Stanford Professor Loses Political Battle To Simplify Tax Filing Process | Hacker News Reader

Stanford Professor Loses Political Battle To Simplify Tax Filing Process

npr.org

712 pointsdynofuz386 comments

This whole thread is full of comments from people who obviously haven't read the article / listened to the podcast in question[1].

Joseph Bankman proposed ReadyReturn in California, which is the kind of tax return pretty much the entirety of the rest of the western world uses. I.e. instead of an empty return, it's pre-filled in with the details the government knows anyway. This vastly simplifies things for most people, especially those whose main income comes from working one job.

This was in no way a change to the tax system, or what taxes people had to pay. The government would just hand you a filled-in form instead of an empty one, so you could make corrections instead of filling it in from scratch.

It had north of 99% approval ratings by the people in the test groups for it, something unheard of when it comes to government programs.

As a parlor trick Bankman would carry around a thick binder with the feedback the program had received from taxpayers. When he wanted to convince someone he'd start paging through it and ask the person he was talking to to say "stop", to ensure he wasn't cherry-picking. He'd then start reading raving reviews of the program starting at that page, some in all-caps from people who couldn't contain their excitement.

It didn't make it into law, partly due to lobbying by the likes of Intuit, but more interestingly, I thought, because Grover Norquist, the well known promoter of the "Taxpayer Protection Pledge" took the counterintuitive view that just making the process easier equated to a new tax, since taxpayers might end up paying taxes already on the books that they might have previously unintentionally evaded.

That to me is the most bizarre detail about this entire story. It's likely that it would have passed if not for the strange interpretation of one man to this not-a-new-tax of it effectively being a new tax, and his ability to sway the Republicans due to the political power his "Taxpayer Protection Pledge" holds over Republicans.

1. http://www.npr.org/sections/money/2017/03/22/521132960/episo...

I think that a major component of Norquist's thinking is that the more painful people find taxes (including the process of calculating them) the more they'll support his agenda of "a government so small you could drown it in a bathtub".

Unfortunately "starving the beast" doesn't seem to actually work. Low tax revenues don't lead to lower spending, just fiscal indiscipline.

I personally would prefer a leaner federal state but it's not clear how to get there.

http://econlog.econlib.org/archives/2013/04/starve_the_beas_...

https://en.wikipedia.org/wiki/Starve_the_beast#Economic_anal...

https://niskanencenter.org/blog/cant-make-government-smaller...

Starve the beast has never been about making federal agencies work better. Its been about creating a path to privatization

They can work better, or they can work for what we can afford (our collective value of them). Washington is in a constant struggle to make sure we get neither.

I think that's backwards. Fiscal indiscipline leads to not lowering spending when there are lower revenues.

You get there by enacting rules that make it really hard (politically damaging) for the government to spend what it does not have.

When I read this "starve the beast" thing, I can't avoid to ask myself where this people think the money is coming from in the first place?

In order to tax, the government have to spend before.

There's this thing called the economy, full of private entities, all transacting throughout the year, creating wealth, expanding the money supply, generating a bit of inflation, and so on.

Yes, the fiscal multiplier is important, but simple problems like corruption (regulatory capture and federal/state/county/municipality contracts to clients) and (very) unequal accumulation of wealth leading to serious power inequality seem more relevant today.

Oh dear oh dear. Private banks create money. If only it were state lead.

I think it's also akin to the withholding tax. If people had to write a check every year, there would be outrage to the amount people are actually paying. Instead, they are grateful for the government "giving" them a tax refund!

I don't think so. 45% of Americans pay zero income tax, even accounting for withholding.

> "This statement, however, is obviously untrue since, if one cares to move one's eyes slightly down the page at the Tax Policy Center web site, one will find that 73.1 percent of all tax units (in 2015) do pay either federal income taxes or federal payroll taxes. In other words, plenty of people who don't pay the "income tax" pay taxes on income via the payroll tax. That income tax is assessed at a flat and regressive rate of more than 15 percent, once both worker and employer shares are included. (The employer share negatively impacts the employees' wages, of course.) In 2014, payroll taxes combined for a total of 34 percent of all federal revenues in 2014, or one trillion dollars. (Those who don't get a paycheck pay the aptly-named "self-employment tax" in its place.)"

https://mises.org/blog/myth-half-americans-dont-pay-federal-...

Income tax is not payroll tax!

Income tax -> Federal income tax (discretionary spending)

Payroll tax -> Social security and Medicare (non-discretionary spending)

Everyone pays into entitlements via payroll tax. Not everyone pays into discretionary spending (everything except social security and medicare).

Yeah, zero FEDERAL income tax but most of those pay for SS, Medicare, and state taxes. Those in a lump sum vs withholdings would still be a different experience.

That's not withholding though (as the parent referred to; withholding towards your federal income tax bill); as you mention, that's payroll taxes, which you're going to get in retirement back as entitlements.

Consider what would happen if the IRS was efficient enough (through these automated tax accounting systems) to not get an interest free loan from working America for an entire year (ie dynamically modifying every pay period how much was collected in federal tax withholding based on estimated total year tax liability); the federal government would have to be more judicious about its cash flow.

You'd think that's something Republicans and small government advocates could get behind. Go figure. "Fiscal conservatives" in name only.

EDIT: For the pedantic: s/IRS/US Treasury/ in my comment.

The number of US citizens that pay federal income tax is closer to 35%. All forms of income tax ought be abolished. A consumption tax of around 18% would provide the same federal revenue. It would simplify tax reporting (i.e. reduce expenditures on tax reporting), and increase the tax base (people living on trust funds would pay in at a higher rater). Look into the "Fair Tax" for a well reasoned proposal for such a tax.

And sales taxes. And all sorts of fees to various governments. And parking tickets. And a host of fees associated with the criminal justice system. And lotteries/gambling. And and and. Nobody pays zero tax, except perhaps the most very wealthy "persons" (ie corporations) able to carry over bad years and write down previous losses/taxes against future income.

I can't find a reputable source for this. A google search comes up with sources like Breitbart. The top source is marketwatch, which I can't remember if they've a slant or not. Even in that, it mentions that, "Note that this does not necessarily mean they won’t owe their states income tax". Of course, it includes a chart, but considering the other sources in the first page results, I'm not sure I can trust this source.

Unless you realize that Social Security and Medicare taxes are actually income taxes: they go up directly the more you make.

Maybe this is psychologically related to

https://en.wikipedia.org/wiki/Loss_aversion#The_endowment_ef...

> If people had to write a check every year, there would be outrage to the amount people are actually paying.

Historically the french have done pretty much that.

In fact it was even more painful as the historical method was to provide advance payments by thirds (IIRC the first two thirds would be based on your tax estimate, and the last one would be the net, or a reimbursement in case of misestimation) so you'd send the taxman a check 3 times a year (or go to the bank for a wire).

No more outrage than most anywhere else, just a lot of wasted time and necessity to plan for and remember to send your advance payments.

Yeah, the psychology of that is fascinating. I don't give the bureaucrats credit for doing it for that reason though. I think they did it because they wanted the cash flow earlier. Nonetheless, it does a wonderful job at making people grateful that they've been given the gift of having a portion of the money that was taken from them returned.

Right! We can't make the government less awful, because happy people might not show us the support we need for our cause to make the government less awful.

While I completely agree that the incentives seem absurd on their face, a counterpoint I have is that while I worked in a CPA office for several years, I came to realize that a lot of people really have no idea how much they pay in taxes. Many people seem genuinely grateful to have received a refund, not realizing that it was money previously removed from their paychecks.

I have no idea what the correct policy would be, but I think a lot of people would feel very differently if they had to write a check for their taxes every time they received a paycheck instead of not thinking about it for 12 months and then getting a refund (which makes them feel like the government is doing them a favor). I'm not sure we can just dismiss out of hand the idea that the way people interact with their government affects their opinions on policy.

I certainly wouldn't go so far as to say we should make filing taxes painful, I'd personally just as soon never have to file a tax return, even if that meant my taxes weren't quite as optimized, but I know a lot about my tax situation. I guess it feels somehow more... honest (I'm not sure if that's the right word) if people viscerally feel how much they're paying in taxes, just like they feel how much they spend on utilities or groceries.

Most people in the U.K. (the only other place I have experience with) never file a tax return. It's just assumed that the government is doing the right thing. Taxes are taken at source for all things, and if you have things outside of the norm you can tell your employer about it and they'll take care of it.

Filing taxes was pretty alien to me. I'm used to it now, but it seems there are simpler ways.

I think that's what has happened with health coverage and with college over the last several decades. Mass ignorance about what people are actually paying, since the costs are removed from our immediate view, via automatic deductions, 3-months-later billing, and student loans.

The goal of those types of politicians isn't to make the government less awful. Their goal is to make "the government" out to be the enemy so that the citizens don't start thinking that they can use government to actually offset the power that corporations have (through plain capital and through regulatory capture).

> they can use government to actually offset the power that corporations have (through plain capital and through regulatory capture)

You're saying people can "use" the government to compensate for the government itself preventing competition with their cronies.

Isn't that a bit of a fool's errand, even disregarding the fact that in reality we don't use the government - the government very much uses us.

it is not about the government being objectively awful, it is about the government regulating. A great deal of the tax code is about giving certain groups tax breaks while preventing other people from using those to create loopholes to avoid taxes. The conservative tax lobbyists actually want to reduce the effectiveness of taxation not its complexity.

> it is not about the government being objectively awful, it is about the government regulating.

Well, the government is no more awful than any other Mafia.

Think about it. If you don't pay protection money / taxes, you get kneecaps busted / imprisoned.

Neither is something you want to happen, so you pay up. Government is essentially just a vehicle for exploiting people on a massive scale.

Your average mafia couldn't possibly pull off extorting 300 million people, but a government can and does, because people believe it's necessary "for the common good".

So for ideological reasons government is regarded as bad in the US and to remind everyone of how bad it is citizens are forced to endure a painful process for paying money to the government to reinforce just how bad it is?

Which is also one of the big reasons the US is one of the few countries that don't automatically add on sales tax.

I thought that had more to do with the fractured taxing powers of the Feds, state and various local taxing authorities. For example Florida sales tax is 6%, but my county charges a 1% tax to provide sand road maintenance and paving. Pretacking is easy enough once in the stores, but somewhat odd when dealing with taxed and no taxes items.

It's the same in Canada: different sales tax/VAT rates in different provinces on different goods. E.g. HST on clothes in Ontario but no tax at all on clothes in P.E.I. I think it does have a lot to do with the federal system. The UK is unitary, so there is a flat 20% VAT on everything taxable, which is included in the sticker price. I wonder if Australia includes tax?

