[tallowen]

My lessons from working on IRS direct file lead me to believe there are a couple reasons:

1) How the welfare state is administered - as an example, the US does a child tax credit as part of the tax code, other countries have agencies that are setup to give parents money directly. We are trying to do _more_ with our taxes.

2) State taxes - the fact that there are multiple agencies that have their own rules and procedures makes things more complicated. Many localities have their own laws which can be hard to deal with. Efile has improved this since there are fewer ways for states to ask for new information

3) A lack of political will to simply. For the purposes of taxes, the us have multiple definitions of "are you 65" (were you 65 on Jan 1, were you 65 on Dec 31, etc). This makes taxes more complicated than they need to be

4) Conflicts between making things simple and incentivizing a behavior things like no taxes on tips or an EV tax credit both make filling taxes more complicated with the way that the tax code works right now. With better systems, this could all be taken care of for the taxpayer but right now it would require a more complex tax filing process

Direct File was able to solve some of these problems, even automatically using data the government had already where possible. Ultimately I think it is possible to make taxes automatic in the US but the data flows required for it are probably more complex than in other countries due to the fragmented nature of the US government.

[Gunax]

I just want to thank you for this nuanced comment. I had never considered #3.

It seems to me that there are many conflicting interests. We want simple taxes but we also want special protections and carve-outs.

[xp84]

Yes! And the closer you look, the more you notice that "both sides" have their pet things that are obviously worth complicating the tax code to do. What most of us want is just for the other half of the people to give up all their favorite complications, so that our "worth it" half would be manageable. Which is why the complexity only grows.

[tallowen]

A car sale is an activity that is already registered with the government. It doesn't seem impossible for the data about an electric vehicle sale and it's purchase price to make its way to the IRS. The IRS could create an API to share this type of data with tax preparation software.

> their pet things that are obviously worth complicating the tax code to do

I agree that this is at the root of the problem but I think that can be addressed by making it easier to file taxes or by reducing the complexity of the tax code. The child tax credit is a relatively common type of benefit across rich countries. The tax code could be simplified by administering this benefit via direct cash transfers through a different government agency. I think from this perspective, the IRS is _extremely_ efficient at benefit administration.

My personal opinion is that the tax code is not always a bad way to administer benefits but the paperwork burden is the problem and the experience of filing taxes needs to be made easier.

[xp84]

Car sales are not registered with the US government. They’re registered with the state government. The two do not share physical infrastructure, data, policies, or even common goals, unless a specific agreement has been worked out between an individual state and the feds.

[tallowen]

To me this feels a little like saying "the federal government doesn't know when people are born because births are registered with local governments". In practice this is all a matter of state capacity to keep track of this information. Given political will to make it happen, I don't see a reason why information about car sales couldn't make its way to the federal government in order to make tax filing simpler.

[lesuorac]

The problem is that no other government agency is capable of doing this.

That's why all the covid stimulus checks were done via the IRS and the PPP loans were done through commercial banks.

[xp84]

> the data flows required for it are probably more complex than in other countries due to the fragmented nature of the US government

I'd also add the color that one of the main reasons for that complexity is political itself: In our zero-trust zero-confidence in government world today, even the notion of two .gov entities sharing data freely with one another terrifies people on any side of the political spectrum. Leftists freak out that say, their HUD application data could end up with ICE and allow a criminal immigrant who lives with them to get deported, while rightists freak out about their financials being shared with IRS to allow IRS to guarantee all taxes owed are paid.

[TimTheTinker]

> Conflicts between making things simple and incentivizing a behavior

Yes. When there's a negative behavior that the free market incentivizes, tax code updates can address it without sounding as scary as "More Industry Regulations". Same with social policy and other goals.

A lot of Americans are against the idea of "big government", which incentivizes government to use the tax code and other low-visibility means to accomplish larger goals.