This is how is works in Australia. The Australian Tax Office will pre-fill your tax return online with income from your wages, interests, managed fund distributions, dividends etc. That maybe enough for simple tax returns, you can just accept their values and submit.

What they don't know is your income from sources like rental income or crypto. They also don't know deductions you are going to claim. In this case you will have to provide the details. Still free to lodge your returns online.

Pretty much every other major developed country operates like this. Here in South Korea for example filing taxes is as simple as logging into some government portal, verifying that the information they already have on you is correct, and making any corrections if necessary. 10 minutes, done.

The U.S is unique in forcing its citizens to waste countless hours and pay hundreds/thousands of dollars every year doing the useless unnecessary work of "filing taxes". Why is the system still this backwards? Either plain ignorance of there being a superior alternative, or a broken political system that can't get anything done. My guess is it's a combination of both.

For comparison, as an example of how other developed/developing countries do it:

I’m a South African citizen, I get an SMS that a pre-filled-in tax return is available online.

I can then log in to their online portal and accept it or amend it and submit it electronically.

Currently I can usually just accept and submit it.

Some years I might need to add or tweak income and expenses, but broadly speaking they are pretty correct.

They have all the income and benefit details from standard corporate employers, expense and contribution info from medical aids (something like medical insurance, but a bit more sane as far as I can tell), investment and banking contributions from financial service providers, etc.

You can opt for extra deductions which require extra paperwork from your side. And they don’t always have income info from side hustles or correct expense info from “unusual” arrangements between you and your spouse. Sometimes your $BIGCORP’s finance department can declare your benefits incorrectly which needs fixing.

But for most middle-class income earners I suspect they can just log in and click accept.

You can pay money and use a tax consultant to see if they can navigate the current rules for a better result, but unless you have a complicated setup you don’t need to.

> Why is the system still this backwards?

Intuit lobbying hard to keep tax rules complex.

Blaming "lobbyists" absolves the politicians of their responsibility. The fault lies with the politicians for creating and perpetuating this broken system.

(copy and pasted from another comment)

Like anyone else, politicians respond to incentives. US crony capitalism is a large-scale systemic failure, and the tax filing system (and under-resourced IRS) is just one symptom.

If you want a narrow target, you can blame the GOP activists on the US Supreme Court, or if you want to go beyond that, blame the GOP senators/presidents who appointed them, the Federalist Society, the GOP donor base, GOP-aligned media organizations, etc.

Gutting campaign finance restrictions was a vast judicial overreach, performed for partisan advantage and the benefit of corrupt wealthy patrons.

I'd add one more in there for a tighter focus -- the lobby group "Americans for Tax Reform", which opposes all tax increases, and specifically opposes any effort from the federal or state governments to provide pre-filled tax returns.

https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Oppos...

There's a word for those incentives.. "bribes"

The #1 most relevant goal for politicians is to get re-elected. (Personal enrichment is largely orthogonal.) Raising large campaign contributions is of obvious benefit to that effort, and is not directly a bribe per se. But it does have some of the same problems that bribery has.

It’s undoubtedly true that some US politicians have gotten bribes, defrauded partners or constituents, embezzled money from their campaigns or the government, used inside information to trade stocks, etc. But even if all of those were impossible, the nature of the US campaign finance system would create plenty of perverse incentives.

> Like anyone else, politicians respond to incentives.

Sure, but it's not like they don't have a choice. Regardless of any incentives, they're the only ones actually empowered to make these decisions. Lobbying, offers of bribes, campaign financing promises, etc. do not in any sense detract from their ability and responsibility to make the right choices.

Nearly everyone who takes any responsibility or even believes that there is such a thing as personal or professional ethics has been systematically purged from the GOP over the past few decades, and the GOP now has 6 votes on the Supreme Court and 50 Senators (=> effective veto of all legislation), and may well end up with congressional majorities after the next election.

You can’t un-screw a system by just telling the people inside who were selected for their mendacity and corruption to “make the right choices”.

> You can’t un-screw a system by just telling the people inside who were selected for their mendacity and corruption to “make the right choices”.

