[ThunderSizzle]

Lol. Its always the Republicans. If it was priority for the Dems, they'd have done it. They have gotten through several other things the Republicans opposed.

Anyhow, the better alternative is to return to lower the rates and remove deductions (aside from the standard deduction). Even simpler yet would be to go to a flat tax with an extremely high standard deduction (e.g. ~$50k with ~10% after that).

I can't think of many good reasons to continue complicating the IRS code aside from political targeting and giving Congress more kickbacks.

[tzs]

> Even simpler yet would be to go to a flat tax with an extremely high standard deduction (e.g. ~$50k with ~10% after that).

That's not a flat tax. That is a progressive tax with two brackets.

Once you have accepted that progressive taxes are acceptable, it is hard to see why two brackets is better than three, or 4, or even dozens. One might argue that two brackets is simpler than say 10 brackets, but that is a very weak argument since it is just a table lookup, and nobody can argue with a straight face that a 10 line table is too complicated.

An interesting exercise is to consider what it would be like if instead of a single tax to cover everything funded by income tax we did a two bracket progressive tax for each budget item separately, with the taxes applied serially. By applied serially I mean that the taxable income for tax N+1 is what is left after you have paid tax N.

You then end up with a progressive tax with N+1 brackets where N are the number of budget items (and then you would have a table big enough that it would arguable be complicated!). If you keep the same total budget but divide the budget items into smaller subitems, your tax curve approaches a continuous curve which represents a progressive tax with an infinite number of infinitely small brackets.

I remember working out the equation for that curve once, and finding the result mathematically satisfying, but I've totally forgotten what it was.

[ThunderSizzle]

> Once you have accepted that progressive taxes are acceptable. . .nobody can argue with a straight face that a 10 line table is too complicated.

First, I don't think anyone should pay taxes on their labor. And just because my labor makes more shouldn't mean I pay a higher percentage; so, no, I don't agree with the concept of progressive taxation on labor. Regardless, that's what we have.

Anyway, 10% after $50,000 is dead simple. e.g. make $120,000 as a family, take away $100,000, left with $20,000, I pay $2,000. Real tax rate is only 1.6%, so maybe that's too nice for the American family? You can change it to 15% after $25,000 and it's still simpler. $120k-$50k=$70k x .15=$10.5k or 8.75% real tax rate, all without worrying about IRAs, 401ks, HSAs, etc.

With a 6-12 tax brackets with crazy amount of deductions, I need to:

1) calculate taxable income. This is some func of deductions. i.e. standard deduction ($25k) + max 401k ($20k) brings taxable income to $75,000. There's other deductions such as IRAs, HSAs, 529, etc; all with their own maxes based on various criterias and income, which has it's own list of gotchas that screw over people. Hopefully you didn't forget a deduction on top of all that.

2) Now determine tax rate. 22%. Feels bad, but whatever -nearly a quarter of your income (nominally, at least) to finance the debt to keep inflation going. The graph says ~$4,800+22% of anything over ~$42,000. Alright. So $4,800+(22% x $33,000)=$12,060 are taxes owed.

3) Now determine your credits, if any. Such as a child credit. I hope you know your credits, because you might've forgot about a tax credit for something you bought. Let's assume you know you get $3600 for a toddler, and put that in. Now your $12,000 is $8,400.

4) Ensure your paid taxes is correct. You paid throughout the year, adds up to ~$8000. So taxes due are now $400.

5) Now you go to pay $400. Welp. Now you need to pay $50 because you decided you wanted to buy a stock that gave you $10 in dividends in a brokerage account, and now you can no longer free file. But you don't want to be audited, so you report the $10 and pay the $50.

Yeah, that's very simple and straight forward. But good news is the actual tax rate is actually only 7%, even though you felt like you just paid nearly 22%, wasted hours of your life, and were insulted with an additional fee just to pay your taxes.

