Can they claim a senator as a tax deduction?
August 26, 2015 11:02 AM Subscribe
H&R Block lobbied for a longer, more complicated Earned Income Tax Credit schedule, to encourage lower-income households to use their services. (SLVox)
From the article:
From the article:
H&R Block CEO William C. Cobb has attempted to justify it as a way to reduce improper payments, but there's little reason to think it would have that effect. Again, taxpayers already have to supply all this information, and the real misreporting problem is from paid preparers like H&R Block, not individuals. A recent IRS study found EITC-claiming returns from paid preparers were more likely to result in overpayments than self-filed returns.
Two links:
Dilbert: "I got a senator."
Center on Budget and Policy Priorities on the topic (also linked to in cited article).
posted by Mr.Know-it-some at 11:12 AM on August 26, 2015
Dilbert: "I got a senator."
Center on Budget and Policy Priorities on the topic (also linked to in cited article).
posted by Mr.Know-it-some at 11:12 AM on August 26, 2015
This just makes me angry. The shameless preying on what little poor people have is a big barrier to ever emerging from poverty.
posted by bearwife at 11:15 AM on August 26, 2015 [9 favorites]
posted by bearwife at 11:15 AM on August 26, 2015 [9 favorites]
Just start nationalizing shit. Block. Comcast. Walmart. Amazon. All that shit. Just nationalize it.
And Germany. Hey Angela Merkel, all those nazis bitching about immigrants and burning down refugee centers? Take away their citizenship and deport all those fuckers. You're refugees now! How's it feel, mother fuckers?
And electric utilities? Upset about people putting solar cells on the roof? Boom. Nationalize the grid.
Southerners? What heritage? Your heritage is racism and slavery. And BBQ. Okay, I'll give you that. But then ditch the goddamn Confederate flags and shut the fuck up.
All y'all vote for me. I'm the leftist Donald Trump. This shit is easy.
posted by Naberius at 11:29 AM on August 26, 2015 [131 favorites]
And Germany. Hey Angela Merkel, all those nazis bitching about immigrants and burning down refugee centers? Take away their citizenship and deport all those fuckers. You're refugees now! How's it feel, mother fuckers?
And electric utilities? Upset about people putting solar cells on the roof? Boom. Nationalize the grid.
Southerners? What heritage? Your heritage is racism and slavery. And BBQ. Okay, I'll give you that. But then ditch the goddamn Confederate flags and shut the fuck up.
All y'all vote for me. I'm the leftist Donald Trump. This shit is easy.
posted by Naberius at 11:29 AM on August 26, 2015 [131 favorites]
It's things like this that make me side-eye people that prefer the EITC to raising the minimum wage.
posted by drezdn at 11:30 AM on August 26, 2015 [3 favorites]
posted by drezdn at 11:30 AM on August 26, 2015 [3 favorites]
Right. Giving people money is simple and hard to mess with. Complex mechanisms that are supposed to lead to some result just give lawyers and lobbyists more to mess with until the mechanism does the exact opposite of what was intended.
posted by Naberius at 11:32 AM on August 26, 2015 [4 favorites]
posted by Naberius at 11:32 AM on August 26, 2015 [4 favorites]
Not surprising - Intuit, maker of TurboTax, has been lobbying against simple, free online filing for years.
Clay Shirkey was right when he noted that the primary aim of most organizations, knowingly or unknowingly, is to preserve the problems to which they are the solution.
posted by ryanshepard at 11:32 AM on August 26, 2015 [63 favorites]
Clay Shirkey was right when he noted that the primary aim of most organizations, knowingly or unknowingly, is to preserve the problems to which they are the solution.
posted by ryanshepard at 11:32 AM on August 26, 2015 [63 favorites]
All y'all vote for me. I'm the leftist Donald Trump. This shit is easy.
I was going to say "take all my money for your campaign!" but instead take all of Wal-Mart's money for your campaign instead.
posted by Pope Guilty at 11:32 AM on August 26, 2015 [24 favorites]
I was going to say "take all my money for your campaign!" but instead take all of Wal-Mart's money for your campaign instead.
posted by Pope Guilty at 11:32 AM on August 26, 2015 [24 favorites]
the exact opposite of what was intended
You're giving them too much credit.
posted by graymouser at 11:33 AM on August 26, 2015
You're giving them too much credit.
posted by graymouser at 11:33 AM on August 26, 2015
In a better world, companies like H&R Block wouldn't exist, because the IRS would fill out returns itself.
