for their interests against companies like Comcast.
You can publish this on the web all you want, but Congressmen aren't going to read the whole internet every day. We need some kind of "push" mechanism to get issues in front of them.
Obviously there are many very serious failure modes, particularly when one side of an issue has a disproportionate budget compared to the other. But there are also important use-cases.
Lobbying is not so simple an evil. Lobbying backed by campaign contributions, on the other hand, is much more simply bribery.
I didn't say nobody could talk to industry. See points 2-4.
If, e.g., the FCC believes they need input, they can ask. I expect that regulators would get in the habit of requesting quite a bit of information on a regular basis.
If trade associations would like to get Congress to attend to an important issue, they can call up a newspaper reporter and try to interest them in an article. And note that there's nothing stopping an individual citizen from calling up a representative and saying, "I'm an airline pilot, and I am concerned about urgent issue X!"
Lobbying is an arms race. The best solutions to arms races is to limit to the lowest sustainable level. And it's important to note that lobbyists are not just competing with other lobbyists. They're competing with everybody who can't hire a professional lobbyist. That is, the majority of America.
I am writing a second reply to you because this is a new thought and only something I just remembered which seems to not be covered by your proposal.
I was involved with a startup in the past several years where one of the people in the startup had a relative that was an official in a federal bureaucracy. The startup was in an area which was tangential to the regulatory authority of that bureaucracy, but relied on third parties which definitely were under that authority. The relative, it was reported, made it clear that if we thought that the third parties were acting in a less than compliant fashion towards us, thus hindering us, we should let them know so they could make it right. I expect our colleague made a bigger deal of how connected they were with us than may have been warranted, but the implication was clear: I'm connected and can pull strings if someone gets in our way.
Now of course a company reporting a regulatory problem they're having with another company isn't underhanded, no matter the connections... but I have a hunch that having the contact within the establishment would have helped that claim move up in the line or be taken more seriously than a claim coming in without the proper introductions (if you will). I don't expect the relative gave our colleague the yellow-pages number (yeah, I'm old) to make such a report, just in case, if you know what I mean.
But the key here is that this didn't even involve a politician. Rent-seeking in a highly regulated environment doesn't even have to come through the politicians. It can be made through the appointed and career officials that create and enforce the regulations mandated by legislators. This is especially true today when so much of law is simply and vaguely mandating the creation of categories of regulation rather than actually specifying what is law and what it is not.
Yeah, regulation is another thing entirely from legislation.
I think US regulators are much less of an issue than US legislators, in that normal government employees know that they are not supposed to take money from the companies they regulate. I'm sure it happens, but I think we already have decent mechanisms in place to handle that sort of corruption. And if they turned out to be insufficient, the way we'd fix that is through legislation, so I'd still want to focus on that for now.
1) You make corporate political donations illegal, but that's pretty specific to a single class of interest group. What about those that regularly act in opposition to corporate interests, such as unions, environment groups, consumer groups? Your point 2 seems to imply they would be included, but why are you specific here as to the prohibition? Or do you propose to treat different association of people preferentially and on what basis?
2) Again you're specific to certain kinds of interest groups but this time leave out corporations when granting permissions. Again, do you have favored classes of associations of people?
3) How do you police such a thing? How do police communication through surrogates or the thousand other ways creative individuals seeking rent or hoping for regulatory capture will bypass "communications with the outside"? Isn't this the sort of creative thinking that caused problems with McCain/Feingold and the like? If you accept greater regulatory involvement from the state, the greater the rewards to those that can gain the ear of the regulator. Risk/reward continues to skew to creative evasion.
4) What makes a neutral group neutral, and, in some way, can there ever be such a thing? Don't get me wrong, I don't know of any instances of the CBO outright gaming information, or releases, etc. for clearly political purposes (nor have I studied the question). However, CBO Director is still appointed by the politicians. What if one political interest group captures congress and decides to politicize the CBO since they can't get sufficient outside support for their position under your proposal? Do you politicians like Trump would do such a thing? Even if we put those sort of hand-wavy humans-are-humans arguments aside, elected politicians are ultimately beholden to their constituents regardless of the CBO position; CBO says we spend recklessly on the military (or if then that sort of thing) a big military district politician will very much ignore that advice. I expect your funds for increased staffers results simply in increased "independent" research supporting whatever position a given politician wants to hold for whatever reason.
Unfortunately, I still think I'm on the right track and that just about any solution that doesn't somehow require the political class, their staff, and families to be quarantined into some forced monasterial existence cutoff from the outside world, seems corruptible.
1: I'm flexible. Corporate donations are the most problematic, in that they create a feedback loop. If I can lobby for a thing that gets me money, I can use some of the profits to buy more favorable legislation. But I'd be happy with pure public funding of elections, no donations allowed. Or an individuals-only model, where each person has a strong limit, like $250.
2: I left out for-profit corporations on purpose, but I'm sure there's a reasonable case for including them.
3: The same way we police campaign finance, lobbying, public records, and elected official ethics. That is, a variety of groups with investigative power who do their best to root out offenders. You couldn't eliminate everything, but as long as we got the bulk of it and reduced the financial incentives for elected officials to favor donors, I expect we'd do pretty well.
4: In this case by neutral I mean "paid by the government to serve the legislators". Sure, there are risks. But giving legislators their own well-funded research groups means they'll have to lean less on industry-created "facts".
Everything is of course corruptible, but perfection isn't my goal. We're already much less corrupt than most other countries [1], and I'm suggesting that we could do better by limiting or strictly controlling channels of information and money. Those old channels made more sense when we didn't all carry around all the world's opinions and information in our pockets.
Both sides of this thread have suggested actions, albeit competing actions. Rational discussion of competing ideas involves discussing the positives, negatives, motivating ideals, and the validity of the ideas on the table. Not discussing or raising issues evades reality and doesn't do anything to diffuse or give answer to that reality. Simply put, if we're going to do something I rather do it with eyes wide open, understanding the downsides, rather than mimic one of those "hold my beer..." memes.
And... notwithstanding the debate at hand, perhaps we shouldn't act if acting actually makes matters worse or drives bad behavior further underground. Significant thought in the climate change debate and the environmental movements is spent on thinking up all the bad things that will happen if we continue to act as an industrial society. Is your admonishment for them, or do you pick and choose who can argue as is convenient? One might say... that's my problem with the person whose proposal I was responding to... they seemed to want to pick and chose who could say what and when.
Proving bad faith for lobbying is impossible. TurboTax would argue that the simple filing would allow the government to stiff citizens by not taking full advantage of their potential tax credits, etc... Proving bad faith would require fraud, and I don't see how there is any indication here of that.
Absolutely. What few people realize is that nations are competing with each other and this is a perfect example of how you can differentiate.
However, your options may be limited at present, or you may have "roots" where you are. If I was founding a nation on the water with Peter Thiel, or in space with Elon Musk, you can bet I would advertise quite loudly that this (and for example pharmaceutical price gouging) would be criminalized.
Today, well, put your votes into people who support it and/or be willing to relocate towards those politicians.
I think that's a pipe dream. I once read that true freedom is the freedom to choose where to live, but our world is moving towards closing borders even more, and they were never really open. So I don't think nations compete on that front. Internally local people compete for the ruling opportunity, nations don't compete to attract citizens.
Sorry I was vague in my comment . You will have it on the books and the lawmakers can point to it when they get elected . Other than that the behavior that you want won't be prevented . At best you will have some long drawn out court case that will strike down the law .