Yeah, I don't buy it. A complex government seems the opposite of a small government (which presumably is lean as well).

I'm nearing the point of being completely convinced nothing is actually improvable anymore in the US. If you touch anything, even the most broken or inhumane thing, you'll find someone defending it until the death either because of vested interests or ignorance.

Yup. US system of passing laws through congress is now broken to such an extent that the only things that can pass unmolested are esoteric bills that (usually) shift money from the taxpayer to big corporate lobbying group in such a way that the common person can't (or isn't bothered enough) to understand. That's one of the reasons most of a President's power is expressed through executive orders directives to federal agencies selectively enforce or ignore laws passed by congress. That is also why passage of Obamacare will forever be remembered as a huge legislative accomplishment the likes of which will probably not be replicated again in our lifetimes.

It reminds me of this story: "Connecticut bishops fight sex abuse bill" [1]

[1] http://edition.cnn.com/2010/CRIME/04/11/connecticut.abuse.bi...

I wouldn't stress too hard. US politics has always been like this. Slavery and then later civil rights are the two biggest examples. As long as there are those who keep up the Good Fight change does happen.

Sure, as long as you don't mind waiting a century or two. Meanwhile, in other nations they fix things far faster.

> Grover Norquist, the well known promoter of the "Taxpayer Protection Pledge" took the counterintuitive view that just making the process easier equated to a new tax, since taxpayers might end up paying taxes already on the books that they might have previously unintentionally evaded.

I just fail to understand the logic exercised by some US residents. Norquist's argument is insane, and if you're not only trying to be kind to it and not call it as such, your stance towards it seems insane to me too.

Welcome to Alternative Rationality, in which an argument is taken to be a sound one if it has the style of one.

Like Alternative Truth, it has probably been around forever, but what seems to be changing is that the users of these techniques are no longer embarrassed by saying the most ridiculous things, and there is effectively no downside for a politician or lobbyist in doing so.

I have heard that the US SAT essay test scoring guidelines progressively reduced emphasis on judging content (to avoid cultural bias) in favor of judging style (to be fair, this may have changed in the 2016 overhaul.) If so, then, as teachers do teach to the test, this could only have harmed critical thinking.

Does embarrassment really have to do anything with it? Whatever motivates somebody to lie is obviously stronger than shame.

I suspect he failed mostly because he tried to get the legislature to adopt it after the initial budget-centered rollback (which was before recent changes to the budget process which made budget impasses of the type exploited to kill it initially unlikely), rather than using the initiative process. While money certainly effects the initiative process, it's usually a much better way to get something whose benefits are simple and easy to understand to the average person and broadly distributed but where there is entrenched narrow institutional opposition passed in California. It's not cheap, but it would be dirt simple to raise the money necessary to get this on the ballot and get a decent campaign for it. (Intuit/Norquist would still fight it, but convincing voters is different than convincing politicians.)

If this system is so popular, why can't it be introduced as a proposition in California? Take the lobbyist and politicians out of the equation and it should win easily.

According to the story it's still available in California as an option for paying your state taxes, it's simply never became the default/only option. If you're in California and want to go find it and use it, it seems you can.

It was popular among people who got to try the pilot program. That doesn't necessarily mean it would be popular among the general public, especially opponents campaigning heavily against it.

It doesn't necessarily mean that, but it's the strongest evidence I could possibly imagine that it would.

It's strong evidence, yes. And I certainly support the change. I'm just saying I don't think it would be a given just because the pilot program was popular among participants. People vote against their interests all the time when campaigned in the right way.

Edit: Also I noticed my previous comment was missing a word. Should have been, "Especially with opponents campaigning heavily against it."

Norquist's tax pledge is very literally the creation of a child. He came up with it as a kid and hasn't felt any need since to revisit the matter. It is the immature and radical thinking of a teenager not tempered by age or experience. That he is still trumpeting it speaks to his character too.

This is a weird critique. It's been phenomenally effective and is consistent with his worldview, so what difference does it make when he thought of it?

That he was a child is immaterial to the immature and radical nature of his idea. It is backstory, colour, to describe the stereotypical nature of the idea. That a child creates an idea doesn't mean that it is bad per se, but should give adults pause before signing up to it themselves. That the young are always more extreme than the old should be common knowledge.

I think that you just disagree with the idea, which is fine, but you might consider attacking it on its merits from the perspective of the people who agree with it, not have a meta-discussion about when it arose in his mind, how "immature" it is, etc.

Norquist, the Republicans who sign the pledge, and the voters who demand it all apparently think that it's a good idea, it's been effective from their perspective, and it's ideologically consistent, so having someone who doesn't like its outcome call it "extreme" and "immature" doesn't really mean anything. It's just another flavor of ad hominem attack.

If people might pay taxes they were unintentionally evading, might they not avoid taxes they were unintentionally paying when they didn't have to? It seems the latter would be more likely, given how arcane the deduction/credit system can be.

Just today I had to convince my girlfriend that no, just because she lives in one state and works in another she doesn't have to pay taxes twice to two states. This requires finding a different credit form for one state to claim a credit for the taxes paid to the other state. It's not exactly intuitive.

I suppose it comes down to who you trust more: your tax preparer to get as many deductions and credits as possible for you, or the government to give them to you.

I'm a resident of Iceland. We have had this for our tax returns for at least a decade. We have had electronic returns for longer than that. All I had to do this tax season was add undeclared income and the expenses they incurred and sign with an electronic "key" password. Very soon they will mandate signing with our recently installed smart-phone enabled identity system (private key on a SIM).

We have the same thing here in Germany. It is good, but it could be much simpler, still.

Jesus fucking christ fuck Intuit and Grover Norquist.

prerty hard to make a living selling tax software if the taxes are easy to do!

Thanks for giving me yet another reason to hate Grover Norquist. Ugh.

>since taxpayers might end up paying taxes already on the books that they might have previously unintentionally evaded.

To take the charitable explanation of this position: studies have shown that prices go up when the payer gets more separated from the actual payment process: credit cards, automated tollbooths, and further open-road tolling have all been shown to significantly (statistically) correlate to higher prices. Automated billing is another great example of this.

As much as I want a simpler tax code and system (while I lived in Amsterdam I could literally calculate my own taxes in a spreadsheet. It was simple... but very expensive), given this data I don't think it unreasonable to think that putting lessening the cognitive burden of the payment process will lead to higher taxes.

On the other hand, simpler taxes would lead to less expensive tax filing process. You don't need to buy an updated software, pay a professional or spend some hours - if not days - of your life doing something like that.

Are you sure people should keep this inconvenience as a reminder of government expenses?

Believe me, I would love a simpler system, if not only for my own life but because the rent-seeking of Intuit et al is infuriating. Though I think almost any tax increase would dwarf the marginal reduction of filing process price (and probably time for many too).

What I wanted to specifically notr is that this is also an effect I think it valid for Norquist to point out, not only that treating unintentional tax evasion reduction as a tax hike, which I think is a silly argument.

On the other hand, confusing pricing can be used to get people to spend more. My local supermarket sells lots of produce as £X/kg and £Y/item. People buy a bag with three onions in for 65p instead of picking up three onions from the box right next to it at 75p/kg.

How is easy filing for those who only earn income through employment any different from people who pay for tax prep every year? The people who pay for tax prep probably aren't thinking much about it either.

The taxes I find most burdensome are those that take from me my time, rather than my money.

Forced bureaucratic form-filling is thus the most burdensome tax of all.

Grover Norquist can go stick his head in a pig... then stick the pig in a hydraulic press.

> When he wanted to convince someone he'd start paging through it and ask the person he was talking to to say "stop", to ensure he wasn't cherry-picking.

Maybe using a standard stage magician's force isn't the best way to convince people that you aren't cherry-picking.

Making government more efficient is not what you want if your goal is to reduce government, and government inefficiency is one of your major arguments.

Actually I think Grover Norquist's position is that making the tax easier to pay would make it less easy to notice it rising and less unpopular. It's a horrible position but not quite so bizarre.

You are correct. But I find his argument to be BS.

1) if it is a simple number, it will be _easier_ to notice it rising.

2) For sure most people using software have no clue what it does. If the software told them they owe 1k more, they would pay it. So when he says that making it simpler would mean people wouldn't notice change to the tax code etc... well, I have a hard time believing they would notice in today's system!

I think he is full of s__t. He should be for a simpler system were the focus is not on detailed expenses and what not but on a simple number. This actually makes it easy to know if they went up. Intuit can then provide a software "why did my taxes go up" if it feels like it :)

Tangential question: If the government sends you a tax form pre-filled, and they missed something to tax you on somehow: what incentive would you have to fix it?

Probably the same incentive you have right now not to omit something: if they do an audit, and find that you never told them about your self-employed second job, or whatever, you'd have to pay up.

Except if your return has no deviations from what the tax authority sent you, why would the computer flag it for an audit? You're essentially going to be in the randomly-selected pile, and the auditor won't see anything at all suspicious.

Besides that, unless you have income above $1M per year or so, it usually costs the government more to audit you than they will get from you as a result of the audit. So unless you're evading so egregiously that it makes sense to prosecute you criminally, pour encourager les autres, it's better to let little cheats slide. Like over-declaring the value of the clothes you dropped off at the thrift shop as charitable deduction. There's no way those jeans are worth $20 now, you cheater. But as long as your total charitable deductions are under $500, no one cares enough to nail you for it.

Most of the people who would sign and return the pre-filled forms probably haven't ever filed a schedule A, anyway, as it would turn out to be less than the standard deduction. Unless you really care about how much you pay in taxes, there is a huge incentive to just sign and return the form the instant you get it, without even looking at it.

It this not usual in the US? :O

That's got to be one of the dumbest arguments I've heard against something. So I wonder if the politicians really "fell for it", or they were just looking for an excuse that sounds good enough that they can use to tell their constituents as the reason they voted that way, and not because they took all that money from the lobbyists.

> taxes already on the books that they might have previously unintentionally evaded.

I agree with Grover Norquist. It might be counter intuitive but I would rather leave it to Turbo-tax to figure out the details than signing the form sent to me by IRS. Let IRS do the extra work of catching me if they think I am filing fraudulent taxes.

Grover Norquist's view might be counter-intuitive but I a agree with him.

You can refer to TurboTax all you like, but you just basically admitted that you're committing tax fraud and challenging society to catch you.

I think the point is that there are many grey areas, and the IRS is likely to come down the side of more taxes while the third party is likely to try more on your behalf.