[tzs]

> With a 6-12 tax brackets with crazy amount of deductions, I need to [list of 5 steps]

None of your steps are made more complicated by more brackets or less complicated by fewer brackets. You determine your taxable income (the complicated part), then lookup that taxable income in the tax tables (simple).

If the taxable income is low enough, there is a table with a large number of entries that each cover a small enough range that you don't even have to do any computation. You just find the line that covers your taxable income and the table tells you the tax.

If your income is too high for that table you have to use a smaller table with entries that cover larger ranges. That table currently has 4 entries. You find the row whose range includes your taxable income, and calculating your tax involves a multiplication and a subtraction--which is just as much work as calculating your tax under your proposed two bracket system for people whose income is high enough to be in the second bracket.

[ThunderSizzle]

You convinced me. Let's go to a single bracket system. No deductions. No credits. One rate. Everyone pays that on everything.

[KptMarchewa]

>First, I don't think anyone should pay taxes on their labor.

This is the part where I start yawning

[ArnoVW]

You're not wrong in saying that tax codes in general are complex. The problem is, they're complex for a reason.

Tax codes are a tool of policy makers. They allow wealth and income distribution. They allow compensation. And they allow policy makers to promote or penalize specific behaviors or activities.

Look at the legal system as a code base (in French, 'law' translates to 'code'). And imagine having 538 product owners, each asking for 'just one feature' that is both 'critical and urgent'. Is it any wonder that we are in this situation?

Perhaps we should implement more sunset provisions? I don't know. But 'we need a simpler system' is sort of like 'we have too many LoC'. It's true, but not easily actionable.

[furyg3]

Yes, but we all know that business rules and logic can be very complex, but you can still simplify the interface for the vast majority of users.

The IRS collects tax information from most businesses with employees, banks and investment firms, so it's is comically easy to pre-load that information in a tax return. Ask a few simple questions (did you buy a house, did you start a business, do you have a new dependent). Pre-fill what you can. Generate a report which you can directly file or share with your tax expert. Many developed countries do this.

While this (correctly) tanks an entire industry of tax preparation software, it actually makes it easier for politicians to do their thing. Right now a tax break for X is buried under form 92921X2 which you learn about after reading the instructions for line 48 on schedule 8812 which you are filling in after being told to in the supplementary instructions for line 21 on your 1099. If you elected to use the alternative streamlined maximum option, of course, if you chose for the default minimum compensation model, well, those are different forms.

With a properly made simple official tax filing process, you just see you got an extra $400 back this year because of the tax break for X.

[Dracophoenix]

>Tax codes are a tool of policy makers.

Therein the problem lies.

>They allow wealth and income distribution. They allow compensation. And they allow policy makers to promote or penalize specific behaviors or activities.

Robbing Peter to pay Paul is not a good reason to tax. Taxation should be decided by the whims of a crab bucket.

>Look at the legal system as a code base (in French, 'law' translates to 'code'). And imagine having 538 product owners, each asking for 'just one feature' that is both 'critical and urgent'. Is it any wonder that we are in this situation?

We're in this situation because most of congressmen believe they have the right to impose their morals on and the expense of thst individual men and women by way of legislative fiat.

>Perhaps we should implement more sunset provisions? I don't know. But 'we need a simpler system' is sort of like 'we have too many LoC'. It's true, but not easily actionable.

It is actionable. Politicians, however, are usually ignorant of tax law until there comes a point where the "wrong" people "win" too much. That is the issue in what should mostly be an administrative affair, if it should at all occur. The people who complicate the tax do not code lack the wherewithal to simplify it. Their feigned weakness and indifference is a choice.

[wolverine876]

The GOP opposes it; they are the obstacle. I think such actions by the GOP has become normalized for people, and so they overlook it. I don't see how you can blame the Democrats, who are voting for it.

> If it was priority for the Dems, they'd have done it.

Easily said, but as we know, not easily done.

[ThunderSizzle]

https://www.opensecrets.org/political-action-committees-pacs...

https://www.opensecrets.org/political-action-committees-pacs...