The fun thing is that the way our current economy works only encourages this kind of thing, with for example retirement funds depending on stock prices to go up. My favorite is Medicare and drug prices, with Medicare drugs often funded by budget deficits that increase the money supply.
I haven't read a legitimate argument against the IRS calculating taxes automatically, but here it is.
The more invisible taxes are to the individual person, the less they think about that money (and the higher taxes can go without them complaining too much).
Rent feels expensive because every month you write a check for rent. However, for many people, taxes are a much bigger expense than rent. But taxes don't feel as painful, because people don't write a check every month for taxes. Taxes are just invisibly withdrawn from your paycheck.
The easier and more invisible it is to pay taxes, the more you forget about how much money that really is. If you believe in constrained government, there's a good case to be made that we should make tax payments more visible, not less.
> Rent feels expensive because every month you write a check for rent
Even when I was living in San Francisco, my rent payments were automatic, and I didn't think about them too much. My rent still felt very, very expensive.
Im sure people who are making their decisions about what they value the way you describe are not really so concerned without how much its actually costing them.
A tangential issue: It seems almost impossible to me that the systems of tax preparation services, whether cloud-based, local software, or offline, are secure.
The standard of security is, make the target more expensive to breach than it's worth to the attacker. How much would it be worth to have access to the tax returns of large swaths of the population?
I don't know the answer, but I'm guessing it's easily worth billions of dollars. Foreign intelligence services would very much like that information, as well as sophisticated criminals.
I am very doubtful that Intuit or H&R Block, for example, invest in security sufficient to protect themselves against that level of attack.
> I am very doubtful that Intuit or H&R Block, for example, invest in security sufficient to protect themselves against that level of attack.
I can't speak to H&R Block, but I used to work for Intuit and I can attest that they took security very seriously. We were often subject to extreme security precautions despite the fact that the application I worked on didn't have any PII and the entire purpose of it was to make the information in our database available to the public and search engines. The rationale for forcing us to comply with the corporate security policies was that any breach of any Intuit service would be damaging to the Quickbooks and TurboTax brands. One of the reasons I left was because of the frustration with security compliance. The organization is incredibly slow moving on everything because the people in charge of security basically have carte blanche to shut down or delay projects until they've been properly screened. Intuit also doesn't cheap out on hosting either. I heard an internal rumor that they were spending $40m/yr serving TurboTax, and that didn't count the construction of the two dedicated data centers that they had built in previous years.
Whether their security is good enough to defend against a state-level adversary is hard to say, but my personal guess is that if you wanted to get at tax returns, it'd be easier for attackers to target the IRS directly, both because it'd probably be easier and you'd get access to the returns of 100% of Americans rather than just the percentage of Americans who use TurboTax Online. Keep in mind that most high-net-worth individuals don't use these online tools and, instead, have accountants and lawyers who prepare their returns.
Where Intuit has been vulnerable in the past has been in accepting fraudulent returns. For a while, you didn't need much more than an SSN and a few pieces of personal information to file a tax return, so identity thieves would file returns that had the highest possible refund and make off with that money. But that's not really a breach and I know they worked with the government in addressing that problem and I haven't heard much about it since.
The above mentioned security. The workload, which has two spikes in January and April, moderate traffic in between and is basically non-existent April through December is pretty much the poster child for cloud since you could spin down capacity in the 8 months where you don't see much traffic. This is why Intuit has publicly stated that they want to go all in on AWS. But, at least when I was there, the internal security teams were making it very difficult to get cloud deployments approved. I know they were working closely with Amazon engineers to fix/design solutions to the gating security concerns, but I have no idea how far they've gotten.
But when you look at the money involved, you can see why Intuit is moving so slowly and is willing to continue to spend on its own data center. $40m/yr may sound like a lot of money, but when your product pulls in $3b/yr, it's a rounding error. And the data centers aren't dedicated to TurboTax...Quickbooks and a few other products run there too. And I have to say that, for certain services, I think you get a lot of piece of mind from not sharing and having your own data center. Take, for example, Intuit's service for scraping data from financial institutions (FICDS). It powers Mint, Quickbooks and TurboTax and is required to store login credentials for people's banks, retirement accounts, brokerage accounts and such. Needless to say, the security of such a service is paramount and there's no way that I'd ever entrust my banking credentials to any service hosted in the cloud. You just can't get the same level of security you can get when you've got physical control over your hosting.
I am a developer of accounting software and this is exactly the problem I faced when developing the cloud-based version of my accounting software.
My solution was to keep all financial data on the server encrypted. The server is unable to decrypt any financial data because the crypto key is either (a) derived from the user's password; or (b) located on an offline device to allow customer support staff to reset passwords.
This means that even an attacker who gains root access to our online servers would be unable to access users financial data. (In fact the cloud version is probably more secure than our old desktop-only version because it encrypts all financial data when cached on the end-user's hard drive)
I'm actually considering adding a full end-to-end encryption option, but it would mean that users who enabled this feature would lose their data if they forgot their password. So I suspect that few users would want enable end-to-end encryption in their accounting software. What do HN users think? Is there a market for 'cloud accounting software with end-to-end encryption'?
I wouldn't use it without end-to-end encryption, and I probably wouldn't trust your implementation of encryption (no offense, but probably you can't be a wizard at both financial software and encryption software) unless you used some proven third-party solution. And even then ... I would just keep the data local and encrypted. Why do I need to put it in the cloud?
However, I'm a tiny market of 1, and I and the HN crowd are not representative. While I'd love it if you designed your solution specifically for me, it probably wouldn't be good for your revenues (for good software, I'll pay $100/yr!).
People put their financial information online all the time, using QuickBooks, tax software, Mint, etc. Most have no idea what end-to-end encryption means, but if you tell them it's more secure I imagine they will like that. As an 'influencer', I might be more likely to recommend it (with the caveats in the first paragraph).
Is there some liability involved? What if there is a breach and their data is stolen? What if you tell them it's encrypted, there's an exploit, and your claim on which they depended turns out to be false?
Thanks for your feedback. I guess the benefits of putting your financial data in the cloud are the same as for any online system: Access your data from any computer, automatic backups, and easily share your data with other people (especially your accountant or co-workers).
The problem is more about marketing - every online system claims to have strong security, and users have no way to test those claims. Users regularly hear reports of data breaches so they become cynical about security do not trust any online system.
Curiously, the efforts by the EU to ban end-to-end encryption [0] may lead to an easier marketing pitch in the US: "Security So Strong It's Banned In Europe!"
You make a good point about liability. Any data breach has a big impact on the reputation of online system, but particularly so with a company that claims to be stronger than the rest. There may also be extra litigation in such cases.
> I guess the benefits of putting your financial data in the cloud are the same as for any online system: Access your data from any computer, automatic backups, and easily share your data with other people (especially your accountant or co-workers).
I definitely could see that applying to business accounting, but not to my personal finances. I don't need to look at the latter very often, and very rarely do I need to share it with someone who can't look at my laptop.
The answer, of course, is "it's not that secure". Now, Turbo Tax and H&R Block aren't being hacked, but breaking into their systems isn't the easy way. And like you said, attackers want to take the easy way. The easy way is to get just enough info from your targets as it takes to extract money from them. And in the past few years, e-filing fraud has skyrocketed. The mantra is "file your taxes before someone else does", because the number of people who are submitting their tax form only to find out it's already been submitted is greater than ever before.
It's really, really hard to attack Intuit. It's much easier to submit fraudulent tax forms and pocket the returns before anyone notices.
