Turbotax’s 20-Year Fight to Stop Americans From Filing Taxes for Free (2019)

Tangentially, the same motivated-disinformation occurs with Social Security.

It's best-understood as an insurance-policy (OASDI is literally named that way) against dying poor and old/orphaned/disabled. With an insurance policy, it's normal for my month's premium to be spent on somebody else's current tragedy, it's normal for me to expect no cash if the Bad Thing never actually happens to me, and it's normal that there's no asset for me to pass on to my heirs.

However wall-street bankers can't make tons of profits competing under that model, so instead they try to trick citizens into misunderstanding what the model is. They want people to think it's a government-managed investment account instead, where every person is filling an individual bucket of "their" money that will someday be tipped back out for them.

With this deception, their job is much easier: They just need to say that they'll be a nicer manager of the accounts than the government is, because they'll give you more choices for managing "your" money. It's dishonest because the two things are fundamentally different in how they work and what they're good for.

In a global economy higher business taxes just cause large international corporations to incorporate in a different jurisdiction, which gives them an advantage over smaller purely domestic corporations, which is bad.

Social Security is already taking in less money than it's paying out. Reducing the Social Security tax would imply reducing Social Security benefits, since that's where it goes, unless you're proposing a more significant reform of the system in general.

The size of corporations and the amount they're taxed are two entirely different things. Indeed, the tax code does a lot of things to encourage corporations to be larger, like taxing dividends and capital gains after corporate income has already been taxed, which creates a tax preference for leaving the money inside of an existing corporation rather than investing it in starting a new competitor.

You also need to look at overall tax burden, not just federal. It used to be that the states levied taxes and did stuff. Now mostly what happens is that the feds levy taxes and piss it back onto the states in the form of grants to do qualifying stuff.

IDK how this distorts the percentages but it certainly does.

That's not a progressive-tax brackets versus flat-tax thing.

That's a "having different rules for different ways of making money" thing.

> the complicated system is the thing that allows the billionaires to pay less

Something true of a parts is not necessarily true of the whole, and vice-versa. The reason billionaires pay less than we might expect comes from relatively simple factors, not because the tax-code is too complex for poor people to get the same result.

Moving from a progressive-tax to a flat-tax (with the same total receipts) will lower the tax-burden on one group and raise it on another. You don't even need numbers to understand it: It's the same as how leveling a see-saw will result in one end moving up and one end moving down.

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To offer a specific critique:

> top 10% $149000

Correct, $149,000 is the hypothetical income of a single person sitting in-between the bottom 90% and the top 10% of income. This means every single person in the top 10% earns at least $149,000 per year.

> therefore half of the top 10% must earn $101500 less than $149000

No no no, something has gone Very Very Wrong here.

It is literally impossible for anybody in the 10% to be earning less than the lowest-earning member of that group.

Plus interest and fees (they can't call them fines because then you'd have rights), so call it triple to be safe.

Both parties are responsible for the complexity of our tax code, how long they allowed TurboTax to run the show, and how poorly the tax revenue is spent.

My individual situation is calculated, by the tax authority and rolled into a "Tax code" which acts as the personal allowance. This then feeds into payroll which pay you net of tax.

If at the end of the year, the tax authority (not you, this is automatic without a form being filled in) spots an over or under payment, they adjust your tax code for the next year to recoup or refund the difference. No cheques in the post, no forms to fill in. Just automatically happening in the background.

Meanwhile for the US, I need to fill in 2555, 1040, and other forms. These aren't "5 minutes", they're slow, and more importantly error-prone, as they get you to add up different numbers rather than just asking for the information needed.

No human should ever have to answer the series of questions ( this is legit, from the current 1040 ) :

  24 Add lines 22 and 23. This is your total tax

  22 Subtract line 21 from line 18. If zero or less, enter -0-

  21 Add lines 19 and 20 

  18 Add lines 16 and 17 

  17 Amount from Schedule 2, line 3

The only purpose I can tell for this ridiculousness is to give scope for people to make mistakes.

A form should collect raw information, not put the burden of calculation shouldn't be on the form-filler in a world where computers exist.

The data is already on the form. What purpose can that solve except opening up a possibility for someone to accidentally commit tax fraud?

You're missing the point suggesting it should be "a couple of CSV files". No, it shouldn't be any filing at all.

Demand change, demand simplification of the tax system, and demand zero-filing solutions for regular employees.

Everything else is fully automatic.

Canada recently announced that they're going to go for automated tax filing and it turns out the biggest cost may not be implementing it, but that they'd end up having to pay out a lot more in benefits to low income people that don't file.

So much fun :)

In the US, if you just have wage/salary income and an investment account, and you lived the entire year in one state, your taxes are also very simple. You can fill everything out yourself in one evening, or pay $100 to do it with tax preparation software.

But things can rapidly get complicated. Did you move from one state to another during the year? Do you live in one state but work for an employer in a different state? Are there any credits or deductions you're eligible for? Or god forbid you live abroad, at which point you're dealing with double-taxation treaties and the like.

What I mean to highlight is that although a mistake in filing may lead to the IRS rectifying the mistake by sending/requesting the error balance, there are other possible effects, including civil and criminal liabilities.

This is undesirable. As mentioned in many comments here, the vast majority of filers, especially those with one employer and no substantial investment income, should not be required to file their taxes and instead the IRS should communicate the calculation result and ask if the filer disagrees.

This is a classic problem related to the "you slice, I choose" false dichotomy[0]. Essentially, even assuming it costs zero time to fill out and file a tax return, any mistake at all could lead to a negative consequence to filer.

As an aside, always choose to choose and not to cut the cake :)

[0] https://en.wikipedia.org/wiki/Fair_cake-cutting

At the end of the year you file online and put in your deductions, which hopefully cover any other taxable income (capital gains, dividends, interest, etc.) if you didn't give your employer a higher figure. Then you pay if you're owing or get a refund if not.

What's the big difference? You don't need a tax preparer to do your taxes in the US, and if all you have is a normal W-2 income and a bit of bank interest its a pretty simple couple of forms to file.

They're suggesting letting the irs actually use the resources they already have to automate the vast majority of the people's taxes to save everyone time and money.

It doesn't have to be perfect to be a huge improvement.

So a W-2?

>for example, banks collect the taxes for the interest you have received, not the arcane American system where you're the one responsible for that).

So a 1099?

I gotta be honest it sounds like you don't really understand the American tax system very well.

In a PAYE system, merely being a foreigner isn't _usually_ an issue, provided that you're domiciled and don't have foreign income. The exception, as you mention, would be a US citizen; the US's approach to foreign income of its citizens is sufficiently weird that they'll generally have annoying tax situations.

> What you get is a very simplified form asking if you have more income sources than from your work, and the local tax system means that most of them legally do not have any

If even that. In Ireland, and I believe the UK, you only have to fill out that form if you actually _do_ have non-employment income which is not deducted at source. Most peoples' only interaction with Irish Revenue would be to claim tax credits on rent/mortgage/medical expenditure/whatever.