Of course not, but it's still the politicians (on both sides of the aisle) who are ultimately at fault for abusing their position and failing in their duty to their constituents, not the lobbyists for merely making suggestions or offering deals in their own self-interest. Restricting lobbying or campaign contributions wouldn't do anything to improve existing politicians' "mendacity and corruption". They'll just find other, less public, ways to serve themselves rather than their constituents.

> politicians who are ultimately at fault

In a democracy, it is the voters who are ultimately at fault.

But perhaps more to the point, it is the system that is at fault, and the system is very complex: institutions, physical infrastructure, social mores, common beliefs, canonical media and stories, traditions, language, ....

You can’t just point fingers at individual people in a large imperfect system and pretend that swapping them would fix it. Troubleshooting and improving large complex systems is really hard and improvements are usually incremental, except sometimes in extraordinary crises.

Yes. This is well known. They became so rich and powerful they had lobbyists (bag men) to protect their interests.

Intuit isn’t the problem. Politicians are. See Milton Friedman on this subject. A complicated tax code is used to reward and punish people. The tax code was complex long before Intuit came around.

https://m.youtube.com/watch?v=TruCIPy79w8

That has nothing to do with the issue at hand. All tax codes are complicated, and you can always spend days minmaxing your taxes (or hire someone to do that for you).

But the US is unique in the developed world as making filing taxes hell even if you don’t try to minmax them, and that is primarily due to tax filing companies lobbying against the IRS doing what everybody else does (and secondarily due to the GOP very much wanting filing taxes to be as painful and error prone as possible, and for it to be as expensive as possible for the IRS).

> All tax codes are complicated,

But the US tax code is an order of magnitude larger than the Swedish one. Which probably means that it is several orders of magnitude more complex (however that might be defined).

And yet as mentioned earlier in this comment thread, the IRS has already managed to automate this on their side, as they can do an “electronic audit”.

TurboTax is a relatively new product, and they haven't been big lobbyists for their whole existence. Why wasn't the tax process simple before then?

TurboTax was first released in 1984, according to Wikipedia.

That's ~20 years before Sweden got everything prefilled for some of the population. As an example.

No. TurboTax has been around for as long as people have had their own computers.

In the UK it's so streamlined some of my coworkers were genuienly surprised when I told them it's the end of the tax year - as in, that's something they have never ever think about in their entire careers. Taxes are paid automatically by your employer, if you only work one regular full time job then "filling taxes" is just not a thing you'd ever have to do in your life.

For many who don't have an automated tax return it could be easily. It amazes me the systems like bizum and bank transfers don't have a checkbox for "this ought to be taxed".

If you are not getting a VAT refund then you are paying VAT and it is in your interest that everyone does, so most consumers would select the box. The transfer is recorded, consumers would be complicit in the fraud if they didn't tick the box and that's enough excuse for both sides to want to play ball.

> Pretty much every other major developed country operates like this

cries in German

Most employees don't need to even submit a tax return as with PAYG your taxes are already collected by your employer.

If you do end up filing your taxes, you can access the prefilled tax statements. Software to do that is free and easy. If you want software advising you on how to get a bigger refund, you'll have to pay maybe $10-20, though the $5 software from Aldi works fine for me.

As an employee doing your taxes is optional in Germany as taxes are already deducted by the employer.

It can work ok if you're a single person with no children. However, you'll potentially have to pay a lot more tax if you're married where your spouse earns more or less than you. There several other reasons where legally you'll have to complete a tax return (e.g foreign income).

German taxes are really horrible, in general. They expect you to pay in advance for expected untaxed income (based on the previous year's return). Working out the taxes on the income from some ETF is a nightmare, unless your platform does it for you. Unless you really understand the system and can file your own taxes, then low-wage freelance work just doesn't make sense as the cost of doing the taxes can be higher than your income. This means people are trapped into not working.

The fun part about advances is that in the first year they don't have data to set your advances so you have to back pay the taxes for the first year in full after filing the first year's taxes in the second year in addition to now having to pay the advances on that year so even if you saved all the money you expected to have to pay in taxes during the first year you also need to have saved up enough to pay the advances but the more money you made (allowing you to set more money aside), the higher the advances will be.

