Turbo tax and H&R Block, companies that produce software for filling taxes, lobby to keep taxes complex and non-easy (unless you pay for their software)
I read theory a lot and I can see it as an argument that the filing process for Americans with reasonably simple situations are painful and difficult (ie that there’s no government website[1] to file for free, or that the IRS can’t fill in details for you). But I would think tax companies are not hugely important in the grand scheme of things and that the actual reason that tax is so complicated is more broad, eg:
- many layers of taxation due to the political structure of the US – federal, state, city, county, maybe also school/water board?
- lots of different deductions exist, and probably for any deduction there are politicians who want it to stay. Each individual deduction may be well meaning (or the result of fraught negotiations) but the whole is undesirably complicated and hard to fix. The rich also have an advantage in a more complicated system but AMT was created so presumably this advantage has limits.
While the first point seems to somewhat naturally fall out of the US political system, I don’t have a great explanation for why the second should apply in the US but not other countries? E.g the U.K. tax system has a few special cases (something to do with child care, some married couples things, some ability for farmers to carry losses forward, maybe some special rules for reverends or Lloyds underwriters?) but nowhere near as many as the US. I think both tax systems are quite old but maybe some U.K. government in the 20th century decided to simplify it a bunch? Certainly a bunch of old taxes like rates don’t really exist for individuals anymore.
[1] presumably the US government have been terrified of launching big websites since healthcare.gov too.
Taxation in the US in general does not become more complex as you move to smaller governments.
For example, my local appraisal district just sends me a notice (which I am free to dispute if I wish) for my property tax each year. If they don't manage to send it, I don't owe anything.
I guess it depends a lot on where you are. My real estate tax bill has separate rates and line items for town, school district, county, and state. Some places have separate assessments on each district within a municipality. Some cities have their own sales and/or income tax. And then there can be local use fees, vehicle registration, and all sorts of other state/local taxes.
Yes, I have all that. My point is, if the appraisal district can't explain it to me & back up their math I don't have to pay it.
Contrast that with the bizarre game the IRS plays where your are basically expected to somehow prove you have paid your lot. Despite the IRS damn well having all the information about what you owe anyways.
I think ordinary income is < 5% of the burden (not just complexity). Think about where the time is spent on your own return: it’s not copying 10 numbers from your W-2 or counting your kids, but rather figuring your investment gains/losses, K-1s, Schedule C for your side work or app.
People with only earned income already have a very easy time of it here as well.
This isn't true. Lower income people are more likely to work more than one job simultaneously, or to do casual work or a string of jobs, or be 'contractors' than have a single W2 with accurate numbers. Only 20% of taxpayers who qualify for free direct filing use it - mostly because they don't even know it exists. Many Americans are challenged by even the process of completing the form.
The W-2 case with maybe a 1099 and standard deduction is pretty simple. And should probably be even simpler by autofilling a "Here's what we think you owe/are owed" return. But you get into complex returns pretty quickly for the reasons you describe. I don't even have that complex a return and what I got from my accountant was probably a 1/2 inch thick last year.
in most cases it's pointless for people to file their own taxes. governments already n ke their income streams and can tax appropriately at the source. just the idea of people having to do their own taxes represents those "fuckers" taking your time away
- many layers of taxation due to the political structure of the US – federal, state, city, county, maybe also school/water board?
- lots of different deductions exist, and probably for any deduction there are politicians who want it to stay. Each individual deduction may be well meaning (or the result of fraught negotiations) but the whole is undesirably complicated and hard to fix. The rich also have an advantage in a more complicated system but AMT was created so presumably this advantage has limits.
While the first point seems to somewhat naturally fall out of the US political system, I don’t have a great explanation for why the second should apply in the US but not other countries? E.g the U.K. tax system has a few special cases (something to do with child care, some married couples things, some ability for farmers to carry losses forward, maybe some special rules for reverends or Lloyds underwriters?) but nowhere near as many as the US. I think both tax systems are quite old but maybe some U.K. government in the 20th century decided to simplify it a bunch? Certainly a bunch of old taxes like rates don’t really exist for individuals anymore.
[1] presumably the US government have been terrified of launching big websites since healthcare.gov too.