> The mantra is "file your taxes before someone else does", because the number of people who are submitting their tax form only to find out it's already been submitted is greater than ever before.
The IRS is liable for losses due to fraud, so why would I care about fraud? It's up to the IRS to secure their systems.
This is absolutely the case. My parents' personal data was dumped when one of the major health providers got hacked a few years ago, and somebody started submitting junk returns with their info. Each season it takes them easily 20+ hours on the phone, and usually the IRS won't believe their identity over the phone (understandable enough) so they need to show up in person at the nearest IRS office (which isn't very near, and requires an appointment - another 3-4hrs on hold to schedule, and they never take you on time when you get there). It's a nightmare, and if you choose not to resolve it, you're just setting yourself up to get audited.
> It's really, really hard to attack Intuit. It's much easier to submit fraudulent tax forms and pocket the returns before anyone notices
What makes you say that it's so hard? Also, the return on breaking into Intuit is millions of tax returns. Finally, attackers may not be after the refunds on a few returns, and more interested in a massive intelligence and identity theft haul.
That's based on my years of experience in the information security industry. Trust me, if Intuit and H&R Block were being breached, I would know about it. And more than likely, so would you.
But your comment about identity theft, that's part of the "file it before someone else does" aspect. Not necessarily that Intuit is getting broken into, but the rampant identity theft that seems to be common and even acceptable in today's day and age is making it a lot easier to file someone else's taxes for them and then make off with the money. And hackers will always go for the easiest target.
In Sweden, as government documents, tax returns are public information. Every year after tax season the tabloids print long lists of "The richest people in YOUR neighborhood! Is your neighbor on there?". You can look up anyone you want.
The local software doesn't really carry the same security concern.
With cloud-based or in-person tax preparation, there's a risk that a single breach could compromise many, many tax returns. With offline software you have no such exposure, it's not like it's exposing open ports to the internet.
Generally I agree that it's a higher cost and therefore less valuable target, but there are ways to mass deploy some exploits. For example, you could use a browser exploit to obtain access, and then use that to mass deploy an exploit on tax return software.
Browser exploit? What? On software that runs completely locally - without a browser, then only connects over SSL to a single government-run server? How exactly do you propose that would work?
Do you mean to suggest that malware unrelated entirely to the tax software has an impact on its security? I mean... you'd have the whole host machine compromised - no need to "exploit" the tax software at all, you can get that and a lot more than just taxes off there - but it's still hard to do in true bulk. Much worse than a simple database dump and would only affect people who browsed to your site during the time of the exploit. Much more limited than anyone who used a given service.
Additionally, full browser exploits these days are very rare and extremely valuable though. I doubt you'd see one wasted on such a purpose - at least, one that still works if you keep reasonably up to date.
I have experience as a tax payer in Estonia (employee only) and Australia (employee and business owner). In Estonia I login to my bank with my citizens ID card, click through a few screens ... and my tax return is done. All the financial information supplied by my employer to the government is immediately visible and checkable, not to mention donations made to tax-deductable organisations is also immediately visible. It is incredibly quick and convenient. In Australia it's just easier to leave everything to my accountant as they already have my quarterly business returns information; cost is still pretty reasonable (500AUD or so for the yearly business returns and the personal returns for my wife and I). But ... yeah ... in Estonia it just rocks. The ID-card based functionality for banking, digital signatures, tax ... just awesome.
It is similar in Norway - though I've only watched my spouse do his.
You get an email notifying you, log into the government website to check it. If you agree, the only action necessary is to pay the bill, if there is one. Otherwise, your refund will arrive. You have the option of doing actual filing or disputing the figures, but obviously don't have to.
Edit: The tax is figured out when you start work or update for things like marriage or children. This seems to include a trip to the tax authority for a personalized tax schedule.
In the Netherlands it is similar, most information is combined for you by the government, they even introduced an app to file your taxes last year. It probably is still a lot of work for businesses though...
We often hear about the advanced digital government in Estonia, must be nice to have such an open minded country.
See the final paragraphs, which I've copied below - it's essentially a version of the Citogenesis effect.
-----------------------------
"Dennis Huang, executive director of the L.A.-based Asian Business Association, also told ProPublica he was solicited by a lobbyist to write about return-free filing. When the lobbyist sent him a suggested op-ed last summer and told him the proposal would hurt small businesses, Huang wrote an op-ed in the Asian Journal that claimed Asian-owned businesses would not only spend more time paying taxes, but they'd also get less of a refund each year.
Huang declined to disclose the lobbyist's name, but acknowledged he didn't really do his own research. "There's some homework needed," he said.
Oregon's Martin did some research on return-free filing and now supports it. She also co-published a post about the issue and the PR efforts related to it because, she says, she was alarmed that other nonprofits could easily agree to endorse a position they did not fully understand.
"You get one or two prominent nonprofits to use their name, and busy advocates will extend trust and say sure, us too," Martin said."
the deep cynicism here is how people think Turbo tax is doing a pubic service by making taxes easier and cheaper, that's how effective their marketing is. Convince the public there is a problem that only said company can solve.
Of course, you shouldn't need to pay anything. That is a false dichotomy.
The way tax returns are done is deliberately abusive to citizens. They'll chase you down if you owe them money, but not if they owe you. In that case you need to jump through flaming hoops every year to appease them. It's not a coincidence.
Not entirely true. I have received money back on taxes that I filed with an error that resulted in my overpayment. So in a simple case, yes they will return money they owe you. But I would not expect them to file an optimized return on your behalf and you probably already know if you should be doing this yourself.
The beauty is you don't. If you go to HR's website they basically say "click here to file for free!", and "click here to make an appointment at your nearest office"
For the last 9 years, I've been filing tax returns on money I've earned abroad: no 1099 and definitely no W2. One year somehow they blew away my foreign tax credit and said I owed $30K (note: they were really nice about it and I eventually was able to fix the mistake).
Taxes get complicated REALLY quickly as you move beyond single W2 earnings.
With stocks, capital gains, dividends, write-offs, company you need to handle these manually and the government doesn't know your write-offs and all sources of income.
For a W-2 employee taking the standard deduction, perhaps.
The IRS cannot correctly calculate what the typical small business owner owes, what the typical real estate investor owes, what the typical upper middle class family owes, because they don't have all the information available to them.
The IRS probably has enough information to file 1040EZs for most people, but certainly not enough for 1040A, 1040, or most business returns.
So, of the 293 million returns filed, about 18.6 million or 6.3% of them could be auto-filed by the IRS. About 1 in 16 total returns and about 1 in 8 personal returns.
To me, 6.3% (or even 13%) is a far cry from "all the typical cases". They can mostly handle one particular case; that might be the case that you personally have; I have no objection to them offering that as a service. Just don't be confused and think that that that's all the typical cases.
Great analysis. One thing to add though - some of these people have to also file state returns. Which in TurboTax pretty much automatic, but without it it'd be separate return which has to be filed separately - which means same work as for Federal, so people would still need something like TurboTax - unless also each state that has income tax makes their own system too.
I do expect that would happen over time (even to the extent that states would change their tax laws to align with the federal auto-calculated tax systems).
I support most systems that would take the burden and aggravation off the American public. I also worry that it would make it even more opaque than it is today. (I don't believe we'd have the current rate of taxation nor spending if we hadn't instituted a payroll withholding scheme and Americans had to actually save and write a check to the government each year.)
