Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Stanford Professor Loses Political Battle To Simplify Tax Filing Process

npr.org

Post reply on HN
Print view View original

371–380 of 405 posts

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

#371

Post by logfromblammo »

SamBam wrote: post #336
yazan94 wrote: post #330

Earlier quoted context omitted.

Tangential question: If the government sends you a tax form pre-filled, and they missed something to tax you on somehow: what incentive would you have to fix it?

Probably the same incentive you have right now not to omit something: if they do an audit, and find that you never told them about your self-employed second job, or whatever, you'd have to pay up.

Except if your return has no deviations from what the tax authority sent you, why would the computer flag it for an audit? You're essentially going to be in the randomly-selected pile, and the auditor won't see anything at all suspicious.

Besides that, unless you have income above $1M per year or so, it usually costs the government more to audit you than they will get from you as a result of the audit. So unless you're evading so egregiously that it makes sense to prosecute you criminally, pour encourager les autres, it's better to let little cheats slide. Like over-declaring the value of the clothes you dropped off at the thrift shop as charitable deduction. There's no way those jeans are worth $20 now, you cheater. But as long as your total charitable deductions are under $500, no one cares enough to nail you for it.

Most of the people who would sign and return the pre-filled forms probably haven't ever filed a schedule A, anyway, as it would turn out to be less than the standard deduction. Unless you really care about how much you pay in taxes, there is a huge incentive to just sign and return the form the instant you get it, without even looking at it.

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

#372

Post by officelineback »

basseq wrote: post #337

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). 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 low…

If it makes filing easier and automatic, wouldn't the returns be submitted earlier, thus negating part of that 1-2 month delay?

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

#373

Post by paulddraper »

mtgx wrote: post #283
barrkel wrote: post #125

Earlier quoted context omitted.

No, I don't think he is at all. Linearly proportional taxes are regressive both because of the declining marginal utility of income, and the lower proportion of income that's discretionary at the bottom end of the income distribution.

I understand your point, but it's not nearly as bad as an actual regressive tax. I would support a flat tax over the thousands of loophopes that exist now for rich and wealthy people any day . As the system works now they probably pay even less than what they would pay under a flat tax system.

E.g. capital gains tax.

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

#374

Post by Broken_Hippo »

toomuchtodo wrote: post #169
joshuaheard wrote: post #151

Earlier quoted context omitted.

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.

I can't find a reputable source for this. A google search comes up with sources like Breitbart. The top source is marketwatch, which I can't remember if they've a slant or not. Even in that, it mentions that, "Note that this does not necessarily mean they won’t owe their states income tax". Of course, it includes a chart, but considering the other sources in the first page results, I'm not sure I can trust this source.

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

#375

Post by dragonwriter »

quadrangle wrote: post #367
dragonwriter wrote: post #289

Earlier quoted context omitted.

> The money that you "pay" in federal taxes is just dollars that are deleted out of existence so that the dollars created by federal spending don't create inflation. No, it's not. Federal government revenue is real revenue, federal government borrowing is real borrowing, and federal government spending is real spending. The Federal Reserve creates and destroys money, but that monetary action is separate from the fisc…

Yes, spending is real spending, but no taxes are not revenue. Read the link I posted. This isn't that hard to understand. The entire concept of federal budget is a balance between "revenue" and spending in order to keep the monetary supply stable. But seriously, just read the link, you don't seem to understand the basic facts I'm expressing.

> Read the link I posted.

I read it, and the point you are using it to support is still not true; the government could, Constitutionally, do what you describe (and what the linked article is part of the author's failed Senatorial campaign advocating), but it doesn't, for the same reason that the Fed exists; moneterizing spending and not unlinking fiscal from monetary policy undermines faith in the currency.

> But seriously, just read the link, you don't seem to understand the basic facts I'm expressing.

There's a difference between not understanding your claims and their relation to reality and disagreeing with the first and with your assessment of the second.

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

#376

Post by webXL »

losoq wrote: post #213
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".