In a better world, taxes would be so simple that no one would benefit from the services of tax preparers, but in the real world of corrupt crony capitalism, wealthy people benefit from a tax code that exceeds ten thousand pages.
In Sweden, Skatteverket prepares your forms for you and all you do is sign at the bottom. There are hardly any deductions and every bit of income legally earned (and the few deductions allowed) are reported to the tax authorities so self-reporting of income is unnecessary.
Of course the greedy bastards take more than half of your money, but that's another matter.
posted by three blind mice at 11:34 AM on August 26, 2015 [4 favorites]
In a better world, taxes would be so simple that no one would benefit from the services of tax preparers, but in the real world of corrupt crony capitalism, wealthy people benefit from a tax code that exceeds ten thousand pages.
In Sweden, Skatteverket prepares your forms for you and all you do is sign at the bottom. There are hardly any deductions and every bit of income legally earned (and the few deductions allowed) are reported to the tax authorities so self-reporting of income is unnecessary.
Of course the greedy bastards take more than half of your money, but that's another matter.
posted by three blind mice at 11:34 AM on August 26, 2015 [4 favorites]
ryanshepard And that is why I feel exactly zero guilt about pirating TurboTax for as long as I've been filing taxes.
posted by SansPoint at 11:42 AM on August 26, 2015 [2 favorites]
posted by SansPoint at 11:42 AM on August 26, 2015 [2 favorites]
Not surprising - Intuit, maker of TurboTax, has been lobbying against simple, free online filing for years.
They've been lobbying against "simple, free online filing for years", when provided by the government.
Intuit wants to provide the "simple, free online filing" services, and they do. Filing a 1040EZ through them (and many other tax prep companies" has been free for like a decade.
So yeah, they are lobbying for their best interests, but when the line gets trotted out the fact that end user still gets their free filing seems to get left out.
posted by sideshow at 11:52 AM on August 26, 2015
They've been lobbying against "simple, free online filing for years", when provided by the government.
Intuit wants to provide the "simple, free online filing" services, and they do. Filing a 1040EZ through them (and many other tax prep companies" has been free for like a decade.
So yeah, they are lobbying for their best interests, but when the line gets trotted out the fact that end user still gets their free filing seems to get left out.
posted by sideshow at 11:52 AM on August 26, 2015
If it's not an upsell opportunity, it's unamerican.
posted by aramaic at 11:57 AM on August 26, 2015 [8 favorites]
posted by aramaic at 11:57 AM on August 26, 2015 [8 favorites]
Maybe they could make requiring H&R Block to provide free (and accessible) services to low-income people part of the bill.
The IRS already provides free tax preparation services, staffed by volunteers, which according to the article performs better than H&RB.
The so-called "liberal media" (assisted by feckless Democrats) have parroted the conservative myth that private business is always superior to government for so long, it's hardly ever challenged. And yet, like most conservative myths, it should be.
posted by Gelatin at 11:59 AM on August 26, 2015 [11 favorites]
The IRS already provides free tax preparation services, staffed by volunteers, which according to the article performs better than H&RB.
The so-called "liberal media" (assisted by feckless Democrats) have parroted the conservative myth that private business is always superior to government for so long, it's hardly ever challenged. And yet, like most conservative myths, it should be.
posted by Gelatin at 11:59 AM on August 26, 2015 [11 favorites]
If it's not an upsell opportunity, it's unamerican.
Would you like a Canada with that?
posted by Etrigan at 11:59 AM on August 26, 2015 [5 favorites]
Would you like a Canada with that?
posted by Etrigan at 11:59 AM on August 26, 2015 [5 favorites]
but when the line gets trotted out the fact that end user still gets their free filing seems to get left out.