Seems like the donations are pretty evenly split for the companies that would be the largest lobbies over the past several years. This seems like the case of the uniparty being apparent, where there's no real drive to simplify the tax code because it's something both can blame each other on when nothing is done. Of course, this was the entire point of the TEA Party (which later became manifested as MAGA), which was mainly a conservative movement, so it manifested inside the GOP, but the GOP RINOs in Congress did nothing.

[wolverine876]

Despite your hypothesis, the evidence is that the Democrats vote for it, and the GOP against it.

[ThunderSizzle]

I haven't seen the Dems get into law a significant simplification of the tax code in the last 20 years. The last simplification we got was from Trump (which was a good step, but obviously isn't the final desired location).

He also did that before the Dems took back the House, so he had the GOP sign on to it.

[throw10920]

This is a really good point - if the tax code were a few dozen pages for the common case instead of a few hundred, then you might not even need tax-prep software in the first place. "The best program is the one that doesn't exist", to quote a popular refrain.

Ongoing software projects require periodic refactoring to reduce complexity and increase comprehension - why would the law be any different?

[giraffe_lady]

I think we've fairly well established that the complexity of the code isn't the problem. The IRS knows what you owe and could just tell you if they wanted to.

Having citizens exposed directly to the mechanics of it during the filing process is a policy choice and the way to fix that is to change the policy, not try to reinvent the tax code from first principles.

This is a complex set of laws yes but it is also detailed multi-generational documentation of all the shit people have tried to pull. You don't just throw that out because it has grown complex. Like all necessary complexity, you isolate and manage it, not spray it all over the end user.

[bzbarsky]

> The IRS knows what you owe and could just tell you if they wanted to.

This is true often, but not always. Examples just off the top of my head:

* Had large medical bills compared to your AGI? How does the IRS know that?

* Paid for college tuition? How does the IRS know that?

* Deducting state sales taxes? How does the IRS know what those were for you?

* Paid for daycare? How does the IRS know how much?

I'm sure I could find more examples if I went and looked at the actual tax forms right now. And while these are all things that don't affect everyone every year, they do affect a large fraction of people at some point in their lives. They certainly affect everyone who pays for college or has kids.

Note that this is not getting into anything too esoteric here, and completely ignoring anything involving self-employment or consulting, or running a small business or whatever. I _think_ those are rarer than having kids anyway.

Now could we have a more streamlined filing process that did the easy bits when possible and asked more directed questions to find out whether people might be in edge cases that might need more handholding or professional help? Absolutely. Could we get rid of the edge cases I listed above with a simpler tax code? Perhaps.

[mikestew]

Itemize if you feel deductions will exceed the standard deduction, leave the rest of us alone to agree/disagree with the amount on the postcard the IRS sent and mail our checks. Now that our paid mortgage interest is low enough to not matter, I can’t remember the last year that the IRS couldn’t have just send us a postcard with the amount they think we owe, and we would have paid probably exactly that amount. And we have a ton of stock transactions and the like. I’m willing to wager that for the vast majority of U. S. residents for the vast majority of their lives, their deductions will not exceed the standard deduction.

[bzbarsky]

First of all, just to repeat: I am very much in favor of the IRS doing as much as it can on its end and then prompting for info it does not have but thinks should be relevant.

That said, neither daycare nor college tuition are itemized deductions. You can take the standard deduction and get credits/deductions for those at the same time.

Or the EITC: That one depends on who lived with you during the year, which the IRS also does not know. But it could ask that one question and then compute it for you...

Handling of stock transactions is the _easy_ case here, assuming the brokerages correctly track basis, because they already report all the relevant info to the IRS.

> I’m willing to wager that for the vast majority of U. S. residents for the vast majority of their lives, their deductions will not exceed the standard deduction.

That is a very sure bet, but not that relevant to whether the IRS can compute one's taxes because our tax code as currently structured has a bunch of credits and deductions that are not part of Schedule A that matter to quite a number of people.