Tax fraud is a super gray area. I will be surprised to find any person who has not violated IRS regulation.

Ok, is anything in this proposal preventing you from using Turbo-tax, your accountant, or just doing it yourself by hand?

No one is forcing you to use the IRS pre-filled form. What is the problem? Let the "idiots" pay extra taxes if they want and smart guys like you can spend extra time and money doing your taxes the old way.

Well, the problem with what happens what government has pre-filled on the form differs from my interpretation!

As a matter of principle I am even opposed to tax deductions at source. Each individual must sign a check at the end of the year/month and pay taxes. This makes sure he feels the pinch.

That's it, blame TurboTax.

Correction: this proposal would not have simplified taxes (i.e., the California tax code). It would merely have simplified the filing of tax returns for the most common case, salaried workers receiving all of their income from a single source.

Very big difference. HRBlock and Intuit are heavily vested in maintaining the current tax filing system. They are not, however, meaningful players in the attempts to rewrite the tax code.

I disagree on one point. Block and Intuit are also lobbyists against all sorts of code simplification programs. Anything that makes the filing process easier, and having fewer deductions and penalties available makes it easer, they are against.

The business of H&R Block and Intuit came about in response to tax code complexity, they did not create it.

Boeing didn't create the Air Force, either. Comcast didn't invent TV, cable TV, or the Internet. MADD didn't invent cars, alcohol, or DUIs. The DEA didn't invent drugs. Ruger didn't invent firearms. GM didn't invent the automobile. The UAW didn't invent factories or employment agreements.

I fail to see what being interested in the state of continued being of something has to do with having been the inventor.

The point is that they are a symptom. The problem is the government and their inability to keep anything simple. And in reference to the original topic, taxes for people with one W2 and no other income are not complicated. You can complete a 1040EZ on paper in 5 or 10 minutes.

They were created to treat a symptom, not address the cause. Now that a viable way to eliminate the cause exists, they advocate the keep the root problem.

The 1040EZ doesn't allow one to deduct home mortgage interest. You need a 1098 and a Schedule A and the long-form 1040. That has nothing to do with whether you're filing from a single W2 or multiple 1099 forms.

IIRC you can't deduct relocation expenses, wardrobe for work, books and training materials, or a whole bunch of other stuff on a 1040 EZ.

So sure, as long as you want to overpay your taxes you can file in about 45 seconds.

They're a symptom that has just successfully lobbied to keep the disease going. At this point it's reasonable to say that they're actively helping to cause it.

They WERE a symptom, but now they actively work to protect their existence via lobbying against any simplifications and common sense changes to tax code. So I don't personally have any issue with how and why they came to exist in the first place, but I find it despicable that they actively work against larger society now. It's well-known that they lobby against simplification efforts, and why they do this.

In other words they rely on tax code being complex or their reason to exist ceases.

They didn't need to create it too perpetuate it for their own self interest.

And the prison lobby came about because we have prisons.

In new zealand, we got rid of having to do tax returns for salaried/wage earners a number of years ago. Makes life easy for a vast majority of people. You can still do a return if you want to though. For the tax department it cuts down on how much infrastructure they need.

Similar in Norway. You receive a pre-filled-out tax return in your digital inbox (Altinn.no). All the fields are filled out from wages, bank accounts, charities etc., numbers which have been reported to the government. You don't need to do anything with the tax return unless you want to make changes or attach additional forms. If you do nothing at all, it will be automatically submitted.

In India also we get form from employer with information on tax paid in that financial year. You just need to copy paste the values to tax dept. website and submit. So simple.

I think that's optimizing the wrong thing; people should be aware of the amount they are paying in taxes.

In the UK each pay-as-you-earn taxpayer ( I.e. tax calculated automatically and deducted from net income ) receives an annual statement of their tax and figuratively how it was spent e.g. £800 on health, £105 on defence etc

Whereas in the US most people don't pay any attention to where their tax dollars go. Meanwhile, President Trump raised our already ludicrous defense budget another $50 billion.

We're still absolutely aware of how much we pay (it's on your payslip). There's just no end of year filing process.

Painfully aware one might say, given how insanely high they are.

They at least usually shield the daylight robbery GST from us. Probably so we can sleep at night.

The UK does the same thing as NZ, no tax returns.

At the end of the tax year you get a P60 form that tells you how much tax you paid over the last year.

Instead of opting for the deductibles route, goods are subsidised at point of sale, so e.g. if you're buying solar panels, you don't need to cover the whole thing up front, or whatever financing deal you get, then claim money back in your tax return; instead the price you buy the panel at already has the subsidy baked in.

There is a slight difference between the UK and US, though, in that there is no per-state/county income taxes. Only UK wide. Individual counties use property tax to raise what revenues they need (counties are also responsible for a lot less things than States)

> There is a slight difference between the UK and US, though, in that there is no per-state/county income taxes. Only UK wide.

Not completely true. Scotland has for several years now had the power to set higher or lower income tax rates than the rest of the UK, but until this year they've never actually used that power. But now this year, Scottish income tax rates are actually being set slightly higher than the rest of the UK – http://www.telegraph.co.uk/news/2017/02/02/middle-class-scot...

I agree. In fact, withholding should be done away entirely. Try taking money from people in a non-transparent way and see how well that goes.

It's amazing how quickly someone's feeling on taxation can flip once tax season means writing a check instead of getting a refund.

Of course, that's exactly why the system is set up the way it is; a number on a pay slip feels much less real than dollars that you have to fork over, so people hardly realize the extent to which the government is fleecing them.

I think people would freak out because many would forget to keep money aside to pay for taxes at the end of the year. If it were phased in or there was a large public education campaign to remind people to put money aside I bet there would be less anger.

Why?

I am not sure I see what you mean with "merely" it's quite a big thing not to have to deal with it every year.

In Denmark and many other countries this is a non-issue. The US should be too but too many interest from the lobbying of people like Intuit.

This is the correct answer to American's "That won't work because ..." on this thread. Turn your head to the right and take a look at Europe where it is plainly working just fine. Turn your head back left and look at how F'd up taxes are in the U.S. and it's pretty clear that objectively we have no excuse other than "some small minority of people are profiting from a broken system and are going to keep it that way."

First, what works in Europe is not necessarily portable. We could just as easily pick things that are better about the U.S. and badger Europeans about why they're not doing it that way when "it is plainly working fine".

Second, everyone attempts to cast every policy decision they dislike as evidence of corruption, chicanery, etc., but I don't think that's typically the case. The fact that a corporation and an elected representative agree regarding some policies does not immediately invalidate the position, nor should it immediately implicate the representative in accusations of malfeasance.

People have spent significant time in this thread discussing the pros and cons of such a policy, yet you insist that the only possible reason it would fail with the people's representatives is that "a small minority are profiting from a broken system". I guess since an advocate carried around a binder full of positive reviews, we assume that must be the universal sentiment of the people?

Is it not plausible that, as seen throughout this thread, many people simply don't agree that this would be a positive change?

Im not badgering anyone i just know as a european luving in the us that it doesent have to be that difficult.

And the pilot actually proved that it was workable in California, as well.

Interesting objection. To me simplify taxes == simplify filing taxes. "I'm doing my taxes" does not mean I'm doing my tax code, but I am preparing and filing my taxes.

As a lawyer and tax accountant, do you see a flaw in the professor's approach? Any domain expert insight here?

Depends on what you mean by "preparing." If the tax code is simpler, that means that there are less lines to fill out and fewer pieces of supporting documentation to find and attach. When people talk about making filing simpler, they mean that the lines are pre-filled, and the supporting documentation is either easier to obtain or somehow not necessary.

How is the proposal different than California's current online filing?

https://www.ftb.ca.gov/online/calfile/index.asp

CalFile morphed from Ready Return. The Tax Franchise Board created CalFile since they did not need permission to do it.

This is a good point. I think a real solution to the 'tax problem' requires both a) having the gubment send us an itemized invoice instead of making us file and b) having a transparent, simple to grok code so that we can validate the bill.

edit: this is obviously a huge huge problem to tackle, but dont we all feel a lot of energy around this during tax season? :)

The entire tax-prep industry generates about the same revenues as Dunkin Donuts. The idea that it is a significant causal factor in keeping taxes complicated is preposterous.

From what I'm seeing, that's not right, and Dunkin Brands[1] makes roughly 20% of Intuit's[2] income. Regardless, the amount a company is willing to spend on lobbying is not only dictated by their income, but also by how much they stand to gain or lose. I think Intuit may see legislation that makes taxes easier for many people as the beginnings of a trend that could be an existential crises for them. Even if they were on par with a Dunkin Donuts, I could see how they would be much more willing to spend any potential profits to fight this.

1: http://amigobulls.com/stocks/DNKN/income-stament/annual

2: http://amigobulls.com/stocks/INTU/income-statement/annual

What's preposterous about it? You can buy a lot of influence for a couple million a year. Are you saying they're wasting their money and might as well just redistribute it to shareholders? If not, then presumably they think it a worthwhile expense or they wouldn't spend it.

The Chamber of Commerce has been lobbying for a simpler tax code (including flat taxes) for decades. They can direct vastly more lobbying dollars to the problem than can Intuit or H&R Block. If it was just a matter of lobbying dollars, the 0.5% of the economy that benefits from more complicated taxes could not possibly out-lobby the 99.5% of the economy that benefits from simpler taxes (all else being equal).

The thing is, there are a lot of people and industries lobbying to keep the tax system complicated: real eatate agents and home builders want the mortgage deduction, oil and gas industries want the depletion allowance, hedge funds want carried interest, et cetera ad libitum. It's nowhere near 0.5% of the influential people in the economy, plus the people it benefits, it benefits a lot, while everybody else, it grinds away a few percent of their welfare.

EDIT to add: plus the incentives for lawmakers are to keep the system complicated, so all the contributions keep rolling in.

"simpler tax code" = "fewer loopholes".

That 0.5% of the economy hires 95% of the lobbyists. Corporate lobbying to save or add loopholes dwarfs all other tax-related lobbying efforts.

http://www.huffingtonpost.com/2013/06/18/companies-lobbying-...

> If it was just a matter of lobbying dollars, the 0.5% of the economy that benefits from more complicated taxes could not possibly out-lobby the 99.5% of the economy that benefits from simpler taxes (all else being equal).

This is a laughably oversimplified way to think about, so much so that there's even a term for how wrong this is: diffuse benefits, concentrated costs (and its inverse, obviously).