Additionally, to pile onto Gelatin's comment, the IRS is specifically forbidden from providing easy online filing.
posted by schmod at 12:02 PM on August 26, 2015 [1 favorite]
Additionally, to pile onto Gelatin's comment, the IRS is specifically forbidden from providing easy online filing.
posted by schmod at 12:02 PM on August 26, 2015 [1 favorite]
So yeah, they are lobbying for their best interests, but when the line gets trotted out the fact that end user still gets their free filing seems to get left out.
As does the fact that the "free" edition of TurboTax will try to upsell you for something like $28 for state filing even in instances where it is already freely available. And that they'll shill you several times during the filing process to upgrade to Deluxe.
posted by ryanshepard at 12:08 PM on August 26, 2015 [9 favorites]
As does the fact that the "free" edition of TurboTax will try to upsell you for something like $28 for state filing even in instances where it is already freely available. And that they'll shill you several times during the filing process to upgrade to Deluxe.
posted by ryanshepard at 12:08 PM on August 26, 2015 [9 favorites]
It's even worse than just overcharging people for EITC returns. They piggyback a "Refund Anticipation Check" that costs up to $75 to enable customers to walk out with a check today instead of waiting two weeks for a check from the IRS.
There's no reason the IRS couldn't do a direct deposit into the customer's checking account the very next day for free. In fact, it would save the IRS the cost of mailing and processing a paper check.
posted by JackFlash at 12:08 PM on August 26, 2015 [1 favorite]
There's no reason the IRS couldn't do a direct deposit into the customer's checking account the very next day for free. In fact, it would save the IRS the cost of mailing and processing a paper check.
posted by JackFlash at 12:08 PM on August 26, 2015 [1 favorite]
H&R Block will file your federal taxes for free* (state taxes are extra). However, starting last year, they do not include EITC as part of your free file. So if you qualify for the EITC there's a fee if you want them to include it on your return.
*Some restrictions apply:
posted by zinon at 12:11 PM on August 26, 2015
*Some restrictions apply:
- Adjusted Gross Income: $53,500 or less
- Age: 53 or younger, or Eligible for the Earned Income Tax Credit
- Live in any state for a free Federal tax return
posted by zinon at 12:11 PM on August 26, 2015
We do direct deposit in Canada for tax returns and it still takes up to 2 weeks.
posted by blue_beetle at 12:12 PM on August 26, 2015
posted by blue_beetle at 12:12 PM on August 26, 2015
The H&R Block "Refund Anticipation Check" fees amount to nearly a 100% annualized interest rate for a $2000 refund.
posted by JackFlash at 12:15 PM on August 26, 2015 [7 favorites]
posted by JackFlash at 12:15 PM on August 26, 2015 [7 favorites]
It's even worse than just overcharging people for EITC returns. They piggyback a "Refund Anticipation Check" that costs up to $75 to enable customers to walk out with a check today instead of waiting two weeks for a check from the IRS.
There's no reason the IRS couldn't do a direct deposit into the customer's checking account the very next day for free. In fact, it would save the IRS the cost of mailing and processing a paper check.
Yeah, stuff like this is awful because the people who need the money the most urgently are the ones who get screwed by it. If you actually need that money RIGHT NOW for rent or you'll get evicted, it's not crazy or stupid to make that choice even if you know you're literally paying for it. The checking account thing is tricky because not everyone has access to traditional financial services and, again, the people who need money most urgently are the ones least likely to be able to take advantage of this.
I hadn't heard about this -- although it all makes sense -- and I'm grateful for this post so thanks for sharing, Halloween Jack. Sometimes it feels like it's payday lenders all the way down.
posted by Mrs. Pterodactyl at 12:17 PM on August 26, 2015 [2 favorites]
There's no reason the IRS couldn't do a direct deposit into the customer's checking account the very next day for free. In fact, it would save the IRS the cost of mailing and processing a paper check.
Yeah, stuff like this is awful because the people who need the money the most urgently are the ones who get screwed by it. If you actually need that money RIGHT NOW for rent or you'll get evicted, it's not crazy or stupid to make that choice even if you know you're literally paying for it. The checking account thing is tricky because not everyone has access to traditional financial services and, again, the people who need money most urgently are the ones least likely to be able to take advantage of this.