You can negotiate to have your advances reduced but the government really doesn't like it when businesses (including freelancers and solo entrepreneurs) have a high difference between their advances and the actual taxes. This also goes for declaring your VAT (which depending on how much you make you'll have to do monthly or quarterly as an advance and then alongside your income tax) and while in that case you basically set the advance yourself you'll get in trouble if it doesn't match your actual VAT (difference between charged and paid).

You can file your own taxes and if you're a regular employee there are tons of non-commercial orgs you can go to that will assist you in doing that but if you're a "business" (even if it's just you and you haven't incorporated) they'll often not help you.

BTW the reason you can just forego filing your own taxes as an employee if you just want to be taxed on your wages (and don't have anything else to declare, e.g. interest on savings) is that your employer already had to do the taxes on your wages and benefits for you. So it's not like the government just does them themselves, it's just done by payroll instead of you.

This was semi-true until this year (if you didn't care about the often massive deductions you would have just for living somewhere other than your office desk, and only for as long as the tax office would not demand you to file taxes, which they could do for any reason, and often).

Now, with the 300 Euros of fuel relief, every employee will have to file taxes on said 300 Euros.

Of course, why would you trust a piece of software created by your government to fill out the forms in a way that benefits yourself instead of them?

This thread was not about deductions, but about the government pre-filling your tax-returns with data it already has about you. Parent was implying that does not exist in Germany, which isn't true. Or are you actually saying that the government will deliberately fill in wrong values, so that you have to pay higher taxes, even though the prefilled values are visible to you and discrepancies would be obvious (and a huge scandal).

There are several ways in which a software can fill data "wrongly".

If you are legally able to claim deductions, pre-filled tax forms that do not contain those deductions are by definition wrong, even though you may agree with individual form items. While this can be related to innocent mistakes and the sheer inability of the state to know the necessary information, sometimes it appears to be deliberate: The classic example is the Pendlerpauschale, which does not appear in Elster pre-filled tax forms even though the state does have all necessary information (address of your flat / address of your employer) to fill it.

If you accept these faulty forms, you will almost always pay more taxes than you have to.

> The U.S is unique in forcing its citizens to waste countless hours

It may be unusual, but it's certainly not unique; I have to fill in a tax-return every year, because I receive rental income. Anyone in the UK that receives income that isn't taxed at source by their employer has to complete one.

The last one I completed was 21 pages long, with notes for each page; a lot of the time I spent was scrabbling through my filing cabinet searching for my evidence.

That rental income plus my state pension and bank interest are the only taxable income I receive.

At one time I was a company director, and had to fill in personal tax returns. I folded the company, and returned to salaried employment, taxed at source; it took me a decade to get the tax authorities to stop sending me tax return forms that I was required by law to complete.

Even rental income has a fairly generous allowance before you need to file a full tax assessment.

The first £1,000 is tax free (presumably the cost of admin makes it easier to let that go).

And up to £2,500 you just have to phone / email HMRC.

The various allowances are certainly helpful but £1,000 doesn’t really factor in when you’re dealing with rental income. Almost every landlord will cross that threshold and should expect to fill a return in.

Hearing about how taxes work in other countries makes me grateful for the system we have here.

Most people never have to file a return. The people that do have a more complicated arrangement and probably need to summarise expenses, etc.

Sure for any actual landlords, but at that point you're running a business and that's pretty different from 'normal' income.

The allowances are more so ordinary people taking in a lodger don't get caught up in tax requirements.

You could probably choose to pay yourself a PAYE salary from a limited company and not need to complete a personal tax return.

There is another reason: a group of Republican lobbyists (Americans for Tax Reform) deliberately want to make taxes more difficult. The idea is that 1) if taxes are difficult, you will spend as much as your time trying to get every deduction and 2) a prefilled tax form from the government would look too much like a bill, so people will pay it without contesting.

Of course, TurboTax/Intuit also lobbies to keep taxes more difficult to protect their profits.

https://www.washingtonpost.com/blogs/post-partisan/wp/2015/0...

I dunno. Most people I know are 1099 / contract workers, and a lot of them get paid cash off the books. The government might have a rough idea of what they make, but it definitely doesn't know down to the penny. I keep very good books, but I have foreign bank accounts, crypto trades, subcontractors I paid over Paypal, people who paid me over Paypal, and there's no one system I'm aware of that could figure out what I actually owe in taxes. It still costs me about $800 a year through an accountant to file my taxes. (Luckily, you can write it off).

