My response is:

>Nah, you're missing the forest when looking at the trees. Go bigger.

Why are we even having to file our own taxes? The IRS already checks everything. They have all the information that you enter into these systems (in fact, turbo tax has frequently had my W2 before my employer gives it to me, as well as many other documents).

So having us, or some middleman, doing it is double work. Let the IRS do it (because they determine if there is fraud or not), they send you a copy and you send it back either as is or with modifications.

If taxes are done this way who cares how complicated it is? (I'll hedge that in that it is harder to check the IRS's work, but I think less people care about this)

"Government: You owe us money. It’s called taxes.

Me: How much do I owe?

Gov’t: You have to figure that out.

Me: I just pay what I want?

Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too.

Me: What if I get it wrong?

Gov’t: You go to prison"

[1] https://twitter.com/jordan_stratton/status/11181414550616719...

"I give myself a 5 and deserve a 5% raise" Oh well you only get a 2% raise.

Just lazy management that event "delegates" the only part of the job they are actually supposed to do.

Sure, your government could calculate everyone's taxes but I'm guessing those taxes would need to go up...

I guarantee you'll get a discrepancy letter.

Supposedly a political gambit from the right. The idea is if paying your taxes is painless, you will cease to notice them. But the more painful paying them becomes, the more attention you will pay to what you are paying, and then the more you will object & vote to lower your taxes.

- We (R) don't want taxes

- We will make filing taxes the most cumbersome thing possible

- People will hate taxes

They rejected her return because I kicked two of the numbers on the EIN of one of her employers. The rejection was quick too, as we got the email about 20 minutes after submitting the return.

I always knew that the IRS checked your return, but I always figured it was something that eventually happened. I didn't think they checked everything as you submitted it. I don't know why I though that. Guess I pictured the IRS computer as an old IBM S/360 with core memory that did everything in batches.

I think that idea is common. But why wouldn't they automate it with modern(ish) hardware? It saves them money to do that. Just like it saves H&R block by creating a program. In fact I'm more surprised that H&R didn't flag it before you hit submit.

>> Let the IRS do it, they send you a copy and you send it back either as is or with modifications.

That's why you check it.

And to respond to a possible next question, do we trust TurboTax (or others) more?

> Also, if you have other income with no W2 it needs to be reported.

All those other forms that are handed to you are ALSO already handed to the IRS. For example the 1099. The W2 was an easily verifiable example of how they already have this information before you receive it. The gov already has copies of all those forms. So really as tax payers we're paying for the IRS to do our taxes and we're paying for companies like TurboTax to do it as well (assuming you don't do it yourself)

What I don't understand is why we can't have the IRS running their own tax prep website. The government seems to be capable of running other websites just fine.

But, the core problem is that in the US we use the tax system as a method for distributing subsidies for various things. Buy a solar panel? Instead of writing you a check, we give you a tax credit. Have a kid? Tax credit.

You could certainly simplify the act of filing taxes, but HR Block and Intuit lobby heavily against that. As far as moving away from using it as a distribution mechanism for subsidies, that complexity could be removed from the tax code but it will get pushed somewhere else instead. I think most people would prefer getting their child tax credit through taxes than having to apply at a welfare office and get a check.

For example, my tax situation is not terribly complicated. But looking at what I paid my accountant to do, there's precisely 0% chance that I would be able to do what he did and get back as much as we did without spending weeks of my life reading tons of IRS regulations and rules. This is exactly why I pay him to do it for us, and exactly the core of my point - doing it right and getting back the most is not easy at all without assistance whether that be software or an actual licensed professional.

I would bet that the majority of Americans get more back through the standard deduction than with itemized deductions.

Cool. Like what?

He actually just does them for free because my wife has an LLC in her name and we pay him to do the LLC taxes and other stuff. And he said the hardest part is doing the LLC work and we were already paying him for that - so since our returns were actually quite simple he'd just file them for us because the hard part was done (and paid for). Not sure what it normally goes for. I think you're correct that it's around $400, though. And in that case, we definitely net out much more than the $400 we would be paying if we were paying. I'm sure every situation is different, but for us it's a clear win. And if you're wondering - no we aren't funneling losses through the LLC or anything like that. The LLC is profitable and only increases our income which is why we figured we would get screwed like my coworkers with the tax changes, but somehow did not.

EDIT - 0.5% meaning my effective tax rate is 0.5% lower.

I ask because I once did go to a CPA, after first filling out the forms myself. The tax bill he computed was identical to what I came up with, so I concluded he provided no value over doing it myself!

Now of course, once I learned this, Schedule A was a breeze. But it's not something I expect a common person to know, and it's unfair that some of them may be overpaying in taxes due to a (nontrivial) piece of knowledge.

And then I'm always wondering if there are any other deductions I should be aware of.

Thus, no one is simplifying, for their own reasons.

To me it just feels wrong to incentivise living a certain lifestyle by getting a discount at just existing. It is great when it incentivises the things you want, such as hybrid cars or something, but what would happen if someone wanted to give you a discount for purchasing gas cars when they become less common because of relations to the oil and gas industry?

Or maybe tax incentives for purchasing private telecom service if/when municipal networks ever become commonplace?

If you they can lower tax liability for a certain amount why not lower it to the actual level needed across the board instead of keeping some cushion to give away coupons?

Whether or not we can imagine a world where buying a gasoline-powered car or private telecom is considered a social good is less of an issue than whether we want to be able to incentivize those things should they become necessary.

It shouldn't be the IRS's business to reward people. If there is a reward for doing X then there should be a fund specifically for giving money to people in those scenarios completely independent of taxes.

Its much more transparent to say "we have a fund for X, mail us the required proof and we will send you a check", then it is to add layers and layers to the tax code. That also means everyday people are aware of what our representatives are arguing about and the dollar amounts being held responsible for the programs.

Then we get simple taxes without all of the itemizing nonsense.

Would you argue that potato chips shouldn't be taxed, or that produce should be?

If there is some reason you report produce on your tax documents then no, it should not be there.

That and form 8960 (Net Investment Income Tax Individuals, Estates, and Trusts) are both direct contradictions to you assertion.

  - The problem of notational vs real gains
  - The fact that capital gains are already taxed once at the corporate level
  - The fact that taxing capital gains is a tax on savings and we want to encourage savings and investment
  - All of the theory on how differentiated taxes on present vs future consumption is a flawed idea
    (see https://en.wikipedia.org/wiki/Optimal_capital_income_taxation)

Especially since there are countries that do tax at least some capital gains at the same rate, and they don't seem to be doing appreciably worse than other countries in a similar economic bucket that do not. Indeed, it seems to be more popular among economically liberal countries with flat income taxes.

Perhaps, but the US is not past that point. Every level of income pays a higher rate of taxes than the level below it according to IRS reports.

Separately, none of the issues I listed are hypothetical.

Does their definition of "income" include capital gains for the purpose of those reports? I don't see how this could possibly be true if it does, given that capital gains constitute the largest part of overall income past a certain point on the scale.

Yes

https://taxfoundation.org/summary-latest-federal-income-tax-...

https://www.taxpolicycenter.org/taxvox/how-capital-gains-aff...

I'm not sure where it is today, exactly. But it's easy to see that it's always going to be there, simply by virtue of increasing proportion of capital gains at higher income levels.