But all else is not equal. And the argument is not that the tax prep companies are out to complicate the tax code, qua liability and subsidy, but that they have frustrated efforts to allow the IRS to offer a simpler filing experience to the public. The usual argument is that if the IRS were to simplify the submission of taxes and offer its own tax prep app, it would be perversely incentivized to maximize its take rather than minimizing taxpayer liability.

Of course, Congress could just pass a law mandating that the IRS take as little as legally required, but as you are surely aware the instant conservative view is that administrative agencies are rapacious out-of-control behemoths restrained only by the heroic efforts of a few valiant champions of liberty etc. etc.

I live in Sweden. Just a few days ago I audited and filed my returns for 2016, it took me about 2 minutes.

1. Go to skatteverket.se (IRS), enter your "personnummer" (SSN).

2. Open the BankID app on my phone, which contains an X509 certificate identifing me, issued by my bank. Enter my password to decrypt the cert's private key and sign the authetication ticket from skatteverket.se.

3. Audit my pre-filled returns. Contains all information about income tax, captial gains tax and so on.

4. Press "Sign", enter password in BankID again to sign the returns.

5. Smell the roses.

Similarly in Lithuania, it takes me few minutes as well:

1) Login to e.bank (I use mobile signature attached to a SIM card)

2) press link to a local "IRS" equivalent

3) check and confirm the prepared tax declaration (usually everything is already there)

During the whole process I have to enter my bank ID and PIN code once.

I live in Ireland. I don't file any returns since I have a single source of income, my company/government figure it out for me => 0 time wasted.

Interesting. I would think that they at least would want a signature from you.

Seems harder to argue cases of tax evasion if you as an individual have not officially stated that you have no additional incomes other than the ones your gov knows about.

Same thing in Denmark, except using nemID for logging in. The whole process barely takes longer than the kettle takes to heat up my tea.

Just for thought: suppose the tax system became so simplified that only goods X, Y,and Z were taxed at rates a,b,c. You pay aX+bY+cZ in taxes per year. It would be easy for voters to campaign their politicians to lower tax rates and easily verify.

Obviously in the real world there aren't 3 levers to adjust: there are probably thousands or tens of thousands. Apart from the lobbying, politicians may themselves desire this, because it would allow them to lower those 3 very-public levers to claim they lowered taxes, while at the end of the day maintaining the same level of spending because they just offset those losses over thousands of other levers. After all, things have to get paid for.

Then at least they can tell the public: "Hey, I lowered tax rates." And when the public's wallet doesn't feel the savings, the politician still wins votes because as far as the public can see, they lowered those tax rate levers. Compare that to a politician under the 3-lever system. Either they lowered taxes or they didn't.

What I'm suggesting is that a complex tax system allows politicians to take the heat off themselves when the public demands lowered taxes, while still maintaining the amount of money the government takes in to cover the budget.

That's exactly why we have a proliferation of taxes and tax breaks instead of a simple tax system. Perform a thought experiment. Say we just have a straight 35% income tax. Now, say you need to raise additional revenues. Do you (1) raise the single tax; or (2) impose a new tax on some specific part of the economy? Option (1) gets everybody mad at you. Option (2) gets only a tiny number of people mad at you.

Same thing for tax breaks. Say you want to cut taxes. Do you cut the marginal rate, which helps everyone (even non-voters), or do you target cuts in a way that helps people who are likely to vote (homeowners, people with employer-paid health insurance, old people, etc.)? Same thing with business tax breaks. Do you cut rates for all businesses, or do you target them for businesses that are big employers in your state/district?

Yeah but a flat tax would be extremely regressive. If you had a simple equation like tax% = x/4 + 10, where x is your tax percentile, politicians could loudly say that they wish to increase or decrease the slope of the line and people would know that increasing slope would mean a more progressive tax.

If it had a standard deduction and all investment income was counted the same as wages, it might actually be more progressive than the current system, depending on the exact numbers. Payroll taxes are mainly what affects people at the lowest income levels.

I like this. I think our democracy (or whatever we've got now) will continue to crumble until and unless "we, the people" get a sense, individually, of the cost of paying for what we pay for, and our share of the cost. Until that happens there will be no honest discussions about what we really value and prioritize.

Your proposal would do that neatly. The system is way out of whack, lends itself to corruption, crony capitalism, rent seeking, and entitlement. We all have our favorite tax breaks (which is why it's been so hard to change), but we really need to get back to basics: every dollar you get is income taxed at some level, and everyone gets some standard deduction, and that's it. No weird industry tax breaks (because, arbitrarily, politicians decided we wanted more, or less, of a certain thing: cars, homes, solar, coal, etc...), just clear numbers we can grapple with.

Yeah, but the point is correct. Progressive tax rates are fine, but there are tons of weird deductions/tax breaks that can be applied

I think you are confusing flat tax (proportional) with poll tax (constant).

No, I don't think he is at all. Linearly proportional taxes are regressive both because of the declining marginal utility of income, and the lower proportion of income that's discretionary at the bottom end of the income distribution.

It wouldn't be regressive, it just wouldn't be progressive either.

A flat tax hurts people with lower income more, because they have less disposable income to begin with - a lower proportion of their income is discretionary.

Let's just have a 1% flat tax, and if government needs more, they can use lotteries.

Like the recent Obamacare repeal debacle has shown, a lot of people believe they have a simple solution to complex issues, until they actually try to implement it.

> Yeah but a flat tax would be extremely regressive.

Not really, because everyone who can afford to pay another human being to figure out how to not pay taxes, would now be actually paying N%, reducing the pressure on the rest of us. That they still would have lots of money left over, after paying their taxes, as opposed to most of the rest of us who spend close to every dollar, would not bother me at all.

And if you like: 0% up to N$/year, 10% up to M$/year, 20, 30, 35.

I get mad at option 2 each time they do this, we got more crap to deal with, more rules, more bureaucracy, more paperwork. If you want to raise taxes, fine, but stop trying to hide it and extract in every corner.

I do however agree you need some control about where you ask taxes on, but keep it simple. And reuse those tax-levers whenever possible.

Taxes do not exist to raise money. If the government needs money, they can just print it.

Taxes perform many functions. One of those functions is to limit federal spending, another one of those functions is to discourage certain behaviors, making too much money, burning too much carbon, leaving too much money to your descendants, drinking too much alcohol.

Simplifying the tax code is a dumb goal, fight against changes to the tax code that you don't like, but don't assume that the system itself is wrong.

To follow up on this with a point that's been made here on HN before: the problem with the tax is not so much the backend complexity as the user interface. Dealing with the kind of situations @rayiner describes above explains why we are where we are. But that's inevitable with a progressive tax code.

The UI problem itself has largely been solved by TurboTax. It could be solved by government itself with a simple free web interface but that's not how America works, for better or worse.

And, on review of the article itself, I see it's about simplifying tax filing, not the tax code itself.

I'm not against the idea of cleaning up the tax code, removing the outdated cruft and making it more transparent, if that's possible. But simplifying taxes in the way flat-tax-proponents want will only make sure the rich get richer.

> I'm not against the idea of cleaning up the tax code, removing the outdated cruft and making it more transparent, if that's possible. But simplifying taxes in the way flat-tax-proponents want will only make sure the rich get richer.

Not necessarily... if taxes were mainly on import, export and currency exchanges. All those HFT trades would have tax implications.

I'm going to argue something a bit different: the overall tax revenue is roughly equal to government spending. The complexity of the tax code is to some extent a distraction. It's complex, and has winners and losers, but ultimately you'd need to raise the same amount whatever you did.

If you really want lower taxes, you need to be honest: you'll be taking that money from someone else. Even then, it's amazing how many politicians trailblaze cuts in spending that don't really make a difference.

Want to make a huge difference to the US tax base? Take a look at defence spending. And don't pretend it won't cost some people dearly if you cut it.

> the overall tax revenue is roughly equal to government spending.

Not even close - spending FAR outpaces tax revenues. That's what the federal deficit comes from. Last year we got about $1.20 in spending for every $1 in taxes collected.

> If you really want lower taxes, you need to be honest: you'll be taking that money from someone else.

s/lower/raise

Taxation is theft.

> Take a look at defense spending. And don't pretend it won't cost some people dearly if you cut it.

I grew up on a US Army base. I can honestly tell you from firsthand experience that an absurd amount of that money goes to waste. 550 billion dollars is an insane amount of money.

A counterpoint: not all countries are so obsessed with lowering taxes. It's hardly a topic in Germany for instance. At the same time the tax system is also pretty complex

The other problem with "only tax three things" is that the government wants to raise a lot of money and so [the combination of] those rates end up being really high, and enormous resources are invested in finding ways to make X-instances not technically count as an X for purposes of tax law, and the tax code must balloon to fend off these increasing "attacks".

We basically have that, except it's goods X, Y, Z are untaxed at rates a, b, c. That is, those goods are tax exempt, a.k.a. they're deductible expenses. Some of those goods get you a tax credit.

Multiply this by tens of thousands. And you get them in various ways, a handful are on form 1040, a bunch more are on form 1040A but those are just categories the actual deductions are found in a booklet that lists the specific goods and what their category is for 1040a, and there's literally asstonnes that have their own private worksheets to compute the deduction or credit, some of which must be filed, most of which don't even get filed but you have to do them to correctly compute the deduction or credit.

It's this complicated because a tiny lobby with a lot of influence manages to go their own private "line" item deduction, and almost no one knows about this. It's accountants and tax preparation software.

A complex tax system allows competition within the tax advising service provider market. You get what you pay for... the original American Way (tm).

You desire a system that encourages and facilitates blatant deceit?

Seems more like the parent is pointing out that a simple, manageable tax system isn't politically tenable in a representative democracy. Certainly not one as madcap as the USA's.

The currently posted link doesn't have the audio/transcript, but here's a few relevant links from last week:

http://www.npr.org/sections/money/2017/03/22/521132960/episo...

https://priceonomics.com/the-stanford-professor-who-fought-t...

I was pretty surprised to see Zoe Lofgren's name pop up as an anti tax filing simplification advocate. She's the rep from CA's 19th District which covers San Jose (but not the rest of Silicon Valley) and generally a straight down the line liberal. This is not even Intuit's core district -- that would Anna Eshoo's 17th (previously 14th) district which covers Mountain View and Palo Alto. As a resident of this district, I guess I have something to write in about.

According to open data[1] the largest contributor to her campaign is Intuit and it's employees.

[1] https://www.opensecrets.org/politicians/summary.php?cid=N000...

"According to open data[1] the largest contributor to her campaign is Intuit and it's employees."

And without even looking, I am going to guess it's some shockingly low number ... let's take a look ...

Ding!

$30k. That's all it took.