I hadn't heard about this -- although it all makes sense -- and I'm grateful for this post so thanks for sharing, Halloween Jack. Sometimes it feels like it's payday lenders all the way down.
posted by Mrs. Pterodactyl at 12:17 PM on August 26, 2015 [2 favorites]
It's effectively not free filing if you have to purchase software first in order to file online, and depending on your tax situation you can't use TurboTax without paying (or pirating).
You haven't had to purchase TurboTax software for years now; it's a web app, basically. If you're not eligible for free filing, you pay for the service upon filing.
posted by mr_roboto at 12:19 PM on August 26, 2015 [1 favorite]
You haven't had to purchase TurboTax software for years now; it's a web app, basically. If you're not eligible for free filing, you pay for the service upon filing.
posted by mr_roboto at 12:19 PM on August 26, 2015 [1 favorite]
Clay Shirky was right when he noted that the primary aim of most organizations, knowingly or unknowingly, is to preserve the problems to which they are the solution.
david graeber calls these bullshit jobs :P (obama looks like he's at least trying to do something about it!?)
also btw more joe stiglitz on economic rents captured by the 'ownership class' (and their lobbyists):
david graeber calls these bullshit jobs :P (obama looks like he's at least trying to do something about it!?)
also btw more joe stiglitz on economic rents captured by the 'ownership class' (and their lobbyists):
The political economy has created rents for share owners, and the increase in their wealth will be reflected in rising inequality... Of course, the rents once created will provide further resources for rentiers to lobby the political system to maintain and further increase rents. This will set in motion a spiral of increasing inequality, which again does not go through the production system at all -- except to the extent that the associated distortions represent a downward shift in the productivity of the economy.posted by kliuless at 12:34 PM on August 26, 2015 [10 favorites]
People complain that the rich don't have to pay their fare share of taxes, but bribes are a sort of tax.
posted by dances_with_sneetches at 12:44 PM on August 26, 2015 [2 favorites]
posted by dances_with_sneetches at 12:44 PM on August 26, 2015 [2 favorites]
In a better world, taxes would be so simple that no one would benefit from the services of tax preparers, but in the real world of corrupt crony capitalism, wealthy people benefit from a tax code that exceeds ten thousand pages.
No question. And yet, it was Steve Forbes who ran on the postcard sized tax form in 1996 and in 2000 and got exactly nowhere.
Maybe if he had been a Democrat.
Or if more people did their own taxes in the first place instead of automatically handing them over to - H&R Block.
(On the other end of the spectrum, time was that TurboTax automatically shunted high earners into the Alternative Minimum Tax, which was not necessarily in their best interests nor even required. But then, a lot of high earners whom this targeted don't understand the AMT any more than some people don't understand why getting a tax refund is actually the undesirable result of bad financial planning, not something to be celebrated. (I hasten to add that the AMT has never been close to a problem for me, worse luck. I just take an interest in tax curiosities and abuse of the tax code writing. It has been said that no one since Dan Rostenkowski has actually understood the damn thing, and nowadays probably even he wouldn't.))
posted by IndigoJones at 12:46 PM on August 26, 2015
No question. And yet, it was Steve Forbes who ran on the postcard sized tax form in 1996 and in 2000 and got exactly nowhere.
Maybe if he had been a Democrat.
Or if more people did their own taxes in the first place instead of automatically handing them over to - H&R Block.
(On the other end of the spectrum, time was that TurboTax automatically shunted high earners into the Alternative Minimum Tax, which was not necessarily in their best interests nor even required. But then, a lot of high earners whom this targeted don't understand the AMT any more than some people don't understand why getting a tax refund is actually the undesirable result of bad financial planning, not something to be celebrated. (I hasten to add that the AMT has never been close to a problem for me, worse luck. I just take an interest in tax curiosities and abuse of the tax code writing. It has been said that no one since Dan Rostenkowski has actually understood the damn thing, and nowadays probably even he wouldn't.))
posted by IndigoJones at 12:46 PM on August 26, 2015
The Forbes flat tax is not a good faith example of tax simplification. It's a massive reversal of every progressive feature of our present tax system.
posted by paper chromatographologist at 12:52 PM on August 26, 2015 [26 favorites]
posted by paper chromatographologist at 12:52 PM on August 26, 2015 [26 favorites]
Maybe if he had been a Democrat.