Unfortunately "starving the beast" doesn't seem to actually work. Low tax revenues don't lead to lower spending, just fiscal indiscipline. I personally would prefer a leaner federal state but it's not clear how to get there. http://econlog.econlib.org/archives/2013/04/starve_the_beas_... https://en.wikipedia.org/wiki/Starve_the_beast#Economic_anal... https://niskanencenter.org/blog/cant-make-government-smaller...

I think that's backwards. Fiscal indiscipline leads to not lowering spending when there are lower revenues.

You get there by enacting rules that make it really hard (politically damaging) for the government to spend what it does not have.

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

#377

Post by webXL »

ep103 wrote: post #340
losoq wrote: post #213

Earlier quoted context omitted.

Unfortunately "starving the beast" doesn't seem to actually work. Low tax revenues don't lead to lower spending, just fiscal indiscipline. I personally would prefer a leaner federal state but it's not clear how to get there. http://econlog.econlib.org/archives/2013/04/starve_the_beas_... https://en.wikipedia.org/wiki/Starve_the_beast#Economic_anal... https://niskanencenter.org/blog/cant-make-government-smaller...

Starve the beast has never been about making federal agencies work better. Its been about creating a path to privatization

They can work better, or they can work for what we can afford (our collective value of them). Washington is in a constant struggle to make sure we get neither.

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

#378

Post by anigbrowl »

rayiner wrote: post #61
anigbrowl wrote: post #41

Earlier quoted context omitted.

What's preposterous about it? You can buy a lot of influence for a couple million a year. Are you saying they're wasting their money and might as well just redistribute it to shareholders? If not, then presumably they think it a worthwhile expense or they wouldn't spend it.

The Chamber of Commerce has been lobbying for a simpler tax code (including flat taxes) for decades. They can direct vastly more lobbying dollars to the problem than can Intuit or H&R Block. If it was just a matter of lobbying dollars, the 0.5% of the economy that benefits from more complicated taxes could not possibly out-lobby the 99.5% of the economy that benefits from simpler taxes (all else being equal).

But all else is not equal. And the argument is not that the tax prep companies are out to complicate the tax code, qua liability and subsidy, but that they have frustrated efforts to allow the IRS to offer a simpler filing experience to the public. The usual argument is that if the IRS were to simplify the submission of taxes and offer its own tax prep app, it would be perversely incentivized to maximize its take rather than minimizing taxpayer liability.

Of course, Congress could just pass a law mandating that the IRS take as little as legally required, but as you are surely aware the instant conservative view is that administrative agencies are rapacious out-of-control behemoths restrained only by the heroic efforts of a few valiant champions of liberty etc. etc.

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

#379

Post by MaysonL »

toomuchtodo wrote: post #246
MaysonL wrote: post #232

Earlier quoted context omitted.

Unless you realize that Social Security and Medicare taxes are actually income taxes: they go up directly the more you make.

No. Social security is only taxed on your first $127,200 of annual income. Anything over that is not assessed social security tax. Medicare is 1.45% of your income with no limit, and an additional 0.9% on income over $200k/year. I'm unsure where you would get the idea that those rates increase as your income increases.

I was replying to someone who was saying that 45% of workers pay no Federal income tax, so the upper limit did not enter into consideration. For the mathematical concept of direct variation, which I meant, but did not quite explicitly call out, see: https://www.freemathhelp.com/direct-variation.html

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

#380

Post by pilom »

chrishynes wrote: post #111
pilom wrote: post #76

Earlier quoted context omitted.

The biggest argument against it is that it is incredibly regressive. Poor people generally spend higher percentages of their income on stuff where rich people save higher percentages of their incomes. So for example, Joe makes 51k/year but spends 50k/year. At the 23% tax rate that FairTax proposes, he pays $11.5k - a $2.5k "prebate". This works out to an effective tax rate of ~18% (with today's tax plan Joe's effecti…

Don't forget the other 7.65% social security and Medicare that his employer pays on his behalf. So total tax burden for Joe now is actually over 20%... And 18% Fairfax would be much less regressive.

The fair tax proposal actually proposes removing Social Security and Medicare taxes as well so there would be no income tax of any kind. I stand by my numbers.
Post reply on HN