Should we have some fun and see if $31k is enough for (whoever this lady is that nobody has ever heard of) to tattoo "rsync.net" on her forearm ?

$32k ? What should our offer be ?

Maybe she can help councilman Ben Kallos pull the rickshaw.[1]

[1] https://news.ycombinator.com/item?id=13972360

Well, would you look at that? Poking around this site will be fun.

This list just screams "corruption". How can it be legal for companies such as Facebook, Google, Johnson & Johnson, Cisco, Apple, etc. etc. to donate directly to a politician? Isn't it obvious that these corporations think they have something to gain from it? That's bribery in plain sight.

Wow I can't believe it. /s

I'm going to say this until I'm blue in the face: fix money in politics, and half of these issues will no longer be intractable.

A more important question I never see addressed is how you prevent "money in politics" from unfixing itself as soon as you're done with the fixing? Money and political influence are two sides of the same coin - power. Money gives more influence, which attracts more money, and so on, in a positive feedback loop. How do we break, or at least control, that loop? Is it even possible?

Decentralization of power.

For example, I'd love to see a progressive tax rate for corporations: companies' tax rates would be based on total revenue or profits. ex. If your company earns less than $50k/year, no taxes, 10% tax rate up to 250k, 20% up to $1M, 40% up to 10M, 50% on earnings over $10M.

This would provide a strong incentive to only maintain a large corporation if the value of your economy of scale exceeds the additional tax burden. Most companies would have an incentive to break up into many smaller subsidiaries. This would provide additional opportunities for competition, prevent profitable departments from being dragged down by executive mismanagement, and minimize the ability for power and wealth to be concentrated.

Would probably need some anti-collusion laws to make sure entities are truly 'separate' to prevent shell games. But I think it would be pretty useful if it could be implemented properly.

IIRC this is the situation (or with a slightly different mechanism such as regulations affecting only large companies) in e.g. France and some other European countries, but an unintended consequence is that the ownership structure of large corporations becomes complex and usually spread across multiple countries, such as the infamous tax-avoidance strategies used by IKEA. This creates a barrier to entry that makes large actors more entrenched in some cases. The best way to see this in action is to compare the ages of the largest European companies (e.g. BASF) with the ages of the largest American companies (incl. Amazon, Google); the largest American companies are generally much younger.

You cherry picked an industry only a few decades old for your American Companies. If you look at established industries the largest companies are more than a century old as well, in auto GM and Ford have 3 times the revenue of BASF and more than twice as many employees, each. For comparison of the companies you listed, Amazon's revenue last year was $133 Billion compared to GM's $166 Billion.

The US's largest chemical company, fairly close in size to BASF, is Dow Chemical, also more than a century old

You haven't really answered the question:

> For example, I'd love to see a progressive tax rate for corporations: companies' tax rates would be based on total revenue or profits. ex. If your company earns less than $50k/year, no taxes, 10% tax rate up to 250k, 20% up to $1M, 40% up to 10M, 50% on earnings over $10M.

What sort of politicians would actually push this through Congress? What stops it from being repealed with the next cycle? Without a culture of socialism and understanding that corporate/owner and individual interests are not incentive compatible, none of this would work.

I've never encountered this concept before, but I appreciate the introduction greatly! I love this idea.

I don't think you can fix money in politics without unduly limiting free speech, and even if you do, those who call foul on political spending hold the power.

I think the only practical way to fix this problem is to remove the two party system which allows representatives to vote against the interests of their constituents except on the issues that strongly separate left and right. And the only way to remove the two party system is to remove the first past the post and move into some kind of proportional representation system. And that only takes constitutional changes...

Part of the problem is that people are capable of getting to "FPTP is kinda bad", and they have heard enough about experiments with instant-runoff and scoring (incl. approval) methods, where some election had a weird result, that they realize a single-winner system won't fix things, but everyone's conclusion is:

"some kind of proportional system"

You can't implement a real government with a metasyntactic electoral system, obviously. You need a specific system. I think the answer is Schulze STV, but most people don't know what that is.

http://en.wikipedia.org/wiki/Schulze_STV

Interesting link, but don't you think it's a bit complicated? I think the opacity of the determination method could lead to a lot of mistrust from the general public.

What's the problem with just assigning a number 0-10 for every candidate that you care to, and summing up the points?

Or just instant runoff?

In California, I suspect the issue was not intractable, just approaches wrongly. After the initial defeat in the legislature, lobbying the legislature to reverse course as the wrong approach: with the successful pilot, clear moneyed-interest-vs.-common-sense narrative, this is an ideal use of the initiative process.

Seems like fixing the tax system would go a long way towards fixing money in politics. What are lobbyists buying from politicians? Tax breaks and tax subsidies.

How do we "fix money in politics" without chilling free speech?

One of the simplest I've heard is a limit on how much any one person can donate to a politician's campaign in any form. And only individual voters can donate. No corporations. Make it a high-end felony to forge that. Make banks track it. That would be a start.

In this case, it would've blocked Intuit from buying a politician mentioned in the HN comments. That might have prevented opposition by that politician. Amplify this to all other sectors.

Note: Main technique I see big companies using is offering jobs or something to politicians afterwards like the defense contractors do for Pentagon contract-issuers. There would need to be a strategy for making that illegal or limiting what they could make from who they benefit. Also, paying them the most from taxes so they know who they work for.

Ok, I will not donate to a political candidate.

I will, however, make an ad that talks about how horrible the opponent to my candidate is.

Ok, then. Let's block political advertising. Ok, we will make direct mailers that say bad things about the other candidate. Ok, we aren't allowed to send mailers. That means you can't start a grass roots campaign on an issue you care about, though.

I am not sure how you regulate your way out of this one.

Perhaps you could consider the regulatory schemes in place in Canada, the UK and EU? Many countries have reduced the influence of money on politics without bringing an end to freedom of speech. The US is a clear outlier.

Individual people already have a limit: https://www.opensecrets.org/overview/limits.php

That said, allowing only individual entities to donate would be an improvement. But money would still find its way through, in unlimited amounts, through

1. SuperPACs, which are not allowed to communicate with a candidate, technically, but can receieve an infinite amount of money to further interests that are functionally identical to the candidate's interests (i.e. running pro-candidate ads), and

2. Lobbying. TurboTax can still spend millions to hire people to engage with politicians and bribe/convince them to see it TurboTax's way.

Both solved by only allowing politicians in office to receive money directly from individuals at the rate limit and of course their pay checks. SuperPAC's can't give them money. Lobbyists can't give them money. That eliminates large part of the incentive.

There's other to tackle such as advertising. One way to do that might be that any paid advertisements for or against a politician must be paid for by the politician's registered donations. Corporate media might then try to offer extra due to their bias or for favors. That's an unknown right now, though, given they currently do it in exchange for the ad revenue that would go down a lot.

We put all candidates online, for free. They are not allowed to spend money on getting elected - although they can spend their time (generally speaking, sometimes studying, a particular problem, history, how other countries do it, etc).

Citizens subscribe to individuals, and groups of individuals, that best reflect their views. Additionally, citizens will be exposed to views that are slightly or significantly different based on an algorithm.

On voting day they can print out their vote and either mail it or bring it to the polling place with their ID.

While I like the idea of short races (1 or 2 months) this system could easily be a constant presence in people's lives; and a constant presence in the elected official's life, as their decisions are recorded and weighed against their stated principles. This would force pols to be explicit about any horse-trading.

Ultimately such a thing is a specialization of social media in the same way the liver is a specialization of muscle. Note that there is no place for "party" in this system, except insofar as it defines a grouping.

Candidates need to be able to reach voters in the best way they see fit. Online favors candidates that appeal to younger voters. This includes giving speeches, debating, advertising, etc., which takes funding. So we allow candidates to collect donations up to a reasonable limit.

Unrelated to that there are private citizens, unaffiliated with the candidates, that want to exercise their free speech by publicly endorsing a candidate. They do not collaborate with the candidate. They just speak through any medium they like. How do you suppress that without suppressing free speech?

In terms of speech, advertising on network television excludes a lot of people (those without a TV). Making phone calls excludes a lot of people.

They are all different channels. Online is the ultimate channel because it is ultra-democratic: anyone can grow a following. Moreover, it's the ultimate channel because it's bidirectional - you can begin to form your own personal platform just off of your reactions (passive and active) to what you view. Personal platforms can be used to locate candidates, causes, like-minded individuals, and specific policy fights, protests and other tasks and actions that ultimately make the world closer to how you want it to be.

This is what politics should be like. This is what the polity should be like.

>How do you suppress that without suppressing free speech?

You don't suppress personal endorsements. Insofar as a person embodies your own views (or close enough) then a personal endorsement is quite valid. Even with this system a candidate will endure far more scrutiny (and endure far more ignorance flung in their direction) so finding a "moral clone" in the world with thicker skin is a good thing.

Either the media can talk about politicians, in which case most election outcomes will be determined by press coverage (and your system would be ineffective). Or, the media is forbidden from discussing politicians, which has a chilling effect on free speech and journalism.

It's a far cry from forbidding campaign spending on media to forbidding media from discussing a campaign. And I highly doubt the most discussed campaign wins.

Democracy rests on only 2 pillars: the freedom of speech, and a fair vote. Everything else we call democracy flows from these two things, and we cannot afford to ever give them up.

It turns out, though, that if you say something often enough, people start to believe it. This violates the spirit of the law, because "free speech" is about sharing views, not programming dependent (as opposed to independent) minds. Note that the notion of "free speech" arose in a time when it meant actually speaking in front of a crowd, or printing and distributing an anonymous flier, critical of the current ruler. It did not mean protecting the right of the ruler to use his power to repeat something so often that his people start to believe it.

It is time for a revolution in the way individuals relate to information. It is time for individuals to assert their right to refuse input that is not in their interest. It is time for communication to be by consent only. It is time for us all to stop defending the right of institutional oligarchs to use power-tools to force-feed us speech in the name of defending free speech.

Right speech is independent of its volume. Money can only increase volume, so get rid of it. Money isn't speech, it's amplification of speech, and as such should not be protected.

If a candidate makes a speech in the woods...

You proposal is a recipe for electing only celebrities, who don't need money to be amplified.

Are you referring to Citizens United or referring to some chilling effects on actual free speech?

The problem is that a corporation is legally defined to be the same as a person. A corporation has the same rights that a person does. Spending money is legally equivalent to speech.

Because of those two simple legal precedents, a corporation's right to lobby is literally protected by free speech.

I don't see the problem with corporations being equatable with people. They are composed of people. Just like unions, nonprofits, social clubs, political parties. Making money is their interest, but there is nothing criminal (or even morally wrong) about that.

