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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

#131

Post by dragonwriter »

ThomPete wrote: post #38
gamblor956 wrote: post #14

Correction: this proposal would not have simplified taxes (i.e., the California tax code). It would merely have simplified the filing of tax returns for the most common case, salaried workers receiving all of their income from a single source. Very big difference. HRBlock and Intuit are heavily vested in maintaining the current tax filing system. They are not, however, meaningful players in the attempts to rewrite th…

I am not sure I see what you mean with "merely" it's quite a big thing not to have to deal with it every year. In Denmark and many other countries this is a non-issue. The US should be too but too many interest from the lobbying of people like Intuit.

And the pilot actually proved that it was workable in California, as well.

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

#132

Post by Zelphyr »

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.

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.

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

#133

Post by [deleted] »

jkaptur wrote: post #116
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…

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".

[deleted]

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

#134

Post by dragonwriter »

noobermin wrote: post #20

I'm going to say this until I'm blue in the face: fix money in politics, and half of these issues will no longer be intractable.

In California, I suspect the issue was not intractable, just approaches wrongly. After the initial defeat in the legislature, lobbying the legislature to reverse course as the wrong approach: with the successful pilot, clear moneyed-interest-vs.-common-sense narrative, this is an ideal use of the initiative process.

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

#135

Post by dragonwriter »

lsaferite wrote: post #33
smt88 wrote: post #7

Earlier quoted context omitted.

Wealthy people are against that. They prefer regressive taxes, like sales tax, that will be shift much more of the burden to the poor. In fact, there's a whole batshit-crazy tax plan called FairTax that proposes changing all taxes to a simple sales tax.

Honest question, why is it batshit-crazy?

Well, at the rates usually proposed it's a massive tax increase on the poor (especially the working poor benefiting from the EITC) and middle class, and the rates usually proposed don't actually preserve revenue, so in reality it would be an even bigger tax increase on those groups. And it's an even bigger tax advantage to the capitalist class than the existing tax preference for capital income is.

Which is why "FairTax" support lines up with support for other proposals that hurt the poor and benefit the rich.

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

#136

Post by MaysonL »

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).

The thing is, there are a lot of people and industries lobbying to keep the tax system complicated: real eatate agents and home builders want the mortgage deduction, oil and gas industries want the depletion allowance, hedge funds want carried interest, et cetera ad libitum. It's nowhere near 0.5% of the influential people in the economy, plus the people it benefits, it benefits a lot, while everybody else, it grinds away a few percent of their welfare.

EDIT to add: plus the incentives for lawmakers are to keep the system complicated, so all the contributions keep rolling in.

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

#137

Post by SilasX »

chiefofgxbxl wrote: post #24

Just for thought: suppose the tax system became so simplified that only goods X, Y,and Z were taxed at rates a,b,c. You pay aX+bY+cZ in taxes per year. It would be easy for voters to campaign their politicians to lower tax rates and easily verify. Obviously in the real world there aren't 3 levers to adjust: there are probably thousands or tens of thousands. Apart from the lobbying, politicians may themselves desire t…

The other problem with "only tax three things" is that the government wants to raise a lot of money and so [the combination of] those rates end up being really high, and enormous resources are invested in finding ways to make X-instances not technically count as an X for purposes of tax law, and the tax code must balloon to fend off these increasing "attacks".

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

#138

Post by fnordsensei »

jkaptur wrote: post #116
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…

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.

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

#139

Post by hundt »

avar wrote: post #128
hundt wrote: post #103

FWIW, here's an email I sent to Prof. Bankman last April: --- I read with interest your letter about the Tax Filing Simplification Act of 2016, and your article "Simple Filing for Average Citizens: The California ReadyReturn." I agree that the tax filing burden on taxpayers is far too high, and I am encouraged that legislators are trying to do something about it. But I am concerned about the details of actually accom…

I've never had to file US taxes so this might be a stupid question, but how exactly are the people in your example worse off with ReadyReturn? Isn't ReadyReturn just e.g. summing up their reported wages for the return, which they'd need to do accurately anyway if they were filling it in from scratch? Yes, if you have a pre-filled in tax return nothing that the government doesn't know about & which might be deductible…

It's not a stupid question at all.

In practice the U.S. tax code is not quite as simple as "Here is the tax burden for your income level; tell us if you have any deductions." Right off the bat, you need to determine your "filing status" (single, married, head of household, and some less common options) from a list of five choices, each of which has different rules for all the calculations that follow. Furthermore, for a large portion of people making modest incomes, various tax credits, most notably the "Earned Income Tax Credit" but also education and child-related credits, cause enormous swings in their taxes, for example perhaps from $1,000 to -$3,000 (many people pay negative income taxes).

None of these things can be determined by information the government has. So for many people any "provisional" return that the government is likely to create will be very inaccurate.

Now, you suggest that maybe this would just be some sort of provisional return that could be adjusted to match your correct situation. That is a fine idea. But in order to make that convenient, the government would basically need to develop their own implementation of TurboTax. That has its own issues (is the government likely to do a good job? will they apply the laws in a biased way?) but even if they are resolved we are still talking about a vastly greater effort than "just give people a pre-filled return." So I would ask advocates for simplifying tax filing to either admit that they are demanding that the government author its own fully-featured tax preparation software, or explain how they will otherwise address the complexity of the U.S. tax code.

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

#140

Post by justabystander »

Honestly, I think it'd be better to start a non-profit that releases tax software, first. It could compete with tax software, like from Intuit & H&R Block, as most of the needed services are rather simple. It would either charge just enough to cover costs, or be completely free, if donations for the year was sufficient. The tax software support could be done on a contract basis, where people certified people could login and handle queries on an hourly rate. The work from home crowd would love it.

Build it out enough, and then push a few legislative mandates:

1. All taxes have to be easily payable in tax software.

2. All taxes have to be payable online.

3. Every tax jurisdiction has to offer a tax estimation service, where they can download pre-calculated data to use in tax software.

Should make predatory companies like Intuit disappear in less than a decade.

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