Killing TurboTax • Hacker News Board

Re: Killing TurboTax

#581

Post by jessaustin » Thu, Mar 04, 2021, 5:26 AM UTC

root_axis wrote: post #576

jessaustin wrote: post #546

Earlier quoted context omitted.

It could be coupled with a hefty UBI. No need for means-testing. If everyone got e.g. $10,000/yr, that would completely offset VAT for people who don't buy much. People who spend millions every year wouldn't even notice it.

I'm not opposed to the idea of UBI, but it doesn't really solve any problems here, it just adds massive political and logistical complexity that would essentially doom any possibility of reforming the tax code.

In this thread, we're discussing how to ameliorate the regressive aspects of sales taxes. Poor people spend most of what they have, so they are subject to proportionally more sales taxes than rich people who spend very little of their vast accumulated wealth on goods subject to those taxes.

The initial, flawed response to this issue would be to construct some "massive political and logistical complexity" in order to track everyone's income and spending and family situation and lots of other stuff too and calculate their VAT refunds based on some formula. The much simpler solution is to just give everyone the same amount of money. Poor people will spend some portion of it on sales taxes, and they'll use the rest for other purposes of their choosing. Slightly richer people will spend all of the UBI on sales taxes but will come out even. Slightly richer people will be able to offset some portion of their sales taxes. Really rich people won't even notice they got a UBI.

Perhaps you really meant that "massive political and logistical complexity" is required to get anything through the legislative process? After all, the more complicated it gets, the more places lobbyists can hide loot for their employers.

Re: Killing TurboTax

#582

Post by KirillPanov » Thu, Mar 04, 2021, 5:29 AM UTC

null0pointer wrote: post #527

bob1029 wrote: post #298

"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…

I agree, a vastly simplified tax code is needed. Here's my dream for a simpler tax code: The only tax is a Sales tax/VAT/GST. Pros: - Individuals never have to think about tax. It would completely eliminate tax returns. That alone is worth it's weight in gold since tax returns are such a time and money burden. - It would close all the loopholes megacorps/wealthy individuals use to pay less tax. You cannot avoid spend…

Please enjoy your imminent crucifixion at the hands of the wokesters. It's what they do to people who use logic like that.

Re: Killing TurboTax

#583

Post by KirillPanov » Thu, Mar 04, 2021, 5:34 AM UTC

singron wrote: post #575

null0pointer wrote: post #527

Earlier quoted context omitted.

I agree, a vastly simplified tax code is needed. Here's my dream for a simpler tax code: The only tax is a Sales tax/VAT/GST. Pros: - Individuals never have to think about tax. It would completely eliminate tax returns. That alone is worth it's weight in gold since tax returns are such a time and money burden. - It would close all the loopholes megacorps/wealthy individuals use to pay less tax. You cannot avoid spend…

Income tax itself isn't the complicated part of taxes. I encourage everyone to do their own taxes by hand sometime. There are like 4 boxes for wage income and income tax, and 100s of boxes for everything else. And besides the boxes you do fill out, there is all the reading and calculating required to figure out you don't have to fill in even more boxes (e.g. in order to know if you have to fill in the AMT form, you p…

> biggest single thing that would simplify the tax code is removing the separate capital gains tax and just counting it all as income

That's okay during times like ~1990-2020, a time of wonderfully low dollar inflation. The justification behind the long-term capital gains rate is this: during times of high dollar inflation, taxation on capital asset values turns into an outright tax on investment.

If the dollar is inflating rapidly then an investment which simply maintains its value in real terms -- neither gaining nor losing real value -- will see its value in dollars increase and will therefore be taxed, heavily. The lower rate for capital gains tax was in recognition that not all of that gain in nominal value was real income. All of the major reductions in the long-term capital gains rate (i.e. reduction of the rate, shortening of timespan for "long term", and increase/removal of cap) occurred after highly dollar-inflationary periods (1934, 1942, 1978-1981).

Without a lower capital gains rate, during times of high dollar inflation the wealthy will shift all their money into non-fungible assets (real estate, artwork, patents, Persian rugs, domain names, antiques) which aren't fungible commodities with liquid markets and therefore can't be marked-to-market or taxed until sold. This kind of economy-wide, sudden, and simultaneous disinvestment would be a catastrophe for the economy.

Not to mention the resulting real estate boom would make the homelessness problem an order of magnitude worse in a matter of months. When your money is losing value every day, buying up every apartment in sight, jacking the rent to the moon, and evicting the tenants (so it can sit empty and maintain value without any management effort) is, unfortunately, a great strategy.

Note that the 1990's were a boom time for the US (Cold War peace dividend), and from ~2000-2020 we had a massive onlining of cheap Chinese labor providing a deflationary counterpressure to our outrageous money-printing escapades. All the cheap Chinese labor is now fully online and "Fed go Brrr" is in permanent COVID-hyperdrive, so the party will end real soon now.

Re: Killing TurboTax

#584

Post by CRConrad » Thu, Mar 04, 2021, 5:44 AM UTC

lolsal wrote: post #416

OwlsParlay wrote: post #326

Earlier quoted context omitted.

The US tax system is another one of those things about the US that looks utterly baffling to an outside observer from Europe. How on earth did it get into this state? How is this 'free'?

It is utterly bonkers; I wish it was different. That being said, it seems "freer" to me to tell the IRS what my financial situation is rather than let it dictate to me what I owe, and then have to fight the government in order to take a deduction for donating to GoodWill or the Salvation Army. I'm splitting hairs trying to play devil's advocate here.

