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Stanford Professor Loses Political Battle To Simplify Tax Filing Process

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Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#161

Post by ksdale »

fnordsensei wrote: post #138
jkaptur wrote: post #116

Earlier quoted context omitted.

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".

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.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#162

Post by tempestn »

slg wrote: post #150
avar wrote: post #110

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 peopl…

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.

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.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#163

Post by ams6110 »

cestith wrote: post #129
ams6110 wrote: post #117

Earlier quoted context omitted.

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.

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 abou…

The original article was talking about simple tax returns. In fact, the 1040EZ is relatively new. Much newer than the existence of H&R Block. So evidently their efforts to keep taxes complicated aren't entirely successful.

Even a 1040 "long form" (2 pages) with itemized deductions for mortgage interest isn't that complicated.

I file about a 10 page return, 1040 with schedule A, schedule C, self-employment and various others and I always do it myself on paper.

If you are at the point where you think you need TurboTax, you're probably better off just hiring a local CPA firm to do your taxes.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#164

Post by llsf »

cestith wrote: post #129
ams6110 wrote: post #117

Earlier quoted context omitted.

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.

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 abou…

In Europe, I have a pre-filled tax report. Of course, it includes only my employee's income and all the banks interest & dividends and deductions they can automatically get (wrt known family situation, loan interest, etc.).

For the rest, it is still up to me to declare additional incomes (e.g. rental properties) or deductions (e.g. donations). It does simplify though the process, especially for "W-2" employees.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#165

Post by maerF0x0 »

barrkel wrote: post #124
rhino369 wrote: post #93

Earlier quoted context omitted.

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.

Why does it matter if its discretionary?

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#166

Post by dragonwriter »

Zelphyr wrote: post #132
barrkel wrote: post #124

Earlier quoted context omitted.

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.

One of the aspects of The Fair Tax, which is basically a flat tax, is the idea of a "prebate" - a sum of money (between $4-7K if I recall) that is paid to each taxpayer every year to help cover the basics like bread and milk.

A preemptive rebate check only makes a difference in the first year of the system. If it's actually a advanced refundable credit, then suddenly you don't really have a flat tax, you have a flat marginal tax with a refundable credit (or a flat tax with an exempt UBI.)

Of course, then you need an even higher marginal rate to achieve revenue neutrality.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#167

Post by bingomad123 »

avar wrote: post #110

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 peopl…

> 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.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#168

Post by magic5227 »

thebrettd wrote: post #12

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?

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

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#169

Post by toomuchtodo »

joshuaheard wrote: post #151
jkaptur wrote: post #116

Earlier quoted context omitted.

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".

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.

Re: Stanford Professor Loses Political Battle To Simplify Tax Filing Process

#170

Post by hyperbovine »

bingomad123 wrote: post #167
avar wrote: post #110

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 peopl…

> 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.

That's it, blame TurboTax.
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