Until or unless everything is centralized and cash ceases to exist, I don't know how they'd really do it. In South Korea do waiters live on tips? Because in the US, almost all money made in the restaurant service industry comes from unrecorded cash tips; the actual wages are extremely low. The restaurant will attempt to estimate their workers tips and cover the taxes out of the fixed wages, but... this doesn't even get into all the other cash industries like stripping or moonlighting as a dominatrix. The US's tax attitude seems to be: You're on your honor, and most of the time we won't catch you, but not even Jesus can help if we do.

We should keep a broken tax system because many of your peers are paid illegally? Or because edge cases exist?

I should be a pretty typical middle-class example. Two salaries (me + spouse), a mortgage, limited other deductions. Yet every year I have to wait for various forms that the government already has, enter the values on paper or pay for tax software, hope I don’t fat finger a value, and wait 7-10 years for an audit. Heck, since Trump increased the standard deduction, I’ll probably be taking that soon (mortgage interest is near that threshold now), but still can’t just click a button at irs.gov that says “yup, that’s right, here’s my bank info for refund/payment”

Oh no. I'm just explaining why it's more efficient for the IRS to do it this way. I'd personally like to abolish income tax and only tax sales, with up to 100% tax on luxury goods and no tax on food, etc.

I don't by the "more efficient" argument.

The IRS could generate online forms (or snail mail) with what they know and let us add deductions and other income. They should know salary/wages, they could know investment income (not sure if broker report to the IRS, or just send forms to filers).

Even if the filer has to manually enter deductions, credits, etc, doing it on an IRS site has several benefits... no $50+ fee for H&R/TaxCut/etc, no $500+ for a CPA (for fairly typical tax situations), no worrying about whether online submission processed correctly (because you'd be submitting directly to the IRS instead of relying on a 3rd party to submit for you). Multiply that time/money/stress savings across the population and it's a MASSIVE benefit to society.

No, I mean, the efficiency is partly amplified by keeping people in constant fear. It costs them less and it increases compliance. Like, those fuckers just put a question about crypto on the front page this year and I just decided not to lie on a sworn document, and basically spent 2 months figuring out what the fuck ridiculous chain of events led to me selling some bitcoin in 2021, to be on the right side of 'em. And they probably never would have known. But it's the fear that they might've known, you see, that makes them so efficient.

That sounds pretty regressive. A massive tax burdon on a low income family so that high earners don't have to file income taxes.

Well, really it's progressive if it only taxes stuff you don't need to buy. Here's what I think:

Fuel and food, no tax.

School supplies, shoes, clothing, any item under $100, no tax. Over $100, ramp it up.

Diamond rings, 100% tax.

Alcohol and cigarettes, 20-30%.

Used cars, no tax.

New cars, 10% up to 100%. Credits if they're electric or extremely fuel-efficient.

Playstations, high end sneakers, Smart TVs, iPhones, rims, jewelry, expensive furnishings, rugs, anything better than your basic washer/drier: 100% tax.

Books: Free and subsidized by the government, as many as you want, any book ever written.

Healthcare: Free.

College: Free.

Basically under my plan, as long as you get stuff you need for your family, you pay no tax. If you get stuff you want for your pleasure, you pay tax on it.

How's that regressive?

The only real downside I see is the potential for a massive black market in luxury goods, tobacco and alcohol. But legalizing and taxing pot and prostitution should take some of the sting out of that.

So low earners are allowed to eat basic food, but pay astronomical taxes for any luxuries in their life. Which you and I could easily afford.

Well, that's a very glass-half-empty way of looking at it. I'm saying that high earners have to help subsidize lower earners the more luxuries they accrue in their life. It's not the earning after all that makes the difference between rich and poor; that's why the wealthiest people in America pay no income tax. They're not earning anything, officially. But boy do they spend. So maybe, I don't know, if you're really concerned about people getting that one luxury in life then there could be an exemption, like if you make under $50k a year you get refunded the VAT on $2k of luxury purchases. Ok? But it has to be small enough to prevent the ultra-wealthy from using it as a loophole.

I think you drastically over-estimate what percentage of income the rich spend on luxury goods. People don't stay rich by buying things.

