Congress Is About to Ban the US Government from Offering Free Online Tax Filing • Hacker News Board

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

#581

Post by mauricio » Wed, Apr 10, 2019, 1:06 PM UTC

rplst8 wrote: post #567

adjkant wrote: post #389

Earlier quoted context omitted.

> If people were able to budget for it then, why not now? A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years. > Without the painful transparency, it becomes too easy for the…

> A failing public education system and increasingly consumerist culture that encourages bad spending habits using psychological advertising tricks, to start. Go look at how little savings Americans have currently as well, which has been covered ad nauseam by most news outlets in the past few years. While these may play a small part in why people couldn't budget for it now, I think a bigger part of it is that income…

Using the tax brackets to measure how much we pay in taxes is incorrect. There are things like Earned Income Credit and other credits that generally relieve the tax burden completely from lower income earners.

Check out https://taxfoundation.org/summary-federal-income-tax-data-20... for an analysis on 2015 US taxes. The bottom 50% of the US paid an average of 3.59% of their income. MarketWatch claims that 44.4% of Americans pay no federal income tax at all: https://www.marketwatch.com/story/81-million-americans-wont-...

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

#582

Post by cascom » Wed, Apr 10, 2019, 1:10 PM UTC

jason_slack wrote: post #506

I just filed my taxes this morning. I owe the government $4,600. I received an "underpayment penalty fee of $44" because I did not "pre-pay an estimated tax" each quarter. Something I have never done in the ~25 years I have been paying taxes. Not only do they want the $4,600 by 4/15 they also want an estimated $1,200 "pre-payment" for 2019 by the same date or I will incur this same fee of $44 next year.Plus 3 more pa…

Not saying I don’t commiserate - but it kind of makes sense - you underpaid us during the course of the year by $4,600, assuming you make the same again next year, we need you to pay us quarterly to make up the estimated shortfall - if it turns out you overpaid we’ll true you up (via a refund)

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

#583

Post by AlexandrB » Wed, Apr 10, 2019, 1:12 PM UTC

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…

> 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 fit.

This narrative is based on nothing. The overall tax rate has been basically flat bouncing between 15% and 20% since WWII[1].

[1] https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...

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

#584

Post by u801e » Wed, Apr 10, 2019, 1:12 PM UTC

dragonwriter wrote: post #559

u801e wrote: post #544

Earlier quoted context omitted.

> Wouldn't that make the lower class the only ones that had to file anything at all (for the tax credit They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes. That's certainly less burdensome than even just the 1040 form now. > put temporary financial strain in place when waiting for credit for purchases What I proposed would be a credit that would be ap…

> They shouldn't have to do anything more than file a W4 whenever they start a new job or their income statutes changes. This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise. Of course, if the conditions it works were always true, irreducible complexity (that is, excluding the complexity that is maintained simply because both conservative politicians and t…

> This works if everyone has a exactly one job at all times that is their sole source of income, but fails otherwise.

The current W4 form takes dual income/second jobs into account and adjusts the withholding based on that. Changing that withholding to a credit based on income, number of jobs, dependents, etc wouldn't be any worse than it is now, but eliminating the 1040 and other associated forms would definitely be a big benefit.

> even in the case it works, address the problem that a regressive tax with a flat credit is...still a regressive tax.

We have tax brackets now based on income level. Would basing a credit on similar income brackets be any different? Or are you claiming that out current tax system is regressive and my proposal wouldn't fix the underlying issue?

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

#585

Post by AlexandrB » Wed, Apr 10, 2019, 1:20 PM UTC

hannasanarion wrote: post #530

onlyrealcuzzo wrote: post #106

Earlier quoted context omitted.

I will say, vote with your dollars. If you don't like Intuit's lobbying, please don't feed the beast and use their services.

Conservatives always love when people say "vote with your dollars", because that means the people with more dollars get more votes.

Not sure why this is downvoted, but it's exactly right. When you tell someone in the bottom 50% of income earners to "vote with their dollars" you're telling them to piss into the ocean in the hopes of turning it yellow.

