This whole thread is full of comments from people who obviously haven't read the article / listened to the podcast in question[1].<p>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.<p>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.<p>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.<p>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.<p>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 <i>already</i> on the books that they might have previously unintentionally evaded.<p>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.<p>1. <a href="http://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero" rel="nofollow">http://www.npr.org/sections/money/2017/03/22/521132960/episo...</a>
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.<p>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 live in Sweden. Just a few days ago I audited and filed my returns for 2016, it took me about 2 minutes.<p>1. Go to skatteverket.se (IRS), enter your "personnummer" (SSN).<p>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.<p>3. Audit my pre-filled returns. Contains all information about income tax, captial gains tax and so on.<p>4. Press "Sign", enter password in BankID again to sign the returns.<p>5. Smell the roses.
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.<p>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.<p>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.<p>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.
The currently posted link doesn't have the audio/transcript, but here's a few relevant links from last week:<p><a href="http://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero" rel="nofollow">http://www.npr.org/sections/money/2017/03/22/521132960/episo...</a><p><a href="https://priceonomics.com/the-stanford-professor-who-fought-the-tax-lobby/" rel="nofollow">https://priceonomics.com/the-stanford-professor-who-fought-t...</a>
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.
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).<p>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 <i>low income</i> Americans, their tax refund is the largest check they receive all year. <i>Delaying</i> 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.
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.
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.<p>Build it out enough, and then push a few legislative mandates:<p>1. All taxes have to be easily payable in tax software.<p>2. All taxes have to be payable online.<p>3. Every tax jurisdiction has to offer a tax estimation service, where they can download pre-calculated data to use in tax software.<p>Should make predatory companies like Intuit disappear in less than a decade.
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.<p>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.<p>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.<p>Or did I miss something important?
California has the initiative system that means ultimately the voters <i>can</i> 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 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).<p>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 <i>you earned</i>, 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.<p>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.<p>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?
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.<p>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.<p>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.<p>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.<p>edit: How do we help this idea take flight?
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.<p>Flat tax @ a high rate: Neutral or slightly helpful to the rich, crushing to the poor and middle class<p>Flat tax @ a low rate: Windfall to the rich, the resulting gutting of government programs hurt the poor and middle class<p>Eliminate taxes on dividends: Windfall to the rich, neutral to the poor and middle class who don't benefit from dividends<p>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<p>Reform AMT: Helpful to the rich and people with stock options, no effect for the poor and middle class<p>Eliminate income phaseouts: Helpful to the rich, no help to the poor and middle class<p>Eliminate estate or gift taxes: Helpful to the rich, no help to the poor and middle class<p>Eliminate income tax in favor of sales tax or VAT: Windfall to the rich, crushing to the poor, probably negative for the middle class<p>The ability to file your taxes on a postcard isn't worth it if it means advantaging the already advantaged.
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.
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!
FWIW, here's an email I sent to Prof. Bankman last April:<p>---<p>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.<p>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:<p>- complex calculations of "support" to determine whether a live-in relative is a dependent<p>- exact payments, and nature of payments, made to schools (generally not accurately reported on the 1098-T)<p>- business expenses<p>- 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<p>- 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)<p>- what gambling losses are there to offset the gain reported on a W-2G?<p>- [litany of qualification questions for various education benefits]<p>- which exceptions apply to an early distribution from a 401(k)<p>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.<p>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:<p>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.<p>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?).<p>3. We should drastically simplify the tax code so these issues go away.<p>Each response has some obvious problems.<p>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.<p>---<p>He never responded, so I am still left wondering the same questions.
> Joe, though, discovered that Intuit had been very busy lobbying against ReadyReturn - meeting with lawmakers, giving money.<p>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 <i>tell them to vote a certain way and then giving them money". For crying out loud. Sometimes the U.S. can be </i>really backwards* compared to other modern societies.