I consider myself pretty high income. If I was just taxed on consumption, I would bet I'd pay probably half as much tax as I do now.

Yep. Luxury goods are at least half aspirational. Until the shortages, always super buys on BMW’s with 15k in the Miami-Ft. Lauderdale area.

How is that any different right now?

Low earners drive some shit cars, while you and me can (probably) afford a brand new Audi. How is that fair? /s

>>Which you and I could easily afford.

That's the key part here. You tax those who can afford it the most.

An Audi? Heh heh.

> Why is the system still this backwards? Either plain ignorance of there being a superior alternative, or a broken political system that can't get anything done.

Neither. There is awareness of the alternatives, and the political system can get things done for it's real constituents. The problem is a malevolent political system that primarily serves a class whose interests are opposed to the mass of the citizenry, to wit, a narrow capitalist elite.

(People will point to the tax prep industry, it's lobbying, etc., and that is part of the problem; an bigger part, however, is the political faction favoring lower taxes in general for the elites that likes to maximize the perceived pain of taxes for the masses to generate support for elite-favoring tax cuts; they are adamantly opposed to procedural simplification that minimizes the pain they leverage.)

Yes. So see my “methodology” above. It is the systematic way for you to do the part that is missing. With various weird-ass forms, this is STILL a lot of work. But it will be substantially correct, where substantially means that the IRS will correct any errors without considering you a miscreant.

“Capitalism” does not mean “every use of money that I disagree with”.

It also does not mean “greedy immoral bastards who sell political influence to the highest bidder”.

There are lots of corrupt things about the US government. That’s not capitalism; it’s corruption. It can happen in any form of government; in the US it just happens to be much more visible.

However, Capitalism inherently rewards corruption. If you are a corrupt politician and earn $10 million through corruption you can invest your money and the capital gains alone will exceed any politician's salary and this is ignoring that you will earn more every single year due to compounding.

You can burn the amazon down and then invest the earned or saved money and economists will tell you, you are doing well and that you have a god given right to that wealth.

Communism doesn't even try to address the root cause, it's actually making the problem worse by concentrating everything at the top.

Almost like all the "isms" are total garbage. The best route forward would be to examine all the "isms", find the parts of each that can be brought together to make a new path forward. Unabashed capitalism is a scourge, just like any other "ism" if left unchecked.

Since we're having the semi-annual "how do taxes work in other countries" thread, here is my experience as an American living in Switzerland. Though I have been here a while, I still find it interesting and a little weird.

At the beginning of the year, you get a bill for that year based on what they think you will owe. This bill is due on October 31, i.e. you need to pay your estimated income tax before you have earned all that income. This is especially strange because most people will get a 13th month salary at the end of October (your annual salary is split into 13 months, the extra comes in time for Christms presents?). You are expected to save adequately to be able by the end of October.

Banking secrecy is not dead in Switzerland. There are no longer anonymous accounts, and banks share information with foreign governments. However, there is banking secrecy between the banks and the government. On the other hand, we pay a wealth tax each year (it's small), so you need to declare each account and how much you had in it on December 31.

To create an equal playing field between house owners and renters, house owners pay an imputed rent cost for how much they would have paid in rent for their house. This is added to their income before taxes are calculated. In my case, this means my assessed income is around 25k higher than it otherwise would be.

There is no automatic form filling in my state, but there is free tax software (Java app which runs everywhere), and it is pretty easy to use. If you have questions, the local tax office will nicely respond via "secure email" in 1-2 days.

Taxes are very progressive and family friendly. With 4 kids and one income we pay 6.5% combined local/state/federal on income of around 120k (plus imputed rent).

There are no property taxes. For the wealth tax, most people who own houses never pay off their mortgages. They will typically have a mortgage for 50% of the house value (which can be quite high, a typical house where I live is between 800k and 1000k, and more in bigger cities). The interest can be deducted, and the mortgage amount from the wealth tax.

You forgot the part where you need to also file and pay US taxes although you may no longer be living there, have any income or assets there but you still need to pay as long as you hold a citizenship or green card.

> you still need to pay as long as you hold a citizenship or green card.

wait, I thought this only applied to US citizens, not Green Card holders

Green card holders are not excempt from this: https://www.irs.gov/individuals/international-taxpayers/freq...