To put numbers to this, per https://www.eitc.irs.gov/eitc-central/statistics-for-tax-ret... in 2020 25 million tax returns had EITC. Per https://www.irs.gov/statistics/returns-filed-taxes-collected... in that same year there were about 150 million total "individual, estate, and trust" tax returns. So at least 1/6 of individual tax returns (more to the extent that trusts exist) could not have been correctly done with the information the IRS has.

And as I said, the vast majority of people who paid for child care would need to correct whatever number the IRS came up with for that.

Now I agree there are lots of people (healthy retirees, young college grads with no kids) who probably _could_ have their taxes done by the IRS entirely. And I'm all in favor of that happening, as long as we're clear that this is not going to reach everyone, and will generally benefit the people who are in the best position to navigate the current system already....

Which brings us back to reducing the underlying complexity, so the IRS could handle more cases itself.

[eru]

> This is a complex set of laws yes but it is also detailed multi-generational documentation of all the shit people have tried to pull. You don't just throw that out because it has grown complex. Like all necessary complexity, you isolate and manage it, not spray it all over the end user.

Who says that complexity is necessary?

Most of that complexity just grew out of other complexity.

If you have a simpler tax code to begin with, you don't need to patch all the work-arounds people found.

Of course, that's much easier said that politically done. Simpler taxes are popular as an idea, but rarely when you get into the specifics.

[ej3]

> The IRS knows what you owe and could just tell you if they wanted to.

I must admit I've always sort of blindly believed the same thing, but here I am year after year accumulating and submitting my own absurd set of turbo-tax button smashes.

Honestly I have trouble figuring out how much I owe myself. I would believe that they have some core set of data linked to my SSN, and every time I submit they run some sort of markov-chain statistical model that says - "meh, looks pretty close. No need for further review. Please pay the refund to the latest identity scam." or "red flag for actual review".

100% chance the IRS is understaffed, running legacy spaghetti, managed by folks just trying not to be the next scape-goat so they can go home to their family and watch the next episode of what everyone at work is talking about.

[thaumasiotes]

> I think we've fairly well established that the complexity of the code isn't the problem. The IRS knows what you owe and could just tell you if they wanted to.

The IRS has no way to know which of your expenditures are tax-deductible.

[jonathankoren]

If you think you can do better than the standard deductions, you’re more than welcome to itemize — just like today. Pretending that the current system is as good as it can get the for the vast majority of individuals is disingenuous. Just look at every other country that sends out prefilled forms.

[RHSeeger]

> Pretending that the current system is as good as it can get the for the vast majority of individuals is disingenuous

Pretending the IRS "knows exactly what you owe and could just tell you" is just as disingenuous. In both cases, it's more complicated than that.

[mactrey]

Some people have complicated taxes (need to itemize; IRS is missing information). Some people have simple taxes (standard deduction; IRS knows what they owe). Why should the second group have to pay for tax prep software or fill out forms by hand? Just to share the pain of the first group?

[jonathankoren]

Do you honestly believe that the majority of individuals in the United States have complicated or unusual taxes? Do you believe that most individuals have tax situations that change significantly year to year? I suggest you talk with some European colleagues about how prefilled tax forms work in their home countries. I think you’ll be surprised.

[thaumasiotes]

If you're taking the standard deduction, preparing your taxes is already the simple affair everyone says it should be.

[toast0]

Eh, you can take the standard deduction and the foreign tax credit or any of a bunch of other things that don't always have great information on forms.

A whole lot of preparing a tax return is plugging in numbers from forms that are sent to you and the IRS. It would be simpler (but perhaps less timely) if the IRS sent the taxpayer the return and if you disagreed, you could send in an ammended form with any documentation, or just pay the bill/cash the check.

[throw10920]

> I think we've fairly well established that the complexity of the code isn't the problem.

I've never heard this claimed before; I'm interested to see your evidence, because it's also not obviously true.