No. How would they know how many charitable donations you made? How would they know how many miles you drove for your business? How would they know how much you spent on travel for your company? How would they know how much you paid for the raw materials for the products you sold? Or your business utilities, rent, etc? How would they know your unreimbursed medical expenses or casualty losses?
The issue here is that taxes have been over complicated with deductions. If it was just simply based off earnings and there were no deductions it would be simple.
Obviously taxes would need to be reduced if all deductions were removed. I for one would love to see a zero deduction tax law, and simple validation of earnings.
I think you're still stuck on W-2 employees (which is a pretty large and common case, I admit, and I'd love to see that simplified).
You will always need accounting for businesses (IMO).
Suppose you ran a lemonade stand. You bought some equipment, some raw materials, you used some utilities, you used some space, you bought a banner and some flyers to advertise your stand, you hired a lawyer to help set it up, you bought a business license, you bought cups and napkins, you took in some receipts. Let's presume you turned a profit.
On what figure should you pay taxes? The gross receipts (every dollar you took in)? Or just the profit (receipts minus expenses)?
And that's just a lemonade stand; imagine the complexity of a larger scale business...
In terms of businesses, I hold somewhat controversial belief that businesses should not be taxed. Their employees are taxed, and people recieving dividends are taxed. By not taxing businesses, we'd also balance out the unfairness in the system today, where large companies are able to offset all profits with deductions, and small companies which actually pay quite a bit. The point is to bring fairness to the tax system.
I don't know that I agree with the fairness points you raised, but from a sensibility standpoint, I like the idea. Corporate income tax is only 9% of total federal receipts, so it seems like we could make that up without incredibly burdensome changes. It would also make the US competitive again as a corporate domicile for multi-nationals (though without taxing them, it's not clear how advantageous that would be).
I do worry that it would raise other forms of exploitation of loopholes though. There would be less pressure to report payroll expenses (decreasing compliance and decreasing payroll taxes as anyone you pay off the books is cheaper out of pocket for you per dollar they receive) and I suspect we'd see a lot more people not taking large salaries at companies they control but rather funding their lifestyle needs with perks and loans from the company, the repayment of which would not be taxed.
Payroll taxes are 1/3 of federal receipts; any significant decrease in compliance there would perhaps be more damaging than losing the corporate tax income directly.
Yes, I think there is an enforcement and compliance problem. I think that gets into some serious details about a plan that would actually work. Perhaps extremely steep penalties for anyone caught cheating would be enough, but you are right that people would try to hide their revenue in the corporation. But aren't the extremely rich already doing that?
The entirety of economic entities is not conveniently split between "employees" and "businesses paying employees". Even aside from disabled, burnouts, unemployable, trust funders, criminals, barterers, and simple parasites, there exist sole proprietors, partners, and individual contractors, whose income never gets distributed to any employees.
Your hypothetical "fair system" will have to have policies and regulations in place to deal with all of these situations.
As far as I can see, the only opportunity for real fundamental simplification is to completely drop all taxes on income, and substitute consumption-based taxes. And even that is not as simple as it sounds (how does it deal with barter, for example?).
That would only be reasonable if you think that only poor and middle-income people should pay taxes. Everyone else would be able to opt out via a series of corporate shells.
It takes a lot more time with Turbotax than H&R Block or even just handing stuff over to a regular accountant who does tax preparation. The obscenity of paying $1000 for small business tax preparation was not moderated by the even more obscene alternative of spending four days with TurboTax (or any other software for that matter).
But at least TaxAct is a small company that's been around for about as long as TurboTax and I think their business model is far more ethical than Intuit, who are doing the absolute worst thing by basically legally bribing elected officials to keep tax preparation complicated enough that they are a going concern.
I use TurboTax Self-Employed and it works pretty well for me. It handles everything I can think of for my 2 LLCs. It takes some time though. If you have all your expenses already worked out, then it's not too bad.
HR Block's online filing system is pretty good. I have used it every year since 2005. I only started recently in the past few years paying for the upgraded services(about $50) due to mortgages and other income.
well, of course. imagine you are a business and the govmt could change a law and put you out of business. wouldn't you put as much money as you could into preventing that change?
this is why money in politics causes problems...
Same old same old: show me a doctor who doesn't want you to be sick. Show me a lawyer who doesn't want you to get in trouble with law. Show me a priest who doesn't want you to sin.
It just blows my mind up to what degree TurboTax will go with this!
I've never met a doctor who wants people to be sick. I'm sure they're out there, but the great majority wants to help people, and would gladly be put out of business.
In my experience it is taken as a given that people will continue needing medical care of one sort or another, so doctors at the microlevel don't worry too much about patients getting _too well_. The exception to this would be some corners of medical care with a lot of discretionary spending like cosmetic surgery, dentistry, etc. and even there a doctor doing work which doesn't need to be done is not looked upon favorably.
Given that there is no magic cure everything potion, I highly doubt doctors will ever have an issue with a lack of patients. This is especially true if you consider population growth.
Why would an HMO want you to be sick? They spend most of their time not covering medical claims. In fact, they'd make more money if you never used your insurance.
And your claim that people are generally good makes no sense. Corporations don't make decisions, people do.
False. If people never used insurance, then they'd stop buying it, and the whole industry would collapse. The reason why the industry exists is it helps manage the alternative: fear of eating into savings, going into debt, or going bankrupt, just to get well again. Or worse, just giving up and dying.
The reality is, no insurance company insures known sick people unless compelled to with sufficiently large pools to redistribute wealth and risk. If a pool had only sick people, insurance is no longer insurance, it's a payment plan. What we in effect have now is one part insurance for totally unpredictable things, with one part payment plan for all the predictable doctor visits and scripts that people want to justify a monthly payment.
Coporations need to make a profit. I don't think this necessarily makes them evil. The ones that you mention make a profit at the expense of people's wellbeing and happiness, so their profit motive definitely puts them in conflict with the better good of people.
I would say corporations are generally amoral, not evil. This is why regulations for corporations are so important; they guarantee an appropriate way to make profit without say polluting all the drinking water in the country.
In the case of the prisons and medical insurance, the profit motive is directly in conflict with the actual positive desired outcome. In cases like this it's clear that the government should be the service provider, where the desire is to reduce costs, not see them increase for profit.
I guess for me, people can be evil, corporations aren't themselves capable of evil without people.
One thing I would like to see more of is individuals who perform evil acts inside companies be held personally liable. To many walk away without any consequences, see Texaco and Venezuela.
In terms of slave owners, the person is evil, and so was the system. I suppose you have a point that corporations can be evil in some cases, but I'd generally say that is because of a lack of regulations to restrain them, but this is obviously a gray area.
But there are diseases where there is a debate over whether someone is "sick" and should be treated. E.g. slow-spreading cancers that likely won't kill you or cause symptoms until after you are dead. Procedures such as whole-body scans frequently turn up issues that would likely never be a problem.
There are doctors who push these things that are of questionable medical efficacy, but definitely put money in their pockets.
I think people are taking your comment too personally. It's not about an individual doctor, but the healthcare business. It's not about an individual lawyer, but the legal business.
Bullshit, I have been to a public Chinese hospital and all I got before paying was a tech hooking me up to an EKG to verify I wasn't actively having a heart attack.
Before I could see a doctor, I had to pay cash. I had to pay again to do the blood tests ordered by the doctor.
On Health Care Compensation: Methods of Allocation:
"The public may yet regard as commendable the Chinese custom of paying the physician only during the period health is maintained, all emoluments ceasing during sickness."