Are you sure about the dates? As far as I know, you need to file your tax declaration for the previous fiscal year by mid-March, and pay before the end of March. But as you say, you're supposed to pre-pay most of it before based on an estimation (though you have to do the estimation yourself, not the government). You don't have to pay all at once though, you can pay in monthly installments with no penalties.

Which canton? As I recall, Zug is near Zürich and has very low tax rates. Many highly paid professionals make the daily commute.

Aargau, normally considered higher tax, but we have four kids at home.

It’s a nice, if overly simplistic sentiment.

It’d be nice if my 1099s were electronically filed with the cost basis. But they’re not. So the IRS, every year, thinks I’m going to owe way more than I do.

The IRS also has zero idea about the $4000+ of sales tax deductions I’m filing for this year.

And finally, if you do get it wrong, you don’t go to jail. They send you a CP2000 letter. (Remember those 1099s? I forgot one one year.) You fix the problem or show them their error. They’ll even waive the penalties the first time. It’s a somewhat easy process.

I agree. The IRS definitely does not know how much I owe each year.

However, they do have an estimate and the vast majority of people would accept this estimate. So I think it's reasonable to suggest it ought to be provided.

I think the strongest counter-argument against this approach is in regards to bad actors and who discloses first. If you're thinking about hiding income and the first step is the government telling you what it thinks then you're very likely to continue to conceal and/or have a defense against a charge of concealment down the road ("I just used the IRS figures!")

It's a much more difficult situation for a bad actor if they have to disclose first without knowing for sure what the IRS knows.

"Estimate" implies someone is trying to... estimate something. The IRS has partial information. They don't have anything approaching something that anyone could reasonably call an estimate, and this isn't just an example of HN pedantry, it's an important distinction.

They know some of your income, but not all of it. Your 1099 income for the year is getting filed by your clients at the same time you're filing it, so all they know is what your AGI was last year. They know your expenses from last year in terms of the numbers, but they haven't been checked (last I saw, they were 3-5 years behind on cross-checking and validation depending on type of return). So they could plug the number in, sort of.

So they have your reported info from previous years, and a best guess at some of what this year's information might be.

So give me a partially filled out form with the information they do know then. Fill in the standard deduction, let me do the extra credit work for itemized deductions if I really want, eg I find taxes fun to do. (Some 90% of filers just go with the standard deductions.) Don't buy into Intuit's nonsense that the current system is good for anything other than their bottom line.

Standard deduction varies based on your filing status (single/married joint/married separate/etc). IRS will not know if that changed in the year.

So the IRS calculates for each filing status, and you choose one. This would be a lot to ask years ago, but nowadays many citizen-facing government processes are web apps. Think TurboTax pre-filled with whatever has been reported.

A best effort calculation done with partial information is a type of estimate.

I agree, this won't work for a big class of people. It won't work for me. But it will work for the majority of tax filers who don't have a 1099 and who don't file a schedule A, B, C, D ...

My tax return last year was a half inch thick, printed out. I had to file on paper. I very much understand that this doesn't work for everyone. But it works for most people.

Where I'm living, the government does the taxes for you and then sends you a notice to check them.

That last bit? That's important - you get to check them. You can adjust if you should need to. Guess what most folks don't have to do? Check them. This works because most folks have simple returns. They work, might or might not own a house, might have a bank account, might have a retirement account - and that's about it. The government already has what it needs for most people. But you can check them and adjust if they are wrong. Of course, you can just not bother, too.

Is the system perfect? No, but it doesn't need to be. It merely needs to have better overall tax compliance than another system. When taxes are easy for the vast majority of your population, the governement has a better collection rate and can spend manpower auditing those that need audited (perhaps audit more complicated returns from the well-to-do instead of Ordinary Married Citizen that makes 50k jointly) and they can generally spend less money doing things like printing forms and manning question lines that don't give answers that constitute legal advice.

And seriously, in these systems, hiding income is still a crime. So those folks that just "used the IRS figures!" still have the chance of going to jail. Even if they never get caught, the automated system still wins because of the other benefits.

> the vast majority of people would accept this estimate.

