They really don't have even close to all the data. The irs will generally have income numbers, as those generally must be reported through 1099k, 1099, and w2, etc. But they have no information on your expenses, depreciation, etc.

So they only know your revenues, not your expenses. And this applies for business as well as personal.

This is like when people say, "I don't know anybody who voted for the other party!"

Lots and lots and lots of people don't have any expenses. They don't itemize. They don't want, have, or need any of the stuff you're protesting about. They have a job. And that job reports their income to the IRS. End of story. Case closed. That's it. That's their entire situation.

You're imagining another kind of person, but I'm not talking about that other kind of person.

To put it another way, there's little reason to not (extremely) simplify something for, say, 60% of the population, just because it's going to remain complicated for the remaining 40%.

If your entire situation is a W-2 and the standard deduction, then the 1040ez is a breeze. You can fill it out online and submit for free in 15 minutes.

Sure, but more than half the population doesn't itemize, and doesn't end up reporting expenses, depreciation, etc. Some people would need to provide supplemental information to the IRS, sure, but that's a minority of people.

You missed the conclusion/point of the reply. It's that I (personally) don't trust the government and banks/agencies enough to actually make this a trustworthy proposition, and I have data-points to back up my intuition.

I didn't miss the point, because the point only applies if you're itemizing in the first place and, as pratheekrebala mentions, we're talking about the vast majority of folks who don't.

And, in any case, the question isn't, "Will the IRS ever make a mistake?" Obviously they will. The question is, "Will the IRS make fewer mistakes than the mass of folks who don't itemize and who have simple tax situations?"

I think that's clearly true.