Yes, that's probably it! A Democrat advocating a giant tax cut for the wealthy would have surely done well!
Or if more people did their own taxes in the first place instead of automatically handing them over to - H&R Block.
Which is squarely at odds with the problem of a complicated tax code that we're talking about here. At a certain point, most mere mortals lose the ability to navigate the complexities of the tax code in order to maximize their refund. At that point, handing it off to a third party will on average result in a larger refund, but with a portion of it paying for the services of the accountant. Of course if the code were simpler in the first place (a simplification that ought not be conflated with the ridiculous "flat tax" proposal) then the average refund would be larger (all other things being equal), except the middlemen would be doing something else for a living.
posted by tonycpsu at 12:58 PM on August 26, 2015 [4 favorites]
Yes, that's probably it! A Democrat advocating a giant tax cut for the wealthy would have surely done well!
Or if more people did their own taxes in the first place instead of automatically handing them over to - H&R Block.
Which is squarely at odds with the problem of a complicated tax code that we're talking about here. At a certain point, most mere mortals lose the ability to navigate the complexities of the tax code in order to maximize their refund. At that point, handing it off to a third party will on average result in a larger refund, but with a portion of it paying for the services of the accountant. Of course if the code were simpler in the first place (a simplification that ought not be conflated with the ridiculous "flat tax" proposal) then the average refund would be larger (all other things being equal), except the middlemen would be doing something else for a living.
posted by tonycpsu at 12:58 PM on August 26, 2015 [4 favorites]
The problem with the simplification argument is that in most cases, it's not really possible to do so, and accomplish everything we are trying to do. Our tax code is as complex as it is because we're using it to achieve several different goals beyond raising revenue.
posted by NoxAeternum at 1:08 PM on August 26, 2015
posted by NoxAeternum at 1:08 PM on August 26, 2015
The H&R Block "Refund Anticipation Check" fees amount to nearly a 100% annualized interest rate for a $2000 refund.
This isn't a problem, we'll just enforce our laws against usury.
Wait, what?
posted by phearlez at 1:10 PM on August 26, 2015 [3 favorites]
This isn't a problem, we'll just enforce our laws against usury.
Wait, what?
posted by phearlez at 1:10 PM on August 26, 2015 [3 favorites]
Our tax code is as complex as it is because we're using it to achieve several different goals beyond raising revenue.
Not really. Most tax expenditures could instead be done as regular old boring government spending and still provide the same incentives. The EITC could be direct cash subsidy for the poor, the mortgage interest deduction could be direct support for homeowners, etc. We do things through the Rube Goldberg mechanism of the tax code because it's easier politically, not because it's superior in any way. Furthermore, the tax code is scrutinized far less often than direct spending is, leading to discrepancies between what the provisions were meant to do and how they're actually affecting the economy.
posted by tonycpsu at 1:16 PM on August 26, 2015 [16 favorites]
Not really. Most tax expenditures could instead be done as regular old boring government spending and still provide the same incentives. The EITC could be direct cash subsidy for the poor, the mortgage interest deduction could be direct support for homeowners, etc. We do things through the Rube Goldberg mechanism of the tax code because it's easier politically, not because it's superior in any way. Furthermore, the tax code is scrutinized far less often than direct spending is, leading to discrepancies between what the provisions were meant to do and how they're actually affecting the economy.
posted by tonycpsu at 1:16 PM on August 26, 2015 [16 favorites]
I've said it before and I'll say it again: anyone who thinks the government should be run like a business has never worked for a company of any size for any period of time.