And the vast majority of people would then overpay. The IRS knows income, but they don’t know expenses.

This would be true if it weren't for the standard deduction. Something like 90% of all filers opt for the standard deduction, obviating the need for itemized expenses.

Almost everyone would be best served by IRS calculated taxes. It's the wealthy and those with non-wage income who need the alphabet schedules.

> those with non-wage income

This is a lot of people now, thanks to the gig economy. Similarly, farmers plus people who work for tips (at employers that do not centralize tips).

Genuinly curious: do people in US report tips on their tax forms? (forgive my ignorance - tips are much less common around where I live)

Not if they are cash tips, obviously.

Because why would anyone do that. But legally speaking, yes, you have to.

I like this argument more knowing it circles back to the "guess what the IRS knows" game earlier. :)

Ok- If you have extras you are going to claim- do it. You are the exception. Why force everyone else who doesn't run a business or claim expenses to do it.

Obviously it's a joke, but if you get it wrong, they send you the right amount and then you pay it (or they pay you). As long as you are close with your on-time payment, the interest is very reasonable on small differences. It's probably cheaper than paying for turbotax if you would have to pay for that.

The best is the 50 cent check in the mail… literally the postage cost more to deliver the return check.

Tax is rounded to the nearest dollar though.

I can confirm I’ve received a check for $0.01 from the IRS. My understanding is it was because of miscalculation of interest owed.

What’s crazy is that unreasonable taxes is one of the main reasons _why_ the British settlers rebelled against the Crown and went on to found America. The fact that nearly 250 years later we have an absurd, convoluted tax system, that literally requires specialists and companies with absurd market caps, for example Intuit has a $137B market cap, shows just how broken the system has become.

The central problem is the refusal of US governments (state & federal) to pay people money to do things they want to encourage rather than give them tax credits and whatnot.

Taxes shouldn’t be used to get people to do things or not do things. Taxes should be used only to fund the essential services of the government: common defense, a legal system to enforce contracts, and that’s about it.

When taxes are used as a means of control, that’s totalitarian. Tax policy should always be neutral.

Technically there's no difference between the government deciding to:

  1. give everyone who does X US$300
  2. give everyone who does X a US$300 tax credit

Both rely on the collection and disbursement of government revenue, which is typically accomplished via taxation.

However, 1. does not introduce any new clauses to the tax code. 2., by contrast does, and it generally functions as a slow steady drip, drip, drip of new clauses.

We therefore end up with an extremely complex tax code, instead of a simple tax code, and legislative acts to pay people for doing things we choose (via political process) that we want done.

The main difference is that not all credits are refundable. If you have a $7500 nonrefundable credit, but only have a tax liability of $5000, that extra $2500 just vanishes.

Tax should also control for externalities. Especially 'common good' pollution/destruction/captation.

It's too easy to make a company go bankrupt with LLC, so taxes are the only way. Unless you have a better idea? (I once had a libertarian explain to me the owners/investors should be liable for externalities, and in this case, taxes shouldn't control for it. I couldn't really disagree, but even staunch communists understand the issue with that).

> Tax should also control for externalities. Especially 'common good' pollution/destruction/captation.

The problem with this approach is all it does is it legitimises pollution/destruction/captation if you just pay a tax on it.

Not even a penalty for wrongdoing. Pay a tax and you’re fine.

So you wouldn't be in favor of a carbon tax? What about a tax on tobacco sales in a universal healthcare system? (to offset tobacco users' additional healthcare costs)

I believe that tobacco use is actually beneficial under a universal healthcare system. Dying early from cancer is a bummer at an individual level, but much cheaper than getting old and the additional care needs that come with that. So you'll be paying almost as much in taxes as someone who doesn't partake,while getting a smaller amount of retiree benefits in return.

Maybe there should be a tax rebate for smokers, so they can buy more cigarettes?

You don’t just drop dead of cancer. There is an extensive treatment process involved which is rather expensive and not guaranteed to work. So this argument doesn’t really hold.

I wouldn’t.

And “sin taxes”, i.e. tobbaco taxes and carbon taxes are a logical fallacy.

Tobacco tax won’t offset the additional healthcare costs for smokers on average, so it ends up just being a penalty for having a bad habit, and carbon tax will simply put a price tag on high carbon emissions.