Albert Abrams, Nervous Breakdown, Hicks-Judd Company, San Francisco, 1901, p 5
I have a family full of doctors and none of them have schedules anything even approximating that; it'd be 4 days with 10-12 shifts, one 1/2 day defined as at least 6 hours or possibly an open ended 8, and two days off. This idea of 4-5 days off in a row, or even per week is nonsense.
It's an analogous situation to last week's news about Apple banning self-updating apps in the App Store and Rollout.io's business model. Except that had the opposite outcome.
This is one of the reasons Credit Karma launched a totally free online tax product this year (https://creditkarma.com/tax). (We view this similarly to credit scores a decade ago, when everyone advertising "free" was a bait and switch).
I always love reading absurd statements made by otherwise reasonable people who - of course - a salary depends on being unreasonable.
Here:
> Intuit argues that allowing the IRS to act as a tax preparer could result in taxpayers paying more money.
Majority of work will be done automatically by some free jQuery and PHP scripts (hello Obamacare website) and taxpayers have only shell-out initial cost. Even if TurboTax is $19 per year, I have a hard time believing that 200MM tax payers X $19 will be less than running an enterprise servers for online consumers.
> [...] "STOP IRS TAKEOVER" campaign and a website calling return-free filing a "massive expansion of the U.S. government through a big government program."
I honestly laugh at this one. Just exactly which part of information that IRS process is not already in the IRS possession? With that statement -- they really reach out for the dumbest people hearing them out.
> Explaining the company's stance, Intuit spokeswoman Miller told the Los Angeles Times in 2006 that it was "a fundamental conflict of interest for the state's tax collector and enforcer to also become people's tax preparer."
I have to place a call to intuit maybe they will sponsor my idea that I should fill out and asses my own respondibility when it comes to a parking ticket. I mean you cannot trust the government that they will be fair to you - so I should get note "you violated parking zone - fill out this form and return to us with own assessment of your penalty". Gosh imagine wild wild west we would be living in if you stretch it to criminal law.
> Majority of work will be done automatically by some free jQuery and PHP scripts (hello Obamacare website)
Obamacare website was notorious for being completely terrible. And so were many other government-run healthcare sites - I personally tried to find some info on CA site when it was launched and failed for several days until they worked out the kinks.
And tax code is vastly more complex than what healthcare needs. There are literally hundreds of various exceptions, deductions, conditions, etc. Many of them inter-related or conditioned on other things. Did you every try to figure out how to use some of the IRS worksheets? It's no picnic. I recently tried to figure out whether I can deduct the cost of some home improvement I've made - took me several hours and I'm still not 100% sure I got it right. US tax code is insanely complex.
Of course, it may be that IRS has most of it already implemented and it may be that this implementation actually allows to produce pre-filled return (from what I've seen from IRS, it's not that easy, but maybe I'm wrong). Still, the project would probably have very significant cost, and unlike the commercial offerings, it won't be privately financed, and it would inevitably suffer from what many government projects suffer from - cost overruns, bureaucracy, wastefulness, choosing suppliers based on political clout, etc. It's not going to be free, it's going to cost a lot of money.
> Just exactly which part of information that IRS process is not already in the IRS possession?
Quite a lot of it. E.g. my charity donations aren't. Many of my other deductible expenses aren't. Education expenses probably aren't. A lot of small business income may not be. A lot of deals like selling non-public stock aren't.
I think you might have very narrow view of how complex a tax return can be if you don't have just "one/two salaries, standard deductions" situation - which btw many preparers offer to handle for free or near free already. That's not where the problem is. It's when it goes out of that simple case where the complications lie.
And yes, currently the simple taxpayers in some measure are subsidizing the more complex ones, by financing the platform that allows handling more complex cases with their money. However, I'd hate if I had to pay $600-$1K for my more complex case (that what it would cost to hire a tax accountant) instead of $60 or so I'm paying now for the software (plus hours of time reading IRS instructions of course).
Maybe Intuit argument is still bad, I don't know, but it's not as laughably bad as you describe it, not even close.
> Quite a lot of it. E.g. my charity donations aren't.
I think you missed the point.
IRS will know about your charity donation shall you decide to give this information to TurboTax for TT to lower your tax burden. IF you don't want to lower your burden, don't give it to TT and don't give it to IRS, problem solved.
So at the end of the day it doesn't matter if you provide something to TurboTax and they forward to IRS, or IRS will have it directly from you by adding this information to your online tax form on Gov site.
> So at the end of the day it doesn't matter if you provide something to TurboTax and they forward to IRS, or IRS will have it directly from you by adding this information to your online tax form on Gov site.
Ah, in this scenario it indeed wouldn't matter - but this scenario means that there's a government-run clone of TurboTax. I doubt the government will do better job and be cheaper than Intuit, which have a lot of experience and knowledge in doing this.
> I honestly laugh at this one. Just exactly which part of information that IRS process is not already in the IRS possession? With that statement -- they really reach out for the dumbest people hearing them out.
They won't have data from people who are self-employed. That said, neither does TurboTax so there's no difference here based on their argument, just as you said.
It does make a difference. TurboTax is an app that allows you to enter this info. The whole premise of auto-filed tax return is that you don't need to enter anything. The argument "to be able to file without entering anything you need to either vastly expand what IRS knows about citizens, or to restrict it to a small number of very simple cases" is not refuted by pointing out neither IRS nor TurboTax initially do not have the info. Because TurboTax side is not based on the premise of having the info upfront, only auto-file case is premised on this.
The correct way to refute such argument would be to prove that the simple cases - the ones that can be auto-files - constitute not a small part of cases but a part big enough to warrant IRS doing it. That's the argument I'd like to see - with proof, of course - i.e. how big is that part that can be auto-filed completely without increasing IRS knowledge it has now.
It's not a very large percentage of returns (around 6.5%) if you credit them with the ability to file all 1040EZs (they probably can't auto-file all the 1040EZs but can probably do most of them).
If trump administration actually manages to simplify tax code and kill the stupidity corporations induce via lobbying such that I can file my own taxes. I would have a lot of respect for him.
Note it says "free" and "government prepared". Setting aside that those are mutually exclusive concepts, that says nothing about simplifying taxes - it's just having the government do the complicated stuff instead of you (or your accountant).
At least the govt is ostensibly about the public good. Anyone else through self interest is suspect. Which gets back to the title of the original post here for this thread...
The IRS is already essentially doing your taxes already (certainly for the most common and straightforward returns): they have to verify your statement. The actual computation is trivial (for them).
"Doing your taxes" mostly involves showing you their calculations. It's almost a freedom of information issue.
Compared to the cost of private prep and filing, it basically does seem free (gratis). And even if you choose to dispute or file independently, such a program could save each filer time and money by providing a base document; you would just provide diffs.
You can do your taxes for free using this: https://www.freefilefillableforms.com/#/fd, but it's a huge pain unless you know what you're doing. I did it last year, but it took 10+ times to submit it correctly and the errors were straight from programming errors (i.e: tax_status is not valid, etc.)
Massachusetts had free tax filing, but got rid of it this year. It was really great and fastest refund I ever received.
I'm really happy with how the Canadian Revenue Agency handles things. You file online, there's plenty of free services to do your taxes. They support auto-fill where the CRA can send them the tax info it already knows about you (e.g. from banks and employers), etc. I filed my a few weeks ago and they assessed my returns by the next afternoon. Last week I received a cheque in the mail, but that's only because I forgot to fill out the direct deposit info on the CRA website. The husband of a former colleague used to fill out junk on their tax returns because they knew that the CRA would just fix it all up, and then tell them what they owed (or what they would be refundend) in their notice of assessment.