Though the various armed forces fighting with another bears a striking resemblance to company divisions competing against themselves.
posted by fifteen schnitzengruben is my limit at 1:18 PM on August 26, 2015 [12 favorites]
Though the various armed forces fighting with another bears a striking resemblance to company divisions competing against themselves.
posted by fifteen schnitzengruben is my limit at 1:18 PM on August 26, 2015 [12 favorites]
From the article:
"A recent IRS study found EITC-claiming returns from paid preparers were more likely to result in overpayments than self-filed returns. That's right: People who fill out taxes for a living are, on average, worse at it than taxpayers who do it themselves (and, by the way, the IRS's volunteers do a better job than anybody)."
posted by Flexagon at 1:53 PM on August 26, 2015 [2 favorites]
"A recent IRS study found EITC-claiming returns from paid preparers were more likely to result in overpayments than self-filed returns. That's right: People who fill out taxes for a living are, on average, worse at it than taxpayers who do it themselves (and, by the way, the IRS's volunteers do a better job than anybody)."
posted by Flexagon at 1:53 PM on August 26, 2015 [2 favorites]
"Would you like a Canada with that?"
"That'll be $54.40 or fight!"
posted by Eyebrows McGee at 2:28 PM on August 26, 2015 [6 favorites]
"That'll be $54.40 or fight!"
posted by Eyebrows McGee at 2:28 PM on August 26, 2015 [6 favorites]
Not really. Most tax expenditures could instead be done as regular old boring government spending and still provide the same incentives. The EITC could be direct cash subsidy for the poor, the mortgage interest deduction could be direct support for homeowners, etc. We do things through the Rube Goldberg mechanism of the tax code because it's easier politically, not because it's superior in any way. Furthermore, the tax code is scrutinized far less often than direct spending is, leading to discrepancies between what the provisions were meant to do and how they're actually affecting the economy.
So, the reason our tax code is as complex as it is because we are using it to achieve several different goals beyond raising revenue.
I'm all for tax simplification. But as usual, making something simple, and fair, ends up being really hard. Often in ways you never really imagine.
posted by 2N2222 at 3:11 PM on August 26, 2015 [1 favorite]
So, the reason our tax code is as complex as it is because we are using it to achieve several different goals beyond raising revenue.
I'm all for tax simplification. But as usual, making something simple, and fair, ends up being really hard. Often in ways you never really imagine.
posted by 2N2222 at 3:11 PM on August 26, 2015 [1 favorite]
So, the reason our tax code is as complex as it is because we are using it to achieve several different goals beyond raising revenue.
Except there are other ways of achieving those same goals without using the tax code. The fact that politicians (ab)use the tax code is the problem, and if tax expenditures were redirected toward direct spending, the tax code could be simplified, which is what this whole discussion is about.
posted by tonycpsu at 3:24 PM on August 26, 2015 [1 favorite]
Except there are other ways of achieving those same goals without using the tax code. The fact that politicians (ab)use the tax code is the problem, and if tax expenditures were redirected toward direct spending, the tax code could be simplified, which is what this whole discussion is about.
posted by tonycpsu at 3:24 PM on August 26, 2015 [1 favorite]
TurboTax automatically shunted high earners into the Alternative Minimum Tax, which was not necessarily in their best interests nor even required.
Any tax software is going to calculate if one is in AMT and then calculate the AMT if due.
It has been said that no one since Dan Rostenkowski has actually understood the damn thing, and nowadays probably even he wouldn't.))
Of all the things in the code, the AMT isn't even close to one of the more complicated. Any competent tax pro gets it.
posted by jpe at 3:38 PM on August 26, 2015 [1 favorite]
Any tax software is going to calculate if one is in AMT and then calculate the AMT if due.
It has been said that no one since Dan Rostenkowski has actually understood the damn thing, and nowadays probably even he wouldn't.))
Of all the things in the code, the AMT isn't even close to one of the more complicated. Any competent tax pro gets it.
posted by jpe at 3:38 PM on August 26, 2015 [1 favorite]
Just start nationalizing shit. Block. Comcast. Walmart. Amazon. All that shit. Just nationalize it.
I'd say your understanding of the Constitution is roughly on par w/ Trump's, so that's a good start for being the lefty Trump.
posted by jpe at 3:41 PM on August 26, 2015
I'd say your understanding of the Constitution is roughly on par w/ Trump's, so that's a good start for being the lefty Trump.
posted by jpe at 3:41 PM on August 26, 2015
Just start nationalizing shit. Block. Comcast. Walmart. Amazon. All that shit. Just nationalize it.
