This article is a clear example of that, laying out 10 different things you need to know with complicated formulas for deduction and professions that do and do not get benefits. What a mess.
Right now, I spend a few thousand/year and an annoying amount of time to make sure I'm doing it right.
I am amazed at how far from the stated goal of "We want you to do your taxes on an index card" this bill is going to come out as... and saddened that the majority of voters supporting the GOP won't feel fleeced by it.
*(with the exception of those preparers that very much want to keep the complexity and rich people/large businesses that can exploit loopholes effectively)
Perhaps the people who look at a tax return as free money from the government won't feel fleeced, but anyone who understands the concept of saving for retirement should be able to put together that we're having our tax burden lessened by $1k-$2k per year and, in exchange, needing to almost entirely fend for ourselves in retirement.
It's not a tax return, it's a tax cut. That means the government is taking less money from me (not giving me more money). I don't know anyone under 35 that's actually counting on SS on being there for them (not saying they're happy about, but most realized 10+ years ago that it's not gonna happen). That was a reality before this happened.
Those kinds of people are the ones that don't think far enough ahead to realize that what's being taken from them, retirement, is much more valuable than what's being given to them, a small tax cut. But anyone with an actual retirement plan should be furious because those programs--that we've paid into for our entire working careers--will be supplying us with significantly less than they would otherwise.
Yes, we've known that Social Security isn't going to be enough on its own ever since Bush II replaced all the money with IOUs, but until this tax cut, there was a reasonable expectation that those programs would survive in some form and augment our 401(k) and IRA accounts. Now, we're basically on our own. And with the Republican unwillingness to deal with health care, we'll likely be left to fend for ourselves in that area...convenient since that's the most expensive part of life when it comes to medical expenses.
But hey, the 0.01% got it rough and need some tax relief, right?
The same happens in a lot of companies. IT develops rules for IT people and the regular user is screwed.
Generally these changes have some sort of champion requesting them and don't just arise from the ether. I'm not sure we can explain it all away as Congress not realizing that their decisions will advantage large business interests at the expense of smaller ones, particularly when the beneficiaries are also sponsors.
I've often wished a test city/state would be allowed to just do a flat tax and completely remove all tax code and see what happens.
Obviously the convolutedness is a barrier to entry to small startups and a unfair advantage for established market entities.
Also I'd love to see an experiment on a zero tax law that basically amounted to no taxes unless the business/person earned a net profit of something deemed reasonable (say 30-50k in a modern society).
Why our societies constantly try to suffocate individuals trying to innovate and create value for his fellow members of society is beyond me.
That's the kind of armchair philosophizing that leads to all kinds of problems, we need more scientific method and less philosophy if we want to get anywhere in a productive manner.
There's plenty of counter points to be made about the sales tax. Here's two.
1. Its the most efficient tax.
2. It has the lowest economic damage.
For point #2, the idea is that if you can increase the wealth everyone benefits, since economics is not a zero sum game. Also you can get around whatever you deem vital needs/rights i.e. food, shelter, in your society through subsidizing. Here's some other information from an economic perspective as well (https://www.taxanalysts.org/content/economic-analysis-can-st...).
Anyway, to say its even more regressive and we don't need to experiment is not progressive. We have ostensibly the same goals (more wealth for everyone, fewer people in poverty/elimination of poverty,etc) and the only way to get at social systems that optimally give us our goals is to apply a more rigorous scientific method and get out of the political philosophy camp - IMHO :)
How would we ever make any progress in medicine if we never conducted any experiments and relied instead purely on observational studies? How much slower would our progress be?
see: https://www.thoughtco.com/the-economics-of-sales-taxes-11475...
No I absolutely would be, so long as it is formed in a traditional experimental design. I wouldn't want anything I was proposing above or you are here to just be globally implemented, since we don't actually know how it would work out. So, I freely admit my bias. But the only way to counter bias and make progress is with data and a process for checking yourself. For me, that is the scientific process, anything else is really just us following our emotions which doesn't lead anywhere fruitful, that's my point.
