Hacker News Reader

Comment by Karunamon | Hacker News Reader

Groups that call for lower taxes, like Grover Norquist’s Americans for Tax Reform, say it is a “conflict of interest” for the government to both collect taxes and calculate how much people owe.

I think there's some logic in this objection, but then again, I don't see these same complaints levied against the other "post-billed" taxes people deal with, like property, vehicle, and so forth.

Really, there's no likeable side in this. The tax prep software people (never buy Intuit!) have a vested interest in keeping the tax code complicated, and decent portions of the government has a vested interest in same.

The solution to both problems is a massive simplification of the income tax code - too many people opposed to it for that to ever happen, though.

View on HN

I don't see a conflict of interest there. If the rules are spelled out so anyone can do an independent check of the calculation than it's fine.

Is it a 'conflict of interest' for restaurant to both collect money for my bill and tell me how much my bill is? No. The rules are clear so anyone can audit their own bill if they feel they're being cheated.

If the government just said "You owe $673.25" and wouldn't tell you why or how they got to that number, then I would see a conflict.

That's just it though - the income tax code is byzantine.

A restaurant charge is simple - here's what you ordered, here's what each thing costs, here's the total. If you really suspect shenanigans, you get a copy of the menu to validate against.

Property tax is usually pretty simple, as is vehicle registration. Both can be described in a couple of paragraphs.

The problem right now is that even if the forms were precalculated, the IRS doesn't necessarily know about the deductions you're entitled to, and claiming those is a far more intricate process than simply filling out your PII (1040) or your wage info (W2).

Here's a relevant example. I just started going to school again at the end of last year (November). A run through with TaxAct/HR Block showed me as owing about $600 before any deductions or credits - you have to tell them about those. The fact that I started going to school gave me the "lifetime education credit", and turned a $600 payment (that I could not afford at the time, and was somewhat stressed about) into a roughly $2K payday.

Without the software, or paying an accountant, I wouldn't have known about that, and paid $600 that I didn't need to pay.

the income tax is byzantine for maybe a third of the population. The other two thirds of the population have a W-2, maybe a 1098-T or E, and take a standard deduction. Granted, they can use TurboTax for free, but it's still a waste of time.

The lifetime education credit is calculated based on the 1098-T that your school had to file with the IRS.

I had to help two friends navigate TurboTax after they couldn't figure out where to enter a 1098-E (student loan interest), so my anecdotal evidence is that TurboTax easily misses certain items when hey ask "Did you go to school this year", but not "Did you have education expenses" (or something similar). Without someone who had already used the software to enter similar items, they may not have been able to get that credit.

My main complaint with TurboTax (other than the fact that I have to use software to file taxes and buy a new version every year) is that I am charged to e-file at the state level.

You're being rather reductive, here. If I had just filed my W2 and 1040, I'd have missed the credit, and the existence of that 1098-T sent to the IRS wouldn't mean that I'd have received a check in the mail later. Also, the credit applies if you start school in the first three months of the new tax year,

This is what I mean. Comparing income tax filing (with a W2 and a 1040 by mail, with nothing else, that's at least 3-4 pages of work, with no guarantee that you're paying what you ought to be) with a restaurant bill (an itemized receipt of things you bought) is fundamentally dishonest.

Every comparison made is against single charge, a single payment, based on a usually simple formula, rather than an entire freaking body of law.

> it is a “conflict of interest” for the government to both collect taxes and calculate how much people owe

Doesn't the government do this anyway? Try claiming that you owe $0 and see how that goes over. The individual taxpayer has already had the money withheld and then submits paperwork after the fact just in case any of the business entities involved failed to submit their required documentation.

You're right. You should distrust any argument Norquist makes about taxation - you'll find that they are either wrong (as in this case) or strawmen. His actual goal is to defund government and you should assume anything he does is done to further that goal. And lest you think this is just ad hominem ranting, google "drown government in a bathtub" and look at the effects Prop 13 have had on California municipalities.

Yup. Norquist deserves no trust.

In about 15 years in the labor force, I've never once had the withholding match up perfectly with the taxes owed. Either not enough is withheld or too much.

Either way, I'm stuck filing the #($&ing paperwork.

The withholding is calculated by you and your employer, not the IRS.

So how can I request $0 withholding?

> So how can I request $0 withholding?

Submit a signed W-4 [0] to your employer with the word "Exempt" on Line 7.

Of course, by doing so you also certify that you are actually meet the legal requirements stated on the form for $0 withholding, under penalty of perjury, so you obviously should only do it if, you know, you actually qualify for it. But that's how you do it.

[0] http://www.irs.gov/pub/irs-pdf/fw4.pdf

Just look at a W-4. It's all there. (Including the no-income-tax-deduction option.) Just fill it out and hand it to your employer. http://www.irs.gov/pub/irs-pdf/fw4.pdf

It doesn't follow that because you are responsible for specifying the withholding, that you can request an arbitrary withholding.

If you underwithhold several years in a row, you get hit with fines and retroactive interest.

I'm aware of that but my point is that most employers would not allow that since the employer is also liable if it under-withheld for a W2 employee.

> I'm aware of that but my point is that most employers would not allow that since the employer is also liable if it under-withheld for a W2 employee.

AFAIK, they aren't liable for under withholding if they withhold correctly according to the W-4 signed by the employee, even if the W-4 claims things (e.g., "exempt" when the employee does not meet the qualifications) that are not accurate.

The employer is only liable for the Medicare/SS withholdings. Half of them are deducted from your check and the employer pays the other half out of pocket. As long as you're being paid as an employee you have no control over that. The employer will only withhold and send income taxes based on what you've specified on your W-4.

So it sounds like we're in total agreement.

Yep! You'll just have a gigantic bill come due in April

Since withholding is performed upfront it either uses older declarations or (more likely) some sort of standard chart. So it's similar to a utility bill: some amount is withheld throughout the year and once all data is in the actual amount of taxes due is tallied and the payment is adjusted (with a check to or from the IRS).

What Intuit lobbies against is allowing the IRS to provide pre-filled tax forms to citizens. They don't lobby to keep the tax code complicated.

I post this not to defend Intuit, but to clarify why the tax code is complicated. It's not because Intuit goes to Congress and says "please make this thing complicated." It's because millions of people and companies each go to Congress for their pet issue.

Norquist objects to pre-filled tax forms because he wants people to think hard about their taxes at least once a year. The theory is that if paying taxes is easy and automatic, it will be harder to argue for simplification. No one will care if things are complicated if they can just push one button and forget about it.

It's part of a larger ongoing debate: if government services work so well that citizens don't have to think about them, will that have the side effect of reducing citizen engagement?

It's not so different from the tech concerns about Apple's iOS ecosystem. Will the super easy, super controlled experience of the iPhone result in fewer kids thinking about programming?

> I think there's some logic in this objection

I don't. The IRS is going to calculate how much people owe in any case. The question is whether they provide all the information they've collected first, and calculate the results based on that, and provide it to the taxpayer who can either accept it or note any changes/additional information and return it, or they make the taxpayer do it first from scratch (or pay someone else to do it, or pay for a tool to do it), and then the IRS goes and does it in anyway for every taxpayer taking into account the information they have from the taxpayer and what they have received separately.

In either case, the IRS is absolutely going to calculate how much people owe. That's not even the choice that is at issue. So the objection to one side of that choice that the IRS calculating how much people owe is a "conflict of interest" is a non-sequitur; it simply has no bearing on the choice.

Reply on news.ycombinator.com