I'd say your understanding of the Constitution is roughly on par w/ Trump's, so that's a good start for being the lefty Trump.
There's nothing in the Constitution preventing government from providing services at cheaper rates than private companies. The government could provide the automatically generated tax forms that would largely put Block out of business. The government could provide fiber and wifi in cities that would put Comcast out of business. The government could charge Walmart for the food stamps and EITC costs of their low wage workers. The government could require Amazon to pay sales taxes just like local brick and mortar businesses.
posted by JackFlash at 4:09 PM on August 26, 2015 [1 favorite]
I'd say your understanding of the Constitution is roughly on par w/ Trump's, so that's a good start for being the lefty Trump.
There's nothing in the Constitution preventing government from providing services at cheaper rates than private companies. The government could provide the automatically generated tax forms that would largely put Block out of business. The government could provide fiber and wifi in cities that would put Comcast out of business. The government could charge Walmart for the food stamps and EITC costs of their low wage workers. The government could require Amazon to pay sales taxes just like local brick and mortar businesses.
posted by JackFlash at 4:09 PM on August 26, 2015 [1 favorite]
So, the reason our tax code is as complex as it is because we are using it to achieve several different goals beyond raising revenue.
No, the reason the tax code is complex is that it has tens of thousands of pages of ways for the wealthy to avoid paying taxes.
The code is quite simple. Add up your income, look up your tax in a table, pay the tax. The other thousands of pages are things like mortgage deduction, property tax deductions, medical deductions, charity deductions, capital loss deductions, lower tax rates for capital gains, lower tax rates for qualified dividends, depreciation of investment assets, loopholes for hedge fund managers, and on and on. If it weren't for all of these tax avoidance mechanisms, there would be plenty of money for things like free healthcare, free college tuitiion and free housing subsidies without a complicated tax system.
It isn't paying taxes that is complicated. It is documenting all the ways for not paying taxes that makes the tax code complicated.
posted by JackFlash at 4:27 PM on August 26, 2015 [11 favorites]
No, the reason the tax code is complex is that it has tens of thousands of pages of ways for the wealthy to avoid paying taxes.
The code is quite simple. Add up your income, look up your tax in a table, pay the tax. The other thousands of pages are things like mortgage deduction, property tax deductions, medical deductions, charity deductions, capital loss deductions, lower tax rates for capital gains, lower tax rates for qualified dividends, depreciation of investment assets, loopholes for hedge fund managers, and on and on. If it weren't for all of these tax avoidance mechanisms, there would be plenty of money for things like free healthcare, free college tuitiion and free housing subsidies without a complicated tax system.
It isn't paying taxes that is complicated. It is documenting all the ways for not paying taxes that makes the tax code complicated.
posted by JackFlash at 4:27 PM on August 26, 2015 [11 favorites]
There's nothing in the Constitution preventing government from providing services at cheaper rates than private companies.
When people say a company should be nationalized, it typically means they want the government to seize the company and its assets, which would violate the fifth amendment.
No, the reason the tax code is complex is that it has tens of thousands of pages of ways for the wealthy to avoid paying taxes.
No, it's a combination of anti-abuse rules (try reading the subpart F rules, PFIC rules, etc), trying to target subsidies to the right people (eg, the exclusion for gain on sale of a primary residence), and trying to make a statute capture economic reality (virtually all of subchapter K).
posted by jpe at 4:53 PM on August 26, 2015 [1 favorite]
When people say a company should be nationalized, it typically means they want the government to seize the company and its assets, which would violate the fifth amendment.
No, the reason the tax code is complex is that it has tens of thousands of pages of ways for the wealthy to avoid paying taxes.