This has been shown wrong since the trickle down economists trickled down on us all.
I don't want a flat tax (as in "all income taxed at 15%," let's say) because a flat tax has an unfair impact on people at lower income levels. But, otherwise, I agree with your entire post. Here's my ideal law, with the caveat that I have zero legal training beyond six seasons of Law and Order and four seasons of Suits:
(1) The following marginal rates are established:
(Emphasis here: these numbers are made up for demonstration purposes only.)
- $0 through $13,000: 0%
- $13,001 through $25,000: 5%
- $25,001 through $46,000: 8%
- and so on
(2) All money earned, by whatever means and from whatever source, by a person or legal entity resident in the United States shall be subject to the tax specified above.
(3) The Internal Revenue Service shall, no later than the 15th of April of each calendar year (or the next day following the business day after the 15th of April if the 15th of April falls on a Saturday, Sunday, or federal holiday), prepare and mail to each holder of an EIN, each person for whom any tax or income declaration form (such as W2, 1098, 1099, and similar) has been submitted to the IRS, a statement of what the IRS believes the taxpayer owes or is due as a refund.
(4) If the IRS has notified the taxpayer that the IRS believes the taxpayer is due a refund, the taxpayer may notify the IRS of a financial account located inside the United States into which such refund shall be deposited or may request a paper check for such refund or, under such rules as the Secretary shall provide, make a request for United States Savings Bonds. Any request must be made within five years of the date the taxpayer knew or reasonably should have known that the refund was due, otherwise the refund is the property of the Treasury absent a showing of exigence.
(5) If the IRS has notified the taxpayer that the IRS believes the taxpayer owes additional taxes, the taxpayer shall make payment to the IRS no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday) by providing the IRS with debit instructions for a financial account located inside the United States or via a paper check or other form of transfer of dollars.
(6) In the case that the taxpayer disagrees with a notice provided by the IRS under paragraphs 5 or 6, the taxpayer shall, no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday), file the tax forms designated by the IRS under such rules as the Secretary shall provide, to indicate what the taxpayer believes is the proper tax due or refund owed. If the taxpayer still owes additional tax, the tax payment shall be due at the time of filing. The IRS shall have 120 days to respond, otherwise the taxpayer's submission is deemed valid and binding upon the IRS.
(7) There is no paragraph seven.
You remove this important policy tool, offering no other tool to replace it.
The tax code should, in my current view which I'm willing to entertain rebuttals against, be used to raise revenue for the operation of the government. If you want to use the government to encourage other behaviors, do it in another way, like direct payments or some other incentives I can't think of right now, but keep the tax code simple lest we wind up with, frankly, the mess we have now.
Every non trivial system gets more complex with time, as you discover more and more edge cases, similar to software, and as we all finding out now, a rewrite would replace a known set of issues with an unknown set of issues.
What about barter? If I trade my property or time for someone else's property or time without it ever being denominated in "money, cash or equivalent," is that taxable? From the recent controversy, does a graduate school education have a taxable value when it's offset by work the graduate student does for the University?
What about inherited wealth? Does an inheritance count as income? From one perspective, at T-1, you didn't have it and at T you did. But from the family unit perspective, nothing changed. If someone's spouse dies, since their 50% ownership of communal property just increased to 100%, is that taxable? If not, how is that really different than leaving wealth to children or extended family?
What about expatriates? If someone lives in France, earns money in France and pays French taxes, do they pay US taxes too? What if they work part time in France and part time in the US...does that earn them the lower marginal rate in both countries despite earning a much more comfortable living?
These kinds of overly-simplistic tax plans always seem to breakdown in accounting for situations that happen in the real world. And once all the necessary questions have been asked and the answers incorporated into the tax code, it's not that much simpler than what we currently have. Yes...the tax code is an overly-complex maze of crap that tends to benefit those with the best team of CPAs. But we're better off fixing that without throwing out the entire thing and starting from scratch.