Getting a deduction for that also seems bonkers.

It's your money, you can do what you want with it, so sure, give it away to charity if you want — but WTF does that have to do with taxes? You pay taxes on your income, and then you can give away some of what's left; it's not the IRS that wants you to give it away, so why should their cut be affected by that?

I'm pretty sure the US is alone in this weirdness too, as in so many others.

Re: Killing TurboTax

#585

Post by pfranz » Thu, Mar 04, 2021, 5:53 AM UTC

spyckie2 wrote: post #579

I really don't get why people want to kill turbotax. I get the following: 1. the tax system in the US is broken 2. It needs to be simpler ... 3. kill turbotax??? For many people, such as myself, turbotax is doing exactly what most people want to kill it for... simplifying US taxes so I don't have to think about it. Am I missing something? Do people just think oh, if turbotax dies, a free open source version of it is…

TurboTax is preventing the government from offering a solution and I wouldn't be surprised if they promote complicating the tax code. It's incredibly common for companies to promote additional regulation to prevent competition.

ReadyReturn[1] was a 2005 California Tax prep program. It mailed you a prepopulated tax form. It was incredibly popular during the pilot program and TurboTax spent $1.7 million lobbying against it.

Most people don't have complicated taxes, but I find even collecting all the forms from employers and institutions and filling out the forms a pain. I'm confident it's the most error prone part. I honestly don't think capital gains or HSA complicate things all that much if you're automating things. I don't care how complicated the tax code is. I have personal opinions on what they should incentivize, but don't care how it's calculated. Most countries offer prefilled or tax software to cover basic needs.

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

Re: Killing TurboTax

#586

Post by CRConrad » Thu, Mar 04, 2021, 5:59 AM UTC

systemvoltage wrote: post #517

lolsal wrote: post #304

Earlier quoted context omitted.

> It's a racket. Yea, possibly (I agree with you). It is as much a racket as lots of other things. Doesn't excuse it being a racket, but TurboTax is not an anomaly. > Government already knows how much you owe them. This is false. If you aren't taking advantage of deductions, sophisticated tax-deferred vehicles for retirement or tax-advantaged accounts for other investments, you're giving the IRS more than you have to…

Agreed, it sounds insane but I much prefer US system. It is easy to say "simpler == better". I'd much prefer the gov not do things for me and leave the control over my taxes by default . I understand people in other countries can do the same, but the default is big gov giving you a number upfront. Think about taxes as a negotiation process.

This haggling, suspicious, negative, even hostile mindset towards your own government is a big reason why the US is so generally fucked up. "Negotiation process"?!? That's how shirkers and tax criminals think about it.

Re: Killing TurboTax

#587

Post by decko » Thu, Mar 04, 2021, 6:01 AM UTC

mattwad wrote: post #27

Try freetaxusa.com if you're looking for a free alternative that has an equally friendly user interface!

I've been wanting to try it, but I can't sign up because they, for whatever strange reason, don't allow emails with foreign country tlds...

Re: Killing TurboTax

#588

Post by pfranz » Thu, Mar 04, 2021, 6:04 AM UTC

godelski wrote: post #254

leshow wrote: post #227

This discussion feels incomplete without mentioning "return-free filing". A lot of countries you don't even need to send a return because the government already has all the info you need. https://www.taxpolicycenter.org/briefing-book/what-other-cou...

The fact that this isn't in the conversation has always surprised me. Both Regan and Obama supported it. The Republicans did that whole "taxes on a postcard" skit, but we don't even need a postcard. We're talking about TurboTax, well how many of you also log in and all the information is already there? I don't see why we can't replace the 1040 with return free filing, or at least the 1040Ez

Grover Norquist has had Republicans sign "the Pledge" opposing tax increase since 1986. Reportedly, he also wants filing taxes to be painful so you hate the government and he opposes these measures.

In 2005, California had a pilot program called ReadyReturn where they mailed you prefilled forms. It was popular. TurboTax lobbied against it and it died.

Re: Killing TurboTax

#589

Post by pfranz » Thu, Mar 04, 2021, 6:11 AM UTC

OwlsParlay wrote: post #326

trymas wrote: post #296

Earlier quoted context omitted.

It's a racket. Government already knows how much you owe them. So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"?

The US tax system is another one of those things about the US that looks utterly baffling to an outside observer from Europe. How on earth did it get into this state? How is this 'free'?

In the early 2000s the US noticed most other countries started having an e-file option. President Bush thought the best way to "catch up" was to have a public/private partnership and created a system where "blessed" companies could e-file with the government. They must offer a free version for low-income people and the government couldn't offer a competing product.

Re: Killing TurboTax

#590

Post by pfranz » Thu, Mar 04, 2021, 6:16 AM UTC

lolsal wrote: post #416

OwlsParlay wrote: post #326

Earlier quoted context omitted.

The US tax system is another one of those things about the US that looks utterly baffling to an outside observer from Europe. How on earth did it get into this state? How is this 'free'?

It is utterly bonkers; I wish it was different. That being said, it seems "freer" to me to tell the IRS what my financial situation is rather than let it dictate to me what I owe, and then have to fight the government in order to take a deduction for donating to GoodWill or the Salvation Army. I'm splitting hairs trying to play devil's advocate here.

That's very similar to what's described in other countries. The government provides you with prefilled forms. In the basic scenario you sign and return. In a more complex scenario you amend it, sign it and return.

As a bonus, they could make it software and offer a way to file/check online--but I'd be happy if they at least did it via the mail with paper.