No, it's a combination of anti-abuse rules (try reading the subpart F rules, PFIC rules, etc), trying to target subsidies to the right people (eg, the exclusion for gain on sale of a primary residence), and trying to make a statute capture economic reality (virtually all of subchapter K).
posted by jpe at 4:53 PM on August 26, 2015 [1 favorite]
Here in Norway, taxes are automated to the point where you get a pre-filled form from the government, and if everything looks OK, you don't need to do anything at all.
posted by ymgve at 5:05 PM on August 26, 2015 [6 favorites]
posted by ymgve at 5:05 PM on August 26, 2015 [6 favorites]
> the IRS is specifically forbidden from providing easy online filing
Can I get a "hell yeah!" on this?
ms scruss is a US citizen. This means that, every year, we have to go through the annual horror of either paying $300 to prepare a vast hunk of dead tree through an accountant, or fight with the horror that is Free File Fillable Forms. FFFF (a product of the Free File Alliance, whose members include H&R Block, Intuit, etc.) have a website that manages to do very bad things to the PDF tax forms, and recreates them as JavaScript-enabled web forms. If this were done in good faith, not so bad.
I'm genuinely convinced that FFFF's product either deliberately sneaks errors into forms, or has a special set of exclusions that almost, but not quite, works for everyone. The really really really brilliant piece of free market fuckupery is that — if your form has errors (which it likely will, given the above suspected bungling) — on submission you get the errors e-mailed back to you as raw XPath errors! Srsly; you'll get stuff like:
All this pain for someone with effectively no US income, living abroad. I can see why you USAians hate taxes if your systems to handle it are such unutterable shit, and deliberately so.
(fun tip: if you get the form nearly right, so maybe only a couple of errors reported, print it, sign it, mail it. Problems over, but paper…)
posted by scruss at 5:19 PM on August 26, 2015 [1 favorite]
Can I get a "hell yeah!" on this?
ms scruss is a US citizen. This means that, every year, we have to go through the annual horror of either paying $300 to prepare a vast hunk of dead tree through an accountant, or fight with the horror that is Free File Fillable Forms. FFFF (a product of the Free File Alliance, whose members include H&R Block, Intuit, etc.) have a website that manages to do very bad things to the PDF tax forms, and recreates them as JavaScript-enabled web forms. If this were done in good faith, not so bad.
I'm genuinely convinced that FFFF's product either deliberately sneaks errors into forms, or has a special set of exclusions that almost, but not quite, works for everyone. The really really really brilliant piece of free market fuckupery is that — if your form has errors (which it likely will, given the above suspected bungling) — on submission you get the errors e-mailed back to you as raw XPath errors! Srsly; you'll get stuff like:
Field/Xpath: /efile:Return[1]/efile:ReturnData[1]/efile:IRSW2[1]/efile:EmployeeNamewhich, aber natürlich, means there's something missing in your W-2. No added value sneaked in here; if you want to understand the errors, you have to consult the jaunty ‘Fixing Your XML Errors’ PDF.
All this pain for someone with effectively no US income, living abroad. I can see why you USAians hate taxes if your systems to handle it are such unutterable shit, and deliberately so.
(fun tip: if you get the form nearly right, so maybe only a couple of errors reported, print it, sign it, mail it. Problems over, but paper…)
posted by scruss at 5:19 PM on August 26, 2015 [1 favorite]
Are you kidding? I thought it was well known that the lobbyists for these income tax processing companies are one of the big obstacles standing in the way of any sort of tax code reform.
posted by absalom at 5:34 PM on August 26, 2015 [1 favorite]
posted by absalom at 5:34 PM on August 26, 2015 [1 favorite]
If we enabled postal banking(which is probably actually legal already) tax refunds for those without checking accounts could be automatically credited to a postal bank account. Thousands of locations across the country, serving pretty much every population.
posted by rockindata at 6:07 PM on August 26, 2015 [3 favorites]
posted by rockindata at 6:07 PM on August 26, 2015 [3 favorites]
H&R Block is a goddamned parasite.
My taxes have typically been very simple, and so I almost always handle them myself. However, the one time I did have a weird tax situation, it seemed like it would be safer to talk to supposed professionals about it, so I went to H&R Block. Only after wasting a ton of my time did it become clear that they literally had never even heard of the specific (real) issue I had, and the person working with me had to consult like 5 other "professionals". And then they still fucked it up.
I ended up having to go spend a bunch of time doing it over myself, and reading all the relevant rules, to get it right.
The experience I had with them made it very clear that their ideal client is someone who absolutely does not need any kind of professional tax preparation services, but is not savvy enough (or confident enough) to know that. That's their business model: make taxes sound scary to people whose taxes are actually super