The reason why corporations have disproportionate political power compared to other forms of human organization is because we fund elections via private donations, endebting our representatives to their donors before their constituents. And whoever controls the most money gets the most representation in our government. It should be possible for politicians to tell major corporations to fuck off without endangering their election, but it isn't. So even the most well meaning politicians take the money, give them a few votes on their pet issues, and then try to make the best with what's left.

How can you fix money in politics without making the whole system worse?

1) Campaigning is restricted to a short time period, perhaps 6 months.

2) Every candidate gets a (small) fixed budget, paid for by tax-payers. (This is already the practice in some countries.)

3) Ads are subject to the same laws that govern ads for products: say whatever you want, but you can be sued for lying.

Any of those ideas sound good?

> 1) Campaigning is restricted to a short time period, perhaps 6 months.

You can't do this without limiting Free Speech.

> 2) Every candidate gets a (small) fixed budget, paid for by tax-payers. (This is already the practice in some countries.)

Might be possible.

> 3) Ads are subject to the same laws that govern ads for products: say whatever you want, but you can be sued for lying.

Lying is Free Speech.

So limit free speech. It's already not absolute, never has been, never will be.

Lying is free speech, but you can already sue if someone's speech is false and then damages you. A candidate's lies should qualify as damaging to someone who votes for them under false assumptions.

Lying is a felony in several situations.

So the New York Times can only say good or bad things about elected officials and potential candidates for the six months before an election?

If not, people with money looking to campaign outside your window will just buy media companies.

Media companies, by definition, are never considered to be "campaigning". They can say whatever they want. There legal definition of campaigning (ex. churches aren't allowed to campaign in many countries).

That's pretty much what we have in Australia — except the campaign period is much shorter still, around 6-8 weeks.

Do you think making politicians dependant on funding makes politics better?

I did some work for the IRS several years ago to explore the same idea. There are many benefits, including simplicity and accuracy of filing (closing the $500B tax gap), as well as better fraud protection (another $25B).

Protectionism of the tax return industry is common, but not the primary reason. Instead, the biggest pushback is from taxpayer advocacy groups. The issue is this: for many Americans, particularly low income Americans, their tax refund is the largest check they receive all year. Delaying that refund in order to receive all tax information (e.g., from banks and employers) and pre-populate a tax return would push back initial refund checks by 1-2 months. This is tantamount to political suicide.

If you receive a huge tax refund from the IRS, that means you set up your initial deductions improperly.

If your sole income is 1 main full time job, it's really not hard to estimate your taxes to the point of having a refund under $500. That way you don't government use you as a bank for 0% interest and have more money throughout the year.

To preempt some of the responses - no, let's not denigrate poor people for their spending habits and pretend like somehow getting the refund is better than having that money during the year.

You're not wrong, but we're leaving the world of "logic" here and moving into "politics and optics". Most people can't wrap their heads around, "What do you mean I won't be getting $1,200 in March!? $100 per month? Who wants that!"

Republicans as well are claiming that an automated tax return creates a passive tax payer, thus lessening the tax payers hatred of taxes and, in turn, the government.

If it makes filing easier and automatic, wouldn't the returns be submitted earlier, thus negating part of that 1-2 month delay?

The reverse, actually. Here's the trick:

Tax filing opened this year on January 23, 2017. This is the first day you can submit your return to the IRS. The IRS aims to process refunds for 90% of returns in 21 days.

In order to pre-fill a tax return (and, incidentally, to validate that your tax return is correct), the IRS needs information. You're familiar with the acronyms: W-2, 1099, etc. These are called Information Returns (IRs). Depending on the type of IR, these are due to the IRS (from your employer or bank, e.g.) by January 31, February 28, or March 31. I didn't get my 1099-INT from my bank until late-February, for example.

Now, do the math.

The IRS cannot pre-fill a return until March 31 at the absolute earliest. That ignores further processing, mailing, approval, etc. time. But for those taxpayers who filed on January 23, most had their refunds processed by February 15.

So pre-filling tax returns delays the process by 2 months.

There's a very "strange" circular logic here, too. In today's system, you shouldn't file your tax return until you have all your IRs. But you might know that you're not expecting anything in February or March, so you can file "early". But the IRS doesn't know that. They only know that you don't have that associated income when they don't receive anything by the deadline.

Incidentally, this is how fraud happens. I file a fraudulent return on 1/23. The IRS doesn't have the information to validate whether I'm lying or not: they won't receive that information for another 2 months. So the run some basic risk algorithms, then shrug and assume I'm telling the truth and pay me my refund (probably in the form of an untraceable debit card). This happens all the time, usually in the form of filing returns in the names of other people, often dead people or Puerto Rico residents (due to some arcane rules relating to income tax immunity given that PR is a territory).

(People make "mistakes" all the time. Small amounts are waived, and the IRS sends collection letters to the rest. The collection rate of those letters is very, very good. Though I have some good stories about government [in]efficiency. Those letters are not "audits", by the way, but friendly reminders. Audits are really rare, despite our fears.)

The other answer is "move up the deadlines". Make employers and banks file everything by January 15 or something. Good luck with going up against every single large employer and financial institution in the States!

And now you know... the rest of the story.

I am not surprised at all. Intuit, H&R Block etc. spend much money in D.C. just to keep tax codes complex so that they can sell more copies of tax filing software, at the cost of all tax payers.

Would it have killed them to at least mention his name is Joseph Bankman in the summary?

Good point. I wonder if the omission was an oversight or intentional (his name would make finding an alternative source trivial).

Honestly, I think it'd be better to start a non-profit that releases tax software, first. It could compete with tax software, like from Intuit & H&R Block, as most of the needed services are rather simple. It would either charge just enough to cover costs, or be completely free, if donations for the year was sufficient. The tax software support could be done on a contract basis, where people certified people could login and handle queries on an hourly rate. The work from home crowd would love it.

Build it out enough, and then push a few legislative mandates:

1. All taxes have to be easily payable in tax software.

2. All taxes have to be payable online.

3. Every tax jurisdiction has to offer a tax estimation service, where they can download pre-calculated data to use in tax software.

Should make predatory companies like Intuit disappear in less than a decade.

Absolutely. But don't think that you'll have an easy time of it. Expect that 501c(3) status won't come, because ultimately it's the IRS that makes that call, and they've already been suborned or cowed to the pressure of the tax preparers.

Expect your credentials to be challenged. You need a license to prepare taxes for other people - And I expect they'll try to say every developer who touches a line of code must have one. Expect character assasination, and every mistake to be amplified. Buzzfeed will run "10 dangers of using open source software to do your taxes". The forms will become even more of a moving target than they are now, and APIs will absolutely not be public.

But it's a fight that should be fought. This is the kind of thing that makes better government, kicking and screaming.

I'm an American working in the Netherlands. Filing US taxes has improved, a lot last year in my opinion, since it got easier to file electronically for free... But compare: I got a letter from the Dutch government a few weeks ago saying I don't need to do anything since as far as they can tell my situation hasn't changed since last year. In the US, some people believe that the tax return that they get every year is some kind of bonus. Here, my employer withholds the correct amount. Why is that so hard?

I wish there were more information about what, specifically, the pilot program included. The main detail I got from the story is that the tax returns were pre-filled with income information.

I think that's useful, but I see no reason to expect a priori that the government would end up doing a better job with that than the private companies (like Intuit and H&R Block) whose revenue depends on doing that well.

The comments that suggest that Intuit and H&R Block were lobbying to keep the tax code complex don't make sense to me. Maybe they are, but that's not what they were lobbying for in lobbying to defeat this particular, reform is it? Rather, they were lobbying to keep the pre-filling process private.

Or did I miss something important?

Intuit and HR block are a bunch of crooks.

They have lobbied for a variety of anti-tax payer causes. Namely stuff like: https://psmag.com/h-r-block-and-intuit-are-still-lobbying-to....

There is a really good reason to think that the government would do a better job -- most peoples tax situation is dead simple. Even if H&R block found deductions every once and a while that the IRS didn't -- which I doubt would happen realistically -- H&R block charges something like 200 dollars. It seems incredibly unlikely that they would save more than 200 dollars on average.

And if that was the case, let the market sort it. H&R block could say bring in the returns, and if the IRS messed up we'll find it and split it with you in some fashion.

I don't have a strong feeling about the statistics here. But I guess a $1,000 mistake on 1 in 5 of all returns does a little unlikely. Bigger mistakes on fewer returns also seems unlikely since the higher the bracket, the less likely you're relying on any default or software.

But I take the point that H&R Block and Intuit could simply start from the filled out returns provided by the gov't. Harder to understand their objections given that.

> I think that's useful, but I see no reason to expect a priori that the government would end up doing a better job with that than the private companies (like Intuit and H&R Block) whose revenue depends on doing that well.

Intuit and H&R Block could of course _still_ provide their services if they happen to be so accurate. In the past, I've used Turbotax only to receive corrections from the IRS (and by the way, the IRS was right). Certainly would have saved me time to have access to that info from the beginning.

> The comments that suggest that Intuit and H&R Block were lobbying to keep the tax code complex don't make sense to me. Maybe they are, but that's not what they were lobbying for in lobbying to defeat this particular, reform is it? Rather, they were lobbying to keep the pre-filling process private.

Of course that keeps it more complex. It means that it's harder for your average tax payer to input information (starting from scratch is always harder than starting from some partially filled point). It unquestionably increases the amount of work required since tax payers have to do work the government has already done (at a much more efficient scale). So yeah basically by lobbying against this, those companies are essentially economic parasites.

You're right about the reform saving work and about it being possible for H&R Block and Intuit to offer their services anyway even after this reform. That's true. I just didn't see how that makes the code itself any more complex. But clearly they do benefit from that complexity in general.

California has the initiative system that means ultimately the voters can make changes to the system without involving a recalcitrant or corrupt legislature. For better or worse, many of the big changes in government in the state were enacted through this process. For example, proposition 13, which drastically changed property taxes, proposition 14, which moved the state to a "top two" primary system, proposition 11 and 20, which changed redistricting and made it less partisan. etc. etc. Moreover the side with more money for advertising doesn't always win these proposition elections.

I'm pretty sure the problem would be that the second someone like Grover Norquist came out against it, you'd lose a huge amount of support. The fact that those very same people would love the system if they tried it (as the 99% approval of the system attests) is irrelevant.

That said, it would be interesting to see it put to a vote.

California passes ballot propositions all the time that Norquist (and the often more relevant in California, similarly aligned Howard Jarvis Taxpayers Association) oppose.