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

#586

Post by metaphor » Wed, Apr 10, 2019, 1:20 PM UTC

vonmoltke wrote: post #547

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 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 remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer. I was not asked for such a thing, and used a different preparer this year. I was asked to set a PIN for 2018 , but I hav…

There're at least 12 private companies listed by the IRS who offer some form of free filing service[1]. Direct from the horse's mouth[2] (my emphasis added):

> When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior-year Self-Select PIN.

To be sure, a filer's prior-year AGI would serve the purpose almost[3] as well. It doesn't even matter what "code" is actually required of the filer, only that one is required at all for the convenience of e-filing. The point is it just needs to be something arbitrary enough for free filers to easily misplace record of but is routinely captured as yet another database entry by service providers. That's how repeat customers at the bottom end of the economic ladder are maintained...none of this "maximizing returns" feel good theory that the parent spoke of.

[1] https://apps.irs.gov/app/freeFile/

[2] https://www.irs.gov/individuals/electronic-filing-pin-reques...

[3] maintaining record of prior-year AGI has utility beyond just tax returns--e.g. applying for benefits and/or services which are limited to people below certain income thresholds--but the self-select PIN is truly arbitrary and serves no other purpose, so my gut feeling is it's a more effective mechanism

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

#587

Post by deaps » Wed, Apr 10, 2019, 1:27 PM UTC

i_cant_speel wrote: post #568

indigochill wrote: post #555

Earlier quoted context omitted.

The anti-tax group wants to make paying taxes as painful and inconvenient as possible based on the assumption that if taxes suck, more people will be more actively in favor of reducing taxes (as opposed to, you know, making the process not suck). It's not about reducing liability at all right now, it's about making more people anti-tax.

Whether I'm going through the terrible process to pay $20 vs $20,000 doesn't make a difference. How would a lower tax rate improve anything in this scenario?

You're more likely to pay attention and double check some maths when writing out a $20,000 check as opposed to a $20 check.

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

#588

Post by Yetanfou » Wed, Apr 10, 2019, 1:32 PM UTC

peteforde wrote: post #398

One thing I don't understand (possibly as a Canadian, possibly just as a conscious person) is how little it costs to bribe your highest-ranking politicians. The article suggests that tax filing is an $11B industry and that companies spend ~$6M lobbying your corrupt senators. The chair of the Ways and Means committee received ~$16k in donations from Intuit/H&R. Wait, what? Never mind how inexcusably transactional this…

> If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.

Why, that is classical supply and demand, Economics 101. If you can buy a service for $10, why would you pay $100? If $16,000 is enough to buy the chair of some committee you'd batter not pay her much more than $16,000 or the next time she comes around in some position where she has the power over some piece of legislation which might get in your way you'll have to dig deeper still. Not to mention the fact that your fellow lobbyists wouldn't like you for raising the going price of politicians, senators and committees and you'd be hard pressed to find another lucrative position in this market.

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

#589

Post by ivm » Wed, Apr 10, 2019, 1:34 PM UTC

ransom1538 wrote: post #580

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 US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.

Recently I was filing my taxes in Chile for the first time and it took about 10 minutes because the tax service already knows most of my activities, including stock purchases via a local broker and dividends from them. I only needed to review the form for correctness and press "send".

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

#590

Post by jeremyjh » Wed, Apr 10, 2019, 1:36 PM UTC

VSerge wrote: post #566

ecopoesis wrote: post #527

Earlier quoted context omitted.

The point is to enrich Intuit and other tax preparers that lobbied for this.

These anti-tax activists seem to be playing the role of Useful Idiots for the much more substantial reason 1, bearing in mind that the very existence of such companies making tax filing easier does indeed destroy point 2 entirely (in addition to the what OP pointed out which also takes away any credit this idea might have had). From a european perspective, having tax returns that are not pre-filled, and having a tax…

For most people the state gets paid every payday from automatic employer withholdings. If your withholdings are much lower than the obligation then you may pay interest penalties. So it’s not really necessary from a cash flow perspective but still would be much more efficient.