[jonathankoren]

Of course a tax code is complicated. It touches pretty everything with respect to income and expenditures, with numerous special cases. The truth is, that most people only deal with the same two forms, a 1040 and a W2. Like anything complex, only a very small portion is actually utilized by any particular individual. Glossing over this, and instead trumpeting some canard like number of pages, or number or words, is simply a rhetorical device to mask different objective.

[throw10920]

Of course there are "special cases" - that should be obvious. However, it's very much not obvious that there are 74,000 pages worth of special cases, which is the actual argument that I'm making that you conveniently ignored. It's pretty clear that the extreme case of tailoring the tax code to the individual results in a hundred thousand clauses of the tax code, which is infeasible, and so there's necessarily the lossy aggregation of many real-world individual financial situations into a smaller number of "paths" through the tax code.

> Glossing over this, and instead trumpeting some canard like number of pages, or number or words, is simply a rhetorical device to mask different objective.

There's no "glossing over" - it's pretty clear that even though there are "a lot" of special cases, that there are reasonable (and unreasonable) amounts of complexity of the tax code relative to the distribution of circumstances. It sure sounds like you have another objective that you're masking yourself.

[jonathankoren]

It is glossing over, because the vast majority is irrelevant to most people.

Do I care about the ins and outs of alimony and child support? Nope! I am not divorced.

Do I care about the ins and outs of how to deprecate the cost of my car as a business expense? Nope! I’m not self-employed.

How about foreign investment income? Nope!

How about income from farms? Oil wells on government land? Military income while serving overseas? Nope! Nope! Nope!

Do I care about the Earned Income Tax Credit? Yup! Do I understand it? Nope! Has the IRS sent me a letter after I filed saying that I qualified for the EIC, and they amended my 1040 to claim it? Yup!

The point is, if the special cases aren’t applicable, it’s the same as if they don’t exist.

Why do you care about inapplicable parts of the tax code?

Let’s be honest here. Most people have a W2, and that’s pretty much it. If they have a mortgage, their lender has already submitted a 1090 on their behalf. That’s it. You spend your day literally just copying numbers from forms and then subtracting. There’s no point to a person doing this.

[wolverine876]

> if the tax code were a few dozen pages for the common case instead of a few hundred

Isn't this the fantasy of clean sheet software? 'We'll get rid of all this cruft and make it clean and simple.' But it turns out that the cruft is needed to deal with reality, which is messy rather than the abstract clean-room requirements of our imaginations.

I can't see how the tax code can be short, having to deal with such a wide range of situations. Has anyone every successfully used a tax code like the short, simple ones that people fantasize about?

[throw10920]

> Isn't this the fantasy of clean sheet software? 'We'll get rid of all this cruft and make it clean and simple.' But it turns out that the cruft is needed to deal with reality, which is messy rather than the abstract clean-room requirements of our imaginations.

The fantasy is that the software can be made completely clean and simple because there are no edge cases. The reality is that it can be made less terrible by reworking complex parts of the design that were slowly hacked into place over time, and by eliminating technical debt. The fact that the ideal is unobtainable is irrelevant to the fact that there are still concrete, worthwhile, and necessary improvements to be made.

If your perspective on taxes were applied to software engineering, then most large projects would have collapsed by now.

> I can't see how the tax code can be short, having to deal with such a wide range of situations.

Not "short", but short-er than the 74,000 pages that it currently is. And, it's already dealing with a wide range of situations by simply compressing the feature-space down a lot, so one way of making it simpler is to compress it down even more. For instance, you could eliminate a bunch of individual rules that reduce effective taxes for low-income earners, and then just reduce the tax rate at that bracket.

[wolverine876]

Agreed! You'll note that I was responding to the idea of a tax code of only a dozen pages.

[IG_Semmelweiss]

yes. I believe a baltic country (Slovakia) taxes flat tax rates.

https://taxfoundation.org/flat-tax-lessons-slovakia

https://accace.com/tax-guideline-for-slovakia/

[rags2riches]

(Slovakia is a Central European country, far from Baltic.) But all three of Estonia, Latvia and Lithuania also have pretty flat tax rates I believe. Not sure about deductions and other details.