The initiative system is both what makes the state innovative, and makes it incredibly hard to govern.

I find it troubling how many commenters here are so passive to automatic, mandatory payroll tax deductions, that they overlook how effective those payroll tax deductions actually are (and how Norquist is right, if for the wrong reasons).

Yes, government payroll deductions are convenient. Yes, all other things being the same, they make your average salaried worker's life easier. And yes, they absolutely mask how much you are paying in taxes, by softening the psychological impact of making an annual tax payment with money you earned, instead slowly pilfering the money from each paycheck. Most importantly, it ensures you never get to see that portion of the money you earned in the first place -- it doesn't hurt as bad to lose something you never really had.

I personally think this should have passed -- if nothing else, to force the IRS to reveal all the information it really has on you. However, the opposing argument has a point that shouldn't be dismissed as completely ridiculous, because a pretty indisputable side effect would be more apathy regarding taxes, which is not a good thing.

Sending taxes in the US by mail was unnerving for me, I don't know if things have changed but basically you put the envelope in the mail box and then .. you don't know, no receipt from the IRS, nothing. What happens if the envelope is lost? In all the countries I've lived you submit your taxes and you get and instant receipt or acknowledgement.

I am impressed that it only took $35,000 to get lobbyist help to get this law proposal that far.

There's a lot of talk here about efficiency and many efforts to strive for it. What would it take to raise 10x that much and provide Prof. Bankman with a war chest that stands a good chance of succeeding?

Seems like a good opportunity for a crowdfunding campaign.

This is infuriating because the simplified tax system is objectively superior. Any Congressperson who voted against this was either 1. stupid or misinformed 2. bought out by Intuit.

It seems to me that the only way to mitigate the effect of lobbying, aka legalized bribery, is to publicly call out the politicians who sell out.

Is there a list of representatives who voted against this bill?

I love this idea in theory, and basically revisit it every year during tax season.

The tax/tax prep lobby is strong, and perhaps needfully so, as a whole bunch of people have their livelihoods wrapped up in it, but I often wonder if that whole industry is not actually a net negative for the economy.

edit: How do we help this idea take flight?

Remember that every dollar spent on intuit, and every hour wasted struggling with bullshit tax forms (deliberately the status quo because of Intuit) means Americans can afford less time and money using your product and buying your services. That is, these billions of dollars and incaculable frustrations wasted by Americans to line Intuits' pockets are a drag on the overall economic activity-- less money circulating in the economy, less ability to buy from each other.

Fuck Intuit. They exist to make everyone's lives worse. But don't forget, the government forces them them to offer their software free for certain lower-income Americans:

https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-...

No idea how much longer this will exist. I'm guessing it will soon quietly go away or be marginalized even more than it was in GWB's adminstration (when the income minimum was reduced significantly).

What about: 1. California ballot initiative 2. Free software (start a TurboTax 100% free alternative) to reduce incentives to have laws like this

I can't see the article, but I suppose it mentions, that Intuit and Co. bribed officials to oppose this idea.

It does becasue they did; well in a lobby sort of way so it is legal.

The problem I have with the popular "simplify" US tax proposals is that they mostly do it by repealing whole sections of the tax code, ending up super regressive and/or hurting the poor and middle class and helping the already rich.

Flat tax @ a high rate: Neutral or slightly helpful to the rich, crushing to the poor and middle class

Flat tax @ a low rate: Windfall to the rich, the resulting gutting of government programs hurt the poor and middle class

Eliminate taxes on dividends: Windfall to the rich, neutral to the poor and middle class who don't benefit from dividends

Eliminate many deductions and loopholes and reduce top tax rate (one of Trump's proposals): Rich are likely better off, no help to the poor and middle class

Reform AMT: Helpful to the rich and people with stock options, no effect for the poor and middle class

Eliminate income phaseouts: Helpful to the rich, no help to the poor and middle class

Eliminate estate or gift taxes: Helpful to the rich, no help to the poor and middle class

Eliminate income tax in favor of sales tax or VAT: Windfall to the rich, crushing to the poor, probably negative for the middle class

The ability to file your taxes on a postcard isn't worth it if it means advantaging the already advantaged.

But this isn't that.

The government already has enough information for the majority of US taxpayers to complete their tax return. W-2 income only? Or other income that's already reported to the government? Government sends you a tax return to sign. If you have more complicated taxes or don't fall into the 1040EZ, then do continue to do as you do today.

Listen to the podcast. THis has nothing to do with changing what taxes are paid. It's about simplifying the tax-paying process, which is unnecessarily a pain in the ass for the benefit of a few software companies.

Have you considered that the tax system shouldnt /help/ anyone? Trying to further social policy via taxation is about the least efficient way to do it.

Treat all income the same, do not allow deductions, charge a medium rate (10-25%), exempt the first 35-50k a year - no special rates for married filers (everyone files single), no deductions for dependents.

Eliminate corporate income tax entirely, replace with a VAT and a financial transactions tax (.25% of any transaction).

Any tax system will have winners and losers, including no tax system at all, including one where the treasury burned the collected money rather than used it to pay for social programs. Who ever designs the tax system directly chooses the winners and losers--it cannot be avoided.

> Trying to further social policy via taxation is about the least efficient way to do it.

Works well for controlling a populations smoking and drinking.

Trump promised to make taxes much simpler. Let's see if he keeps his promise.

It would be nice to know each legislator's reasoning. Maybe there's something real in the againsts, or at least makes it more difficult to take a flakey position. Statements should have to come with votes.

I wonder if it would be ok for the IRS to charge for this service. Maybe then it would be justifiable to the Republicans who oppose on the basis that it would make raising takes easier.

You think it would be more palatable to Republicans if more money went to the government for the privilege of making taxes less transparent?

I've always wondered, why can't we just pay one tax? Say make income tax 1.5x what it's now and cancel all other taxes. That way it'll be even easier!

Wealthy people are against that. They prefer regressive taxes, like sales tax, that will be shift much more of the burden to the poor.

In fact, there's a whole batshit-crazy tax plan called FairTax that proposes changing all taxes to a simple sales tax.

They prefer regressive taxes, like sales tax

I don't buy that. Yes, I know it seems logical, but in practice it's not so clear cut. With deductions, rich people end up paying very little for income tax. With sales tax (or VAT) the person spending more pays more, and it's more difficult to escape.

This issue is very unintuitive and numbers tend to hide reality. Let me put an example on how numbers can fool us.

In my country, Spain, there has been a recent discussion about what economic model we want. Left wing parties argue that in countries like Denmark (that's seen as a very good place to live) taxes are higher than ours.

But that's terribly misleading. The important number is how much money you're left with after paying taxes and what you can purchase with it. Our salaries are too low so, even if the tax percentage is lower, and prices are a little lower (not in Madrid or touristic areas) we still are poorer after taxes and we have worse public services.

Tourism is poisoned candy.

> With deductions, rich people end up paying very little for income tax

You're utterly wrong. The wealthiest 0.001% paid 17.6% of their income in taxes in 2012[1]. That's not "very little" -- it's likely in the tens of millions per person. The top 1% paid even more than that.

Some corporations will avoid income tax altogether, as will some small-business owners, but individuals still pay substantial amounts of income tax. The "deductions" you mention aren't structured to eliminate most people's tax bills, and the loopholes don't work for everyone.

1. https://www.washingtonpost.com/news/wonk/wp/2015/06/04/as-th...

> That's not "very little"

In my book, a billionaire paying a lower tax rate than their secretary, driver, security guard, etc. is paying proportionally "very little" taxes.

You're utterly wrong. The wealthiest 0.001% paid 17.6% of their income in taxes in 2012[1]. That's not "very little"

So you say I'm wrong and you say it's not very little and in the middle of both sentences you say that richest people pay less than 20%. WOW!!!

To put it in perspective, in some european countries the nominal rate for the highest income is about 40%, approaching 50%.

My source of ire is that as someone who makes much much less, I paid closer to 22% of my income in taxes - how is that fair?

>The wealthiest 0.001% paid 17.6% of their income in taxes in 2012[1]. That's not "very little" -- it's likely in the tens of millions per person. The top 1% paid even more than that.

So what? How much did they have left? How much utility do they have with what they have left?

As a small business owner I'd love to know how to avoid paying any income tax! Perhaps you didn't mean that?

Honest question, why is it batshit-crazy?

The biggest argument against it is that it is incredibly regressive. Poor people generally spend higher percentages of their income on stuff where rich people save higher percentages of their incomes. So for example, Joe makes 51k/year but spends 50k/year. At the 23% tax rate that FairTax proposes, he pays $11.5k - a $2.5k "prebate". This works out to an effective tax rate of ~18% (with today's tax plan Joe's effective rate would likely be about 7.5% for income taxes and 7.5% for Social Security and Medicare. I.e. a lower tax burden.)

Compare that to a rich person. Susan makes 250k per year but only spends 150k/year and saves the other 100k. She pays 23% on the 150k = 34.5k minus the 2.5k prebate which makes for an effective tax rate of 12.8%. I.e. Susan makes more each year but pays a lower rate of taxes. These numbers get even more insane when you have 10 million in income but only spend 1 million a year. We basically are subsidizing investing and rich people are the biggest investors.

> We basically are subsidizing investing and rich people are the biggest investors.

What's wrong with subsidizing investing? Without investment in capital we'd all be subsistence farmers tending the fields for 12h a day.

If some rich guy wants to make $100 billion and spend 1% on himself and 99% on improving the world for future generations through investment, that's great, no?

I guess it comes down to whether you believe the government can invest those same dollars more productively than rich individuals.

Don't forget the other 7.65% social security and Medicare that his employer pays on his behalf.

So total tax burden for Joe now is actually over 20%... And 18% Fairfax would be much less regressive.

But Susan still paid 3.5x as much in actual dollars. I guess I just fundamentally disagree with taxing my labor (or investing acumen). I'd be fully on-board with a high consumption tax though.

Because rich people spend a much smaller percentage of their income on taxable goods, so to be revenue-neutral the "fair" sales tax would have to be at least 30% (if you believe the FairTax fans) or over 50% (if you believe other economists).

One reason is that it's impossible to enforce. If sales tax were that high, it would give retailers a huge incentive to under-report sales on the billions (trillions?) of transactions in the US each year. The same way it's hard to catch drug dealers for tax evasion, it's hard to catch retailers who want to avoid charging/paying sales tax.

With the income tax, you have employers reporting and a far small surface area of cheaters to police. It's still a massive effort to police it, but not nearly as large as FairTax would be. FairTax is essentially a scheme to eliminate enforceable taxes, although I'm not sure its creators intended it that way.

