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.
As opposed to the other countries with automated taxes, that don't attempt it?
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.
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.)
I think you agree with me.
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.
The tax laws in this country are fucked.
Also, in US is there any capital gains discount for property?
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.
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.
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.
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.
There is no personal benefit.
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.
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.