The IRS can say "this is not a valid business expense." You can say "it clearly is a valid business expense and should be deducted!"
The IRS can say "this is contractor income." You can say "it clearly is an down payment for subcontractors, you can see the money leaving here!"
These are two obvious problems you could have, and it doesn't even require dishonesty on the IRS' part. Maybe one of your subcontractors is trying to cheat the system and is jamming you up?
Further.. it feels like the goalposts have moved on this since it last came up. I don't need the IRS to do my taxes for me, I just need to be able to login to the IRS, pick a form, fill it, and submit it.
E-filing should be free and available to everyone. If you have that, I'm not sure what the value of having it prefilled for me is. In particular, if you just have a single W2 to work from, there could be a 1040-SUPER-EZ where you just enter a serial number from your W2, have it fill from that, and then submit.
You can make this easy without putting everyone under the thumb of the IRS.
How are they at a disadvantage? Before, they had to do all their filing themselves, after, they have to also do all the filing themselves.
That sounds like a big difference to me. The former would require government knowledge of every single transaction you make/receive, while the latter does not.
You and I don't do that, but rich people and companies do, if a tax increase is going to impact you and I by $100 it's barely worth the email that will be ignored. If a company is going to be hit by $100m, then it's well worth spending $1m to carve out an exception.
> All these are just giant waste of time to majority of the population in the country.
It works too. Tax return day is ingrained in the American Psyche through cultural output (TV), there is a constant undertone in the US that taxes are bad and the government is stealing your money.
Get rid of tax day and make 70% of the country not have to worry about it other than a line on their payslip and as well as making things far more efficient for both the taxpayer and the government (thus reducing government spending), it changes that cultural balance. Few will care about taxes, and that means the pressure to introduce a 0.1 cent drop in tax (which is structured to benefit someone on $150k by say $2 a week, but benefits people like the Koch Brothers by $200k a week) goes away.
Each month I get a payslip saying I've earned £xxxx and £yyyy has been taken in various taxes and other deductions (from pension to [optional] healthcare, some of which comes off pre tax, some post tax), and the balance is transferred into my nominated bank account each month.
At the end of the year I get a summary from my employer called a P60, which shows how much tax I've paid.
If I have complex needs I then have 9 months to go to a gov.uk website, fill in that data, and either get a rebate or a bill. If it's a bill then they adjust my tax code (which defines the deductions) the next year it takes about 10 minutes (or I can just pay straight away), if it's a rebate they pay it direct to my account (or they can adjust next years deductions)
For self employed people then, but you likely have an accountant who handles everything, and pay yourself via dividends, making large enough tax savings to easily pay accountant fees (which for a small business is pretty low)
I don't consider tax a burden, I consider it the cost of living in a western society. I don't have to pay them - I could move to Svalbard or a country that would take me and pay taxes in that country. Even Americans can do this (and get rid of their US citizenship - saying "no I don't want the benefits of American society")
Not just industry lobbyists. Another big part is Grover Norquist's "Americans for Tax Reform" and similar groups. They have a lot of influence with about half of Congress.
Here's a PowerPoint presentation [1] Norquist presented to the President's Advisory Panel on Federal Tax Reform in 2005 explaining their opposition to free filing.
It's short so I'll paste the text from each slide here, with the slide titles marked with dashes, so people don't have to find a copy of PowerPoint (or LibreOffice or Keynote, which also can open it fine).
---- Implementing a “Return-Free” Tax Filing Scheme
Presentation to the President’s Advisory Panel on Federal Tax Reform
Grover Norquist
President
Americans for Tax Reform
May 17, 2005
---- The Current System
Tax filing is citizen-based – taxpayers tell the government what they earned and owe
---- Under Return-Free
Tax filing would be government-based – the burden would be on the taxpayer to challenge the government’s findings -- essentially an audit of every single American taxpayer
---- The Fox Would Guard the Henhouse
The same agency that collects taxes would be the tax preparer – the motivation to maximize revenue would dominate both ends of the process
---- Return-Free is a Tax Increase
The true goal is to increase revenue. The government knows few taxpayers will challenge its findings
---- Taxes Should be Visible
Doing taxes keeps citizens aware of the tax burden imposed upon them by the government. A Return-Free scheme would allow the government to raise revenues invisibly
---- The California Example
The State would not guarantee the accuracy of the returns it prepared – the taxpayer was removed from the process, but left with the responsibility
The pilot program achieved 50% less uptake than planned
Comments by CA officials tell us that the true aim was increased revenue
[1] http://govinfo.library.unt.edu/taxreformpanel/meetings/docs/...