You think it's harder to enforce tax collection on businesses than individuals? With a significantly lower number of business you can audit their books more often. Additionally you can more easily monitor their bank account activity to detect tax evasion. Sure, cash-only businesses could try and avoid taxes, but they have a lot more to lose than a single individual that under-reports their income.

Not sure how you think individuals are the easy ones to enforce.

Also, in this world the tax code is tiny in comparison and loopholes are removed (mostly?).

Well, at the rates usually proposed it's a massive tax increase on the poor (especially the working poor benefiting from the EITC) and middle class, and the rates usually proposed don't actually preserve revenue, so in reality it would be an even bigger tax increase on those groups. And it's an even bigger tax advantage to the capitalist class than the existing tax preference for capital income is.

Which is why "FairTax" support lines up with support for other proposals that hurt the poor and benefit the rich.

Not everyone earns money via income. You have to define what "income" is exactly, then it starts getting complicated......

Example: I route my investment earning via a company, that company can claim expenses such as paying my utility bills and buying my groceries, anything leftover they give me. They work it out so my net income is zero, oops.

It's easier actually to tax purchases.

Taxing consumption would rapidly explode into a vast array of categories and rates for different types of consumption, luxury taxes, etc.

Food, maybe no tax. But maybe there's some tax if it's ready-to-eat. Or based on sugar content.

Automobiles maybe taxed rather heavily, but the first $5000 is exempt so poor people can buy cheap cars, etc. It would become just as complicated as the current code.

Iceland (where I'm from originally, so I'm familiar with it) is already your worst nightmare when it comes to this. There's a 500 page PDF[1] exhaustively detailing every product category and what tolls & fixed fees you pay on certain products. Ketchup 0% toll, Mayo 0% but 19 ISK per kg etc. Turn to page 50 and you can see different tolls & fees for different types of cabbage.

It's an entirely byzantine system, but because it's happening when products are imported, or at the point of sale, it's vastly easier for consumers than an equivalent system that works through tax rebates.

Things on that list occasionally become a political issue. E.g. the tax on added sugar has gone back & forth a couple of times depending on who's in government.

Still, this adds zero complexity to your tax return, or to the average person's interaction with the government or private businesses.

1. https://www.tollur.is/library/Skrar/Tollskra/Tollskr%C3%A1%2...

Taxing consumption is already done in many parts of the world. UK: most things are subject to 20% vat. Fresh food is 0% (normally), and there are a handful of things (children's clothes being the only one I know offhand) at 5%.

There's also heavy duties charged on fuel - over 2 pounds per US gallon (plus 20% vat). Alcohol - 28 pounds per litre of spirit.

Lots of these systems exist, and work, outside the US.

Flat rate tax. Across the board rebate on a set level of spending. Mischief managed.

As long as we have elected officials making the tax laws, good luck.

Because while simple, that's pretty regressive.

They're not proposing a flat income tax, though. You can have a progressive income tax provided we're liberal with how we define income.

The goal is not making it easier, but maximizing income for the collecting entity. And guess what: there are different entities competing for maximum extraction.

The most infuriating situation is when a tax taxes already taxed money, so in fact you are paying taxes for paying taxes.

Most of the tax code addresses what is defined as income. The part that figures out what the rate is, is very simple. The deductions and loopholes in the tax code exist to incentivize many activities, and it would be politically difficult to change that

Most tax reform proposals (at least those aiming for flatter systems) advocate lowering rates in exchange for eliminating the deductions and loopholes. Bringing the statutory rate and the effective rate closer together.

Then people living off of investment income wouldn't be paying any tax. At the same time, if you mean, tax all gains at 1.5x the income tax rate, investors wouldn't be properly compensated for the risk they take + inflation.

If you are going that route, check into the FairTax idea. Basically, replace income tax (and others) with a simple federal sales tax system in the 30% range. Enforcement narrows to businesses and rates aren't determined by income. States get a portion of the tax in exchange for enforcement. Poverty level spending gets a tax rebate (prebate in that plan) to not tax a certain amount. Interesting ideas from my POV, but I'm not an economist.

The US oligarchy strikes again, even in California, crazy. It works in almost all Western countries. Filing my taxes takes about 15mins each year.

If you are a foreigner, you are most likely not complying with the tax code unless you hired a competent CPA. TurboTax won't do.

FWIW, here's an email I sent to Prof. Bankman last April:

---

I read with interest your letter about the Tax Filing Simplification Act of 2016, and your article "Simple Filing for Average Citizens: The California ReadyReturn." I agree that the tax filing burden on taxpayers is far too high, and I am encouraged that legislators are trying to do something about it.

But I am concerned about the details of actually accomplishing this given the complexity of the federal tax code, even for what appear to be "simple" situations. For the past five years I have volunteered with the IRS's Volunteer Income Tax Assistance program and helped low-to-moderate income taxpayers file their taxes. One of the first things I learned was how frequently a taxpayer's total tax is affected by factors other than what is on their W-2 or otherwise reported to the IRS. Examples include:

- complex calculations of "support" to determine whether a live-in relative is a dependent

- exact payments, and nature of payments, made to schools (generally not accurately reported on the 1098-T)

- business expenses

- which months the taxpayer had health insurance (often not reported correctly, or reported to a different person) and, if no insurance, whether an exception to the penalty applies

- what portion of the property taxes paid by the mortgage company on behalf of the taxpayer was for ad valorem taxes (the only kind that is deductible)

- what gambling losses are there to offset the gain reported on a W-2G?

- [litany of qualification questions for various education benefits]

- which exceptions apply to an early distribution from a 401(k)

Although each of these individually sounds like a corner case, my experience is that in aggregate a large percentage (perhaps more than half?) of the tax returns involved information that the IRS has no way of knowing.

So for advocates of IRS-prepared returns, of which I understand you to be one, I wonder what the response to these issues is? I can think of three:

1. The IRS should assume whatever results in the maximum tax liability, and it is up to the taxpayer to determine whether they can reduce their liability further.

2. The IRS should guess based on some combination of factors, and the taxpayer is responsible for verifying the guess (and is assessed penalties if they don't fix an incorrect guess?).

3. We should drastically simplify the tax code so these issues go away.

Each response has some obvious problems.

Anyway, this is just something that has been on my mind, so I hope you don't mind this email out of the blue to try to solicit feedback from someone who might have given the issue some thought.

---

He never responded, so I am still left wondering the same questions.

I've never had to file US taxes so this might be a stupid question, but how exactly are the people in your example worse off with ReadyReturn?

Isn't ReadyReturn just e.g. summing up their reported wages for the return, which they'd need to do accurately anyway if they were filling it in from scratch?

Yes, if you have a pre-filled in tax return nothing that the government doesn't know about & which might be deductible is going to be on there, but that's the situation you were in already, wasn't it? Now you'll have more time to fill that out, instead of doing menial work like manually summing up your monthly payslips to arrive at a yearly total.

Or is ReadyReturn somehow structurally flawed in allowing you to either file for a simplified pre-filled in return with no amendments, or having to do an old-style return from scratch?

When I file my taxes in The Netherlands all the concerns you've raised are addressed through a system where most of the information is pre-filled in. I.e. they know how much I make so that number is on there, but they might not know about a few other deductibles, those are established through a series of questions you answer.

E.g. "do you own a house" -> "what type of mortgage" -> "do you pay a land use fee?" -> that's a deductible (to cite one made-up example).

Most importantly it establishes a workflow where if something is a deductible (unless it's something really obscure, manual returns still exist), it's going to be on the online tax form.

So even if the initial implementation is bad just establishing that process is worthwhile, because there'll be political pressure to make it better next year, and the year after that.

It's not a stupid question at all.

In practice the U.S. tax code is not quite as simple as "Here is the tax burden for your income level; tell us if you have any deductions." Right off the bat, you need to determine your "filing status" (single, married, head of household, and some less common options) from a list of five choices, each of which has different rules for all the calculations that follow. Furthermore, for a large portion of people making modest incomes, various tax credits, most notably the "Earned Income Tax Credit" but also education and child-related credits, cause enormous swings in their taxes, for example perhaps from $1,000 to -$3,000 (many people pay negative income taxes).

None of these things can be determined by information the government has. So for many people any "provisional" return that the government is likely to create will be very inaccurate.

Now, you suggest that maybe this would just be some sort of provisional return that could be adjusted to match your correct situation. That is a fine idea. But in order to make that convenient, the government would basically need to develop their own implementation of TurboTax. That has its own issues (is the government likely to do a good job? will they apply the laws in a biased way?) but even if they are resolved we are still talking about a vastly greater effort than "just give people a pre-filled return." So I would ask advocates for simplifying tax filing to either admit that they are demanding that the government author its own fully-featured tax preparation software, or explain how they will otherwise address the complexity of the U.S. tax code.

What you're saying makes sense, but doesn't at all jive with the reported 99% satisfaction rate in the pilot program.

Wouldn't more than 1% have noticed an increased tax burden? Or perhaps the focus group wasn't diverse enough.

It sounds like the 99% satisfaction rate was "of the people who filed their taxes using ReadyReturn" so it presumably excludes those who observed, or suspected, that the result was not correct and made alternative arrangements.

That said, I will also admit that this article is really about California state taxes, which are substantially simpler for most people than federal taxes. I got off on a bit of a tangent because Prof. Bankman seems to claim that the same approach will work for federal taxes as well, and in general most people perceive these issues as linked: automatically prepared state taxes are seen as a step towards automatically prepared federal taxes.

Can you answer the question of whether Intuit lobbying for their interest is in the interest of the public?

I mean it might be, right? Just like when anyone else lobbies the government, Inuit might be asking for something that is good or something that is bad.

In this case I think they are right.

> Now you'll have more time to fill that out, instead of doing menial work like manually summing up your monthly payslips to arrive at a yearly total.

There is no manual summing of paystubs. You (already) get an end-of year statement of wages (W-2 for employee wages, 1099 for contracting payments). ReadyReturn saves you nothing here.

> Joe, though, discovered that Intuit had been very busy lobbying against ReadyReturn - meeting with lawmakers, giving money.

How the hell do Americans not think that this is BRIBERY? Are you kidding me? It's one thing to "talk" to politicians, it's another to tell them to vote a certain way and then giving them money". For crying out loud. Sometimes the U.S. can be really backwards* compared to other modern societies.

This is why I pirate Turbotax every year.

Fuck Intuit. Fuck H&R Block.

I'll give them money over my dead body.

Why would you need a new version every year? Does the tax code change that frequently?

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