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Congress Is About to Ban the US Government from Offering Free Online Tax Filing

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Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#401

Post by ddlatham »

avsteele wrote: post #378

Disappointed by the overwhelmingly negative commentary here. There are multiple private companies providing this service for low amount, as many have mentioned; for free for incomes below a threshold. 1) Why would you want the IRS to duplicate this effort and compete with these companies? Remember 'Free' in this context means paid for by tax dollars. Do you think the IRS is going to spend less to implement a filing s…

Upvoted.

1) I'd like the IRS to at least have a role, since the IRS is the only one who has a copy of all my tax information provided by employers, banks, brokerages, etc. They have a unique role in that they can pre-fill all the information, where someone like Intuit cannot. However, an opportunity where they simply provided that information to a third party with my permission could also be an interesting model. I haven't seen any exploration of that.

2) California, at least, already provides this service. But few use it because the federal government doesn't. If the federal government stepped up, many states would follow.

I believe that the IRS providing it like most of the rest of the world would be a big step forward, but would be open to a role for private industry too.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#402

Post by metaphor »

rayiner wrote: post #384
metaphor wrote: post #369

Earlier quoted context omitted.

> The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers. The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to…

The 22% tax bracket goes well above the median income. Meanwhile, in 2010 less than 15% of people filed the 1040ez.

Bottom end of 22% tax bracket is ~$43k/annum based on 2019 Notice 1036...that's a $23k margin before hitting the $66k AGI threshold for free file offerings.

That number is more like ~25mil, or just over 18% in 2017; +4.6% over previous year[1].

EDIT: I suppose I should probably ask what point you were trying to make? I didn't quite track where you were going with all that.

[1] https://www.irs.gov/pub/irs-soi/17in01pl.xls

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#403

Post by tathougies »

Calloggs wrote: post #298

Planet Money covered tax filing a few years ago and visited it again recently: https://www.npr.org/templates/transcript/transcript.php?stor... My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes. The…

> The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.

I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#404

Post by losteric »

Dig1t wrote: post #317
Calloggs wrote: post #298

Planet Money covered tax filing a few years ago and visited it again recently: https://www.npr.org/templates/transcript/transcript.php?stor... My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes. The…

Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his bigg…

> However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can.

lol. No.

First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations.

Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#405

Post by hellllllllooo »

This is pointless obstruction and ironically a waste of my tax money. You could easily have the government automatically complete your taxes for the simple cases and have software like TurboTax for the difficult ones.

To the people complaining about the possibility of a government run site being poor have you used TurboTax? I've used it twice now and will never use it again. The dark patterns, upselling and fake loading screens really obscured how simple my taxes actually were to do.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#406

Post by blindwatchmaker »

vidarh wrote: post #397
blindwatchmaker wrote: post #388

Earlier quoted context omitted.

> Another way to think about it is that if people were actually straight up buying votes on a regular basis the prices would likely be much higher And as I said earlier, the campaign contributions are window dressing for the rest of it and I gave a concrete example. Families like the Clintons have made massive amounts of money cashing out after office, and secured lucrative sinecures for their daughter while in it. T…

But while I'm sure some of them had that in mind, I think very of them went around thinking "how I vote on this specific piece of legislation will make a difference in how much I make afterwards". The Clintons is a good example of why that would no sense: Their revenue is effectively diversified enough that it would make very little difference. They're trading off their perceived status and recognition - if they'd pu…

I'm not overly concerned with hurting a politician's feelings. I am bemused at the idea that someone can observe the last few decades of the capture of the government and major political parties by corporate and oligarch interests and the increasingly lucrative payoffs to these people, and not come to the transparently obvious conclusion that these are commercial relationships.

This is institutionalized and legalized bribery, not just 'access' or 'networking' or whatever euphemism you want to use to couch this in niceties.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#407

Post by tdeck »

rattlesnakedave wrote: post #377
adjkant wrote: post #366

Earlier quoted context omitted.

Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes. What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea. What…

This is actually how things were done pre WW2. If people were able to budget for it then, why not now? The current system makes filing taxes and getting refunded seem like a reward, it should probably be a bit painful to do your taxes. Without the painful transparency, it becomes too easy for the government to nearly invisibly turn up the tax rate on individuals to pay for whatever boondoggle or foreign war they see…

Income taxes in the US applied to a much smaller segment of the population before WW II than they do today.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#408

Post by jacobolus »

twoodfin wrote: post #368
jacobolus wrote: post #344

Earlier quoted context omitted.

Simplifying the tax code in the 80s was the public sales pitch. The real strategy was to dramatically cut taxes on the wealthy (e.g. by eliminating the top several marginal tax brackets). But keep in mind, the Democrats controlled congress, so reform had to gain bipartisan support.

This chart doesn’t show evidence of a particularly dramatic cut in effective rates for the top 1% of earners: https://taxfoundation.org/taxes-rich-1950-not-high/

The top 1% of earners today earn a dramatically larger share of total income than the top 1% in the 1950s.

If taxes kept up, they would have noticeably higher effective tax rates than they used to have.

P.S. The “Tax Foundation” is a right-wing “think tank” (i.e. activists masquerading as researchers) funded by billionaires and corporations.

I would however recommend reading the whole paper they cite, http://gabriel-zucman.eu/files/PSZ2017.pdf

> Government redistribution made growth more equitable, but only slightly so. After taxes and transfers, income in the bottom quintile stagnated (+4%) over the 1980–2014 period while it grew a meager 21% for the bottom 50% as a whole. That is, transfers erased about a third of the gap between macroeconomic growth (61%) and growth for the bottom half of the distribution (+1% before government intervention). Taxes did not hamper the upsurge of income at the top, which grew almost as much as pre-tax.

> The top panel of Figure II provides a granular view of who benefitted (or not) from growth, by showing the annualized real growth of pre-tax and post-tax income for each percentile of the distribution over the 1980–2014 period, with a zoom within the top 1%. There are two striking results. First, the vast majority of the population—from the bottom up to the 87th percentile—experienced less growth than the (modest) macro rate of 1.4% a year. For instance, the 10th percentile declined by 0.6% a year pre-tax (+0.3% post-tax); the 30th percentile stagnated pre-tax and grew 0.6% post-tax; the 80th percentile grew 1.2% pre-tax (+1.3% post-tax). Only the top 12 percentiles of the population achieved a growth rate as high or higher than the macro rate of 1.4%. Second, even percentiles 88 to 98 experienced unimpressive income gains, between 1.4% and 2.2% a year—in most cases less than the macro growth rate of U.S. incomes for the preceding generation, from 1946 to 1980. The only group that grew fast is the top 1%, whose average income increased 3.3% pre-tax and 3.2% post-tax, with growth culminating at +6.0% a year for the top 0.001%. The top 1% has pulled apart from the rest of the economy—not the top 20%.

etc.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#409

Post by tdeck »

mikestew wrote: post #173
TheHypnotist wrote: post #108

Earlier quoted context omitted.

What are suitable alternatives? Aren't they the best in class, regardless of how shitty that class is?

Tax Act. And as far as "best in class" goes, I find Tax Act to be far less infuriating that that steaming pile of shite Intuit puts out. I would almost go so far as to say it's decent software. As for the lobbying, I have some vague memory of jumping to Tax Act because of someone pointing out that they don't lobby. A cursory bit of searching didn't raise any red flags at the time.

I file with TaxAct as well, but it's worth noting they're a member of this industry lobbying group:

https://www.americancoalitionfortaxpayerrights.org/

Interestingly while looking this group up I found this entire report prepared by Elizabeth Warren's staff about these types of industry groups:

https://www.warren.senate.gov/files/documents/Tax_Maze_Repor...

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#410

Post by mjevans »

adjkant wrote: post #366
rattlesnakedave wrote: post #349

Earlier quoted context omitted.

A better way to do 2 would be to do away with withholding. After a year of that we’d see a radically different tax system.

Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes. What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea. What…

At least if you're using the tax prep software I did it offers a 'payment plan', which seems like an upfront way of asking to have wages garnished post-taxes due, instead of before (like W4?s do)
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