With the deadline for filing income taxes fast approaching, it's a good time for a reminder that filing individual income taxes could be quick and basically automatic for most Americans. In most cases, the IRS has all the information it needs to do your taxes for you. Citizens could then check to make sure everything was in order, and sign off, or make any additions or changes as needed. And of course people would have the option to do their own taxes if they preferred — some folks have more complicated tax situations that includes reporting information that the IRS doesn't have. And some folks might simply want to have a hand in filling out the forms, which is fine too. But our current system — in which the two-thirds of Americans who take the standard deduction rather than itemizing fill out forms to self report information the government already has — is needlessly wasteful, expensive and complicated (not to mention stressful) for taxpayers.
It is an absolute scandal that this situation persists in this country because of lobbying efforts by: 1) tax-preparers like TurboTax make big profits off of all this hassle lobby to keep from creating a sensible policy and 2) anti-tax crusaders like Grover Norquist
taxes to be as annoying as possible so that people will be more likely to oppose taxes.
Vox.com has a good two-minute video out on this subject today.
The Vox video points out that, well, "this is the twenty-first goddamn century" and that having the IRS auto-prepare taxes would save Americans $2 billion in tax preparation fees per year and 225 million hours per year in time spent preparing our taxes. A number of other countries do this and when California tried it as an experiment, 98 percent of the people in the program said they liked it and would do it again.
Matthew Yglesias had a good piece
last April 15 on the absurdity of our current system:
Many people react to this proposal by saying they wouldn’t trust the tax man to do their taxes for them. But in fact, you already do. The way it works now is that absent you filing a protest, you end up paying what your W-2 says you should—which is what the IRS thinks you pay.
My taxes are more complicated than most people’s because I have dribs and drabs of income from a freelance piece here or a speaking engagement there. Consequently, each spring I get a bunch of 1099-MISC forms in the mail and squirrel them away until tax time. Then I open the envelopes and start entering the data. On not a few occasions—especially when I lived with a bunch of roommates and the mail situation was chaotic—it turned out months later that I missed a form somewhere and underreported my income by a few hundred dollars and thus underpaid my taxes. Guess what? The IRS always caught me. Because the IRS already knows how much income you should be reporting since the people who pay you also submit paperwork to the IRS. If I thought they were wrong, I could dispute it. But in my experience they’re always right and I’ve always screwed up. So I pay—with penalties.
Broadly speaking, liberals believe in a more robust social safety net which requires higher taxes, and conservatives believe that taxes are already too high and should be lower.
But there is no good reason for taxes to be needlessly burdensome, other than to line the pockets of rent-seeking profiteers in the tax prep business and to serve the narrow partisan ends of folks like Norquist.