Technically the situation in Canada is the same as in the US. You must use a third party to file your taxes online. There is a donationware system from simpletax.ca and most (all?) of the others will not charge for a sufficiently low yearly income.
That doesn't change the fact that in Canada there is no way for a citizen to file their taxes directly with the government other than by using the paper forms and mailing them in. There used to be a telephone system but that was eliminated some years back.
The relationship between the private tax preparers and the CRA is much closer than is healthy. I suspect that is related to the current situation.
This bothers me enough that I file my taxes on paper as a form of protest. The nice thing is that you can put pretty much any nonsense on there you want. They will just ignore your figures if they disagree which of course shows how silly the current situation is.
In Austria, since I think 2016, you also get automatic tax returns as an employee, but these are calculated based on a minimum standard wage and parameters, so you want to do the math on your own anyway, but it's very simple and straight forward, at least once you validated your account, which is a very official procedure but ok for security reasons.
There's a simple online form where you basically only have to put 4 sums for each tax category and that's it, the rest is already sent by your employer. Always a nice and welcome surprise and a rewarding experience
> The Computer and Communications Industry Association (CCIA), of which Intuit is a member, represents its members on a wide range of technology issues, but spends a significant amount of its $6.7 million in lobbying on tax simplification. As ProPublica's piece points out, the group operates the website "Stop IRS Takeover" which bashes the idea of pre-filed returns. Disclosures indicate the CCIA has focused on "issues pertaining to tax preparation services" and legislation involving simple filing. It lobbied in support of Rep. Lofgren's bill that would have barred government-filed returns, and rallied against Sen. Akaka's bill that would have let taxpayers file directly through the IRS "without the use of an intermediary."
The CCIA is an active political giver as well, doling out over $650,000 over the past 20 years with 91% going to Democrats. Silicon Valley-based Rep. Lofgren, an opponent of IRS-prepared returns, has been the biggest beneficiary of CCIA donation, collecting over $12,000. The group also opposed John Chiang in the 2006 California controller election, chipping in $50,000 to the Alliance for California's Tomorrow — the same group that received $1 million from Intuit.
While the focus of this discussion here is on the taxes, I think the bigger story is the unethical behaviour of companies like Intuit. And its not only Intuit, but also companies like SAP [1] that engage in such behaviour at the cost of tax payers.
The finanical might takes away so much from the commons and also pushes back adoption of good Open Source software. We constantly under-estimate the damage done by these mega-corps.
Reminds me that raw capitalism isn't the answer to every problem.
Kind of like the current healthcare debate in the U.S., where the problem seems to be "how do we allow insurance companies, pharmaceutical companies, etc. to make maximum profits while providing healthcare for the maximim number of people at minimum cost?"
It's not really a credible idea that an industry accounting for 0.05% of U.S. GDP somehow manages to out-lobby the industries representing the other 99.95% of GDP, so as to keep tax filing complicated when otherwise there would be a critical mass in favor of simplification.
I am in India and tax filing here is as simple as 1 2 3. We have the Form16, which has the data to be entered in an excel sheet that you can download from the govt website, punch in the numbers and voilà, they tell you tax you owe! Pay via net banking and you are done.
As strange it may seem, a portion of people/corporations are always pro-privatization and anti-nationalization.
This helps explain why there is an anti-net-neutrality faction. It's not just because people don't understand. And it's not just because people are bought and paid for. There are actually legitimate arguments for privatizing things and then regulating them rather than nationalizing and trusting the government to manage effectively.
Interesting, that in all income tax discussions the underlying premise of income tax is not questioned.
For me it's a form of extortion. If I avail of certain services provided by the government, I would expect a bill only for the services I availed. And just like my ISP I should have the option of not opting for the for their services.
Whether income tax is generally acceptable is a much broader (and philosophical) topic than the simpler question of whether it should be simpler to handle (obviously yes unless you make money from its complexity).
In that case the debate would never end. Even before we get down to tax complexity, how do we decide if 10% of income as tax is good enough, versus 20%? Notice the rabbit hole of arguments that one can get sucked into.
> Even before we get down to tax complexity, how do we decide if 10% of income as tax is good enough,
Why would we have to do that? The reality is that we already have an income tax, and we can definitely simply its filing process without changing its current rates.
So far this sounds like a standard libertarian tactic where you try to turn every debate on political policy specifics into a debate around whether government should be doing anything at all. It's not any different than internet marxists who, given a topic that revolves around business, will always reply "well X should just handled by government anyway FULL COMMUNISM NOW". It's completely unproductive and borderline trolling.
here in NZ most people don't even have to file taxes - we have NO exemptions, if you have one job your boss will have gotten your tax right, your bank will withhold tax on interest at your declared marginal rate - if you have multiple jobs filing a one page web form might get you a refund (with interest!).
less than 5% of us, those with complex financial lives who can likely afford it, have to file a more formal return
Same here, but I have to actually confirm that I have seen it and sign it (via text message, online or paper). The stuff I have to manually add to the filing is s.g if I bought or sold a house or did any complicated stock market trades (but then the broker or bank usually lets you take that form pre filled from them at least).
I live and work (not self-employed) in Germany, which has one of the most complex tax systems in the world. Normally, a certain amount is deducted from my salary upfront automatically so I pay my most of my taxes through the year. The deducted percentage is defined by so-called "tax class" (1 for singles, 3/5, 4/4 or 5/3 for married or "registered partnership" couples).
When the year is over you MAY file a tax declaration if you had 1 or 4/4 combo - or you MUST file it if you had 3/5 or 5/3 combo (because then you have normally underpayed the taxes through the year as a couple). If you have 1 or 4/4 you have normally overpayed taxes so if you don't file, the goverment is happy.
The tax code in Germany is mindbloggingly complex. And it's not just laws, its' also "common practices", knowing what the Tax Authority (Finanzamt) accepts and what not. It's also knowing the current lawsuit which may be potentially applicable to your declaration. Every year there's a few dozen such tax lawsuits where the results are applicable to large groups of taxpayers.
When I was single I either didn't file the tax declaration or filed it myself with the help of software and a few books. There's a bestselling book "1000 absolutely legal tax tricks" (https://www.amazon.de/Konz-1000-ganz-legale-Steuertricks/dp/...) which is a a good starter.
Nowadays with family and kids we must file a tax declaration, but now there are so many special cases we're either subject to or can profit from that it's not realistic to do it on our own. We outsource our tax declaration, it costs us around 300€ a year and is absolutely worth it. Our tax consultant routinely argues with the Finanzamt over two-digit sums, basically fights for every cent.
Honestly I don't think we'd better off if the tax system in Germany would have been simpler. We profit from a number of special cases like "extraorinary burden" because of the disabled child, so I think in the "one size fits all" system we'd probably lose. I'm totally fine with 300€ fee for the tax consultant, she allows us to use the benefits of the system. By the ways, this fee is considered the next year, we get out tax back from the fee.
If I remember correctly, a few years ago politicians discussed a "no-file" option: you declare that you don't file you tax declaration this year and get some bonus back (I think the proposed sum was around €300). The Finanzamt has less work to process declarations, so probably this was worth it. I don't think it was implemented, however.