Kind of tangential - the tobacco tax is a fallacy in another way: without taking into account quality of life adjustments, smokers are actually a net benefit for society in healthcare costs [1]. The simple reason is because they die earlier and most healthcare costs are incurred near the tail end of life, so by shortening those final years it becomes much cheaper for society to pay out.

1: https://bmjopen.bmj.com/content/2/6/e001678

How many people die per year of second hand smoke? Smokers impact non-smokers significantly.

The "essential services" are kind of the big thing in dispute -- you say "common defense, a legal system to enforce contracts" and that's a typical libertarian perspective, but certainly not the only set of essential services that reasonable people could posit for their government.

Well, Intuit lobbying/bribery has a lot to do with it in the last couple decades.

I was referring to the complexity of the tax code, not the filing system itself.

Complexity of the tax code is just part of the system Intuit wants. If taxes were simple you wouldn't have to pay for unique software right?

While I absolute believe that Intuit and others are responsible for the lack of (1) free, highly functional e-filing and (2) response filing, the complexity in the US tax code is beyond their purview and precedes their existence.

“Me and my homies woulda be stacking bodies by now”

- George Washington, probably

you don't really go to prison unless you're going out of you way to do something really nefarious

it's also super easy to setup a payment plan online now if you really mess things up

well, I am walking around free so, for sure you don't go to prison but you pay a penalty perhaps. In my case I just paid it. It was an honest mistake and they did not bust my chops over it, they did charge interest, which is stupid. But, fine, if your computer can figure it out why not just send me the bill monthly like my city government does?

IRS is currently in the MVP phase, waiting on buy in from the steakholders on UX improvements

ya, so why not just send me a statement once a month, the power company does that, the cell phone company does that, the city I live in does that, etc.

Just send me a statement, you made this, you get this much deduction for the other crap or whatever.

No stupid W2, W4 1040, bunch of mumbo jumbo from the 1950's that a few companies are ripping us off over IMO.

That's basically how it works in Germany.

There is a formula in the law that specifies how much if your salary gets deducted every month based on specific criteria such as your marital status, your religion (yeah church taxes), whether it is your primary or secondary job etc.

That amount is calculated to be enough (a little bit to much in fact) to cover taxes for most people employed with a single job.

Unless you have extra income or deductions beyond a certain amount you don't have to file any tax return.

If you want to file one (pre filled with what they know) the government calculates what you need to pay/are owed and you have the right to dispute that.

You can use the free digitalised version of the former paper form or you can use a number of (often inexpensive) commercial programs

German efficiency!

I like it, my city government sends me a statement once a month, says you owe this amount for police, that amount for fire, some other amount for sewer and water, some amount for schools. Maybe I disagree with some of the amounts, fair to discuss, that's democracy. But they don't play that idiotic game the feds do, you owe a certain amount, if you guess it correctly, or if you on purpose short it but we don't catch you at it, then nothing happens. But if we randomly catch you getting it wrong then we fuck with you. I hate that.

In the UK, I’m told how much I owe. A year later, I get fined because they told me the wrong amount.

You do not have to guess “what the government knows.” Download your income transcript. See the “methodology” I replied above in response to this comment.

The alternative is:

Gov’t: You owe us money. We took the amount we want directly from your income.

Me: But shouldn't the amount be lower because of X and Y and Z ?

Gov’t: Send us all the right paperwork and we might give you back some of what we took if we agree with your claim.

I actually like this version better (and it's also what I am used to), but I'd see people being uncomfortable with that arrangement.

My employer pay taxes for me based on either a table or percentage (this is up to me). At the end of the year our tax authorities sums everything together (income, capital gains, ownership, debt and so on) and sends me my preliminary tax report for me to verify and make changes to. For normal people it's usually correct with most deductibles already accounted for. It's easy to fill in any other deductibles or income that is not already accounted for. This year it ended up with the government owing me approx. $2000.

The best part is your employer already sent them the income tax money you owe them but you still have to tell them how much money someone else gave them. Its an absurdly brain damaged system.

Having to spend our own time, money and effort in order to work out how much money we have to pay the government for their crappy low quality services. Just yet another humiliation the government imposes on citizens.