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by jon-wood 1805 days ago
This seems like another case of American exceptionalism. Countless countries around the world do this, they do it by having employers report income when they pay people. I’m in the UK and other than a short period of being self-employed I’ve never had to fill in a tax return, I just get the amount I should deducted from payroll each month and get on with my life. Occasionally I’ll change jobs which causes my tax code to move and I get a cheque in the mail from HMRC for the amount I overpaid.
1 comments
leephillips 1805 days ago
Employers report that in the US, too. But that is just the beginning of the story. The IRS doesn’t know about your charitable contributions or your extra income from that side-job you did for your uncle until you report it. On the form.
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Dayshine 1805 days ago
The way it works in the UK is there's £1000 of untaxed self-employed income.

So you only need to bother with a "self-assessment" tax return if you earn over £1000 of casual income.

And then, if you have less than £1000 of expenses related to that income, you don't have to justify the deductions so you just enter the income as a number and you're done.

Charitable contributions are claimed by the charity at the basic taxpayer rate. So when you donate £1 they can claim 20p from the government.

You only need to itemise your charitable contributions (to claim back the difference between the 40p of tax you paid and 20p the charity got) if you are a higher rate taxpayer, which is something like £70k per year gross, so you're well into <5% of people here.

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hakfoo 1805 days ago
I'd expect if we moved towards a direct-bill model, tax policy would begin to optimize for "causes least frustration for the 200 million common-case taxpayers who do the direct billing."

We'd probably see more monkeying around with the standard deduction. I know for me, and presumably a lot of people (especially those without major mortgage interest), the current standard deduction exceeds the benefits to be had by itemization-- and claiming the trivialities like charitable donations or medical expenses.

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