I gave Credit Karma Tax a try this year. I mostly liked it, but did find one serious deficiency compared to others I've used. It did not handle the deduction for state income tax nearly as well.
The IRS allows deducting either the actual sales taxes you have paid, or you can use a standard amount based on your AGI and your state and local tax rates.
Most other software I've used knows about this. If you enter your actual amount (or 0 if you do not know the actual amount) they compare to the standard amount and go with which is higher.
CKT just goes with what you enter. If you ask for help on that item it doesn't even mention the existence of a standard amount. It just says fill in the amount you get from adding your receipts.
No data obviously, but several people in my group have mentioned that they ran into (software) bugs with your tax filing software. You might want to look into that. I love your service, so I hope the tax service takes off as well!
I've looked at Credit Karma tax free, but I'm a bit nervous as I own a California LLC (100% sole owner), and also have capital gains, dividends, write-offs.
Is Credit Karma a good choice for more complicated returns? Last year I paid H&R $650 for literally one hour of time which infuriated me.
I just did my taxes with them, and it does have some support for business income and loss, so I think in your case (pass-thru entity) you may be okay- I didn't have to use this section this year as all of my income came from my salaried position this year, so I can't ssay for sure how it works.
For tax purposes, a Single-Member LLC can be treated as a disregarded entity (i.e. similar to a sole proprietorship - all the business income and expenses go on your personal return).
You can file for free at any income level; you just get software assistance if you make less than a certain amount. I file with Free File Fillable Forms, which does the calculations for me, I just have to be comfortable filling in the inputs to the form (and I'm paranoid enough that I want to be reading the form and its instructions anyway). But I don't have complicated deductions... or at least, I don't think I do.
Let's start with that fact that <$64K AGI is the high end and not applicable to all online filing services. The state that you're filing in and even your age are used as filters for qualification as well.
Then how about the fact that offerings are only applicable if you're filing 1040EZ. For example, if you so much as claim student loan interest or itemize deductions, that's automatically 1040A at a minimim and disqualifies you from the free offering.
Then there's actually getting your tax return. If you don't provide an ACH bank account and routing number, you'll get charged to have your return credited. You'll also be solicited to purchase crap like bonds, insurance, or donate to some charity. Another common tactic to nibble away at your return is to offer to get paid by the service provider (as opposed to the IRS) for an upfront cost. I won't even touch on the dark patterns employed in this process.
To e-file, you'll also need to know your prior year's AGI or PIN. This is important when coupled with a model which tries to get people to "push and forget" without keeping any independent documentation. There's no doubt in my mind that many people go back to same provider not because of superior service or competitive offerings, but because their information from the previous year will automatically be pulled to enable e-filing. If you weren't diligent enough to keep good records and want to try a different provider, you'll be charged for a digital copy of your previous years' filings.
what a hilarious combination of informative and dickish... i... dont know what to make of that. thank... you?
i asked because ive used the free offerings and there were absolutely no headaches. there is nothing wrong with asking someone else a question like the one i asked you, you insane person.
I have a better idea. Simplify the tax code so anyone can do theirs on an index card. There is absolutely no reason for the gargantuan tax code in a free society.
>Simplify the tax code so anyone can do theirs on an index card.
Aim higher.
In the UK, your employer informs the government about your wages and HMRC figures out how much you paid and whether it's the correct amount. And if you want you can check the numbers.
In other countries it's basically the same but you have to log into the e-government portal to click 'yes, the values you have are correct'.
Obviously if your finances are more complicated then you need to file; but it's not very difficult.
Yes, of course. Obviously if the IRS knows your income, knows you mortgage interest, interest on savings and dividends and it is all electronically recorded, there what is the point of filing. Only to keep accountants and tax software companies in business. I can guarantee you that if you file a return and copy the numbers in wrong from your W4 you will get a computer generated letter. I did that by accident once I transposed two digits in the amount on a 1099 and I got a letter from them that was computer generated. So obviously they are having computers check it, so what is the point of me wasting time and money on filing. The UK system (and many other countries) is obviously the way to go.
Even on mortgages, the IRS doesn't have all the information.
I refinanced my mortgage and paid points for the refi. Those points have to be amortized over the life of the loan (which the IRS knows the law, but doesn't know that I paid points on the loan).
I just refinanced that mortgage again, meaning next year that I'll write off the rest of the points for the previous loan as a 2017 expense.
There's plenty that the IRS doesn't know until you tell them.
Intuit may have gotten to the Canadian government too (or they are just incompetent) because I lived there a few years, and then moved back to the UK and it sort of crazy how simple and easy things are here, especially for people who are only employees. You don't file anything at all if you are an only an employee in the UK.
Not entirely true, there are lots of reasons why you do need to file in the UK as only an employee. See https://www.gov.uk/self-assessment-tax-returns/who-must-send... Although HMRC's self assessment website does make it pretty simple (compared to the US system, at least).
Thanks for the link and correction. Most of these apply to people who have income other than employment, but a couple of them affect employees only (such as those collecting child benefit). I think there's a huge difference how the UK handles this where having to file for an employee is usually an exception rather than a rule whereas every single employee in Canada must do this paperwork.
Or if fortunate to earn over £100k! But I do totally agree with you. And it does seem the obvious way of doing things. The recent changes to the personal allowance are another example of trying to keep the common case simple.
The problem is that every individual provision is popular with one group or another.
But we could move to a system like the UK has where taxes are calculated for you and if you don't have contractor income you don't even need to file. But this would need changes to things like the Married Filing Jointly status.
Married filing jointly is one of the more sexist things codified in US law. It basically says women make no money and the man has to provide for everyone with a big salary so deductions and credits for the big earner. Or it says that if you're a dual income bunch of shmucks, that your wife must make 80% of what you do.
Think about when these laws were written and look at it through a historical context. Once you do, it will outrage even the most even keeled.
Since some people are downvoting for bad reasons, I'll just toss in this anecdote:
My parents were audited by the IRS for 5 years straight. They were convinced that my father "was hiding income through losses in your wife's business." My father was a surgeon; my mom ran an antiques shop. The IRS auditors setup camp in our living room for a month going on five years. That quote was straight from the lead auditor's mouth. I remember it very starkly as a young teenager. (I said hi to them each morning on my way to and from school) It really peeved me that they viewed my mom (the woman) as a failure and only a place for my father (the man) to "hide income."
Every year they came to the same results. My mom's bookkeeping was a mess, but she always overpaid her taxes and we got a refund at the end of the audit. The best kicker? My mom made more than my dad. The IRS thinks women should make less than men (by word and by audit).
As for the historic reasons of this thinking, see my reply below.
If married filing jointly isn't sexist, why are the income brackets different? Even for married filing separately, why are they different than for single people? Sit and think about it for a minute.
Sure. When the federal income tax was instituted in 1913, all of the tax rates were individual (and the lowest bracket covered most Americans). People who were married could lump sum their income and divide by 2 to find the correct rate. Married filing jointly back then was just a way to save on paperwork and hassle. Lump the two incomes together, divide by two, and treat the two people equally. That was it.
In 1948, you got the official married filing jointly "status" and with it, the various income credits, deductions, etc. One would think that the married filing jointly tax rates would simply be double what the individual rates were, right? Wrong. The joint rates were about 1.8x the individual rates. Someone was 100%, someone was 80%. This being 1948, the woman in the dual income family was 80%. The IRS didn't want to appear to favor married couples over single people (even though they did), so they said 1.8X instead of 2X the individual rates. If you were lucky enough to be a big wage earning white male in 1948 America, you got a huge tax break since stay-at-home moms were the norm, there was a baby boom going on, and only about 20-25% of women worked.
Married filing jointly is silly. It should be a sum of the family income, divided by two, then mapped to the individual rates.
> One would think that the married filing jointly tax rates would simply be double what the individual rates were, right?
Certainly not, why would I expect that? That's mean that if there's a family of two paying individual rates, they pay X% of the income, but if they file MFJ, they pay 2X% of the same income, or twice as much. How would it make sense?
> The joint rates were about 1.8x the individual rates.
Do you mean the tax brackets and not rates?
> Someone was 100%, someone was 80%.
That is a weird conclusion - why not each one 90%, or one 110% and one 80%, or one 180% and one 0%? Having MFJ rate does not imply any distribution of income, not that I can see it at least.
> This being 1948, the woman in the dual income family was 80%
What you mean "was"? Do you mean average married woman's income was 80% of average man's income in 1948? Maybe (I have no idea, didn't check) but what this has to do with tax rates? If it was so, it was certainly not because of the tax rates.
> Married filing jointly is silly
No it's not. The fact is our society is organized around families. It's not everybody, but mostly that is how it works (and MFJ is optional of course, so if you don't like the model, you can stay away from it). Taxing family - or household - as one unit makes a lot of sense, because that's how the actual households commonly work, the income and the expenses are shared. Just as taxing a company as a unit makes sense, instead of taxing each employee's production individually, so does it make sense for a household.
> It should be a sum of the family income, divided by two, then mapped to the individual rates.
That's another question. Maybe specific tax brackets need to be adjusted, maybe not - at least this link suggests that MFJ has actually lower brackets (and thus higher taxes) than two individual incomes: https://en.wikipedia.org/wiki/Marriage_penalty
But: all that explanation failed to show where does it say "women make no money". It is true that in 1948 a lot of women did not make any money as employees, and instead were providing services to their families which weren't remunerated monetarily, but I see how having (optionally) the household as taxpaying unit implies "women make no money". It still makes no sense to me.
How about the IRS calculates, you click OK if you agree, and if you don't, you're free to file? (Maybe this is how the UK system works; I've only done American and Canadian.)
Great idea in theory, but hard to implement. Tax breaks were often created for a reason. Take them away, and that special interest group will try to protect it and lobby to keep it in place.
Not that I believe you think it is, but this isn't exactly a startling new idea.
The same forces described in the article are also responsible for lobbying against simplicity in general.
There is a whole giant industry that would go away in a puff of smoke (or at least be drastically reduced) if individual taxes weren't unnecessarily complex.
Also, everyone wants a simpler tax code except for the parts that benefit them. Few economists think the mortgage interest deduction is a good idea, but try telling that to homeowners.
I'd exchange MI deduction for equivalent reduction in income tax. But the government wants to keep power to induce people into doing what it thinks is better, taxes and deductions are a major tool in this. Without explicitly giving up that power, nothing would change, so homeowners are not the main thing to blame it, they just do what the government wants them to do and makes profitable for them to do.
If you object that this isn't sufficient for you or someone else, I'll be happy to argue that whatever behavior would make you 1040EZ-ineligible should either not be permitted in a free society (because it's a tax-avoidance scheme for certain types of rich people with political power) or should be taxed as W-2 income (because otherwise it'd become such a tax-avoidance scheme), but good luck getting the people who benefit from those schemes to allow it.
Foreign tax credits to balance out foreign taxes for overseas income is another thing that nixes an 1040EZ. That's a pretty tough one to argue against.
> Use this form if: Your taxable income (line 6) is less than $100,000.
For a lot of the folks on HN, I'd bet that isn't true.
At the end of the day, US taxes are super weird. This may be an overly simplistic view, but I'm definitely of the opinion that we need to drastically simplify taxes. Complex systems generally produce more opportunities for exploitation.
I wonder just how simple a viable tax system could be.
I assume that's because it gets vaguely into AMT territory (nothing in the normal 1040 changes at or even near $100K), and the AMT mostly exists because of the complications of tax law.
If I change jobs in the middle of the year and my income is high enough I might overpay social security taxes. There is no way to recoup that with the 1040EZ.
The solution to this is to do away with FICA taxes and fold collection of that money into the general tax tables (including the employer side of FICA which a lot of people forget). You may or may not be in favor of this idea?
Do we get more value out of charity donations by normal people than we lose in charities being used as a tax-privileged vehicle for rich people to exert their desire on the world?
Also, charitable donations have weird constraints. My church would like to end deportations of undocumented immigrants based on our reading of Leviticus 19:34, and the most effective way to do that would have been to campaign against certain presidential candidates. We couldn't do that. Another church wanted to end civil recognition of same-sex marriage based on their reading of Leviticus 18:22, but that involved campaigning for a ballot initiative, and they were allowed to do that to the tune of millions of dollars.
I'm obviously not inclined to say "Please start taxing my church," but the fact that we can participate essentially by chance in some political activities and not others doesn't seem like it would exist in a "free society".
First, your distinction between "normal people", which are moral, and "rich people", who are just evil, are kind of disgusting. Having a lot of money doesn't automatically make one evil (to remove all suspicion, I am not rich and likely never will be, at least by US standards :). I'm not sure what your point is there, but it doesn't sound good.
> the most effective way to do that would have been to campaign against certain presidential candidates
That's certainly not the most effective way. US law has very clear immigration provisions, which require certain documentation, and US president swears to uphold the law. Most efficient strategy would be to change the law, thus voting for specific - namely, open-border - candidate for Congress, that can change the law so that US has immigration procedures no longer, and thus does not have to deport people who violate them. Note that I did not say "efficient" but "most efficient" - I see no really efficient strategy that would make US a country without immigration law anytime soon, and having such law, it is natural to have to enforce it - otherwise there's no point in having it.
In any case, nothing prevents you to from campaigning for or against any policy or any candidate, be it open border or not, as a private person or as a part of an organized effort. Why you need the church to do it? Just create an independent organization and campaign as your hear pleases.
> I'm obviously not inclined to say "Please start taxing my church,"
If you register a non-profit and make all the requirements that tax-exempt non-profits have, and do charitable work and so on, nothing prevents you from calling your organization "church", but I don't see why doing so should give you any special status not available to any other nonprofit. And if it doesn't qualify as nonprofit, then it should be taxed by the same rules as the rest of organizations are.
When I read this, unfortunately I'm thinking "don't hate the player, hate the game". Lobbying is a double-edged sword, and it is a game played very well by the powerful and the rich.
Lobbying only works because voters don't care about what they're voting for. You can always vote against the candidates who were lobbied into doing something you don't like, or lobbied at all. But the majority of voters can't do that - they insist on voting for the candidates with the most expensive advertising and forget about where that money comes from.
It's pretty much the same as the situation with taxi medallion owners now that Uber has come along.
If you ask me, the correct answer is for the government to either give some one-off compensation to Intuit (or buy the company from its existing shareholders), and then shut it down, and reform the system.
Why should the government pay money to a private corporation or shareholders? Because they created this mess ("opportunity") in the first place with a ridiculous tax code. It's just the actual, realized, dollar-value cost of the mess that was created, instead of externalizing the cost onto taxpayers. Once that cost has been paid, the system can be fixed.
I also get donations rebates, this is a one page form that lists all my charitable donations. Very easy very quick.
All my details are available to me online. All transactions are there and it's very transparent.
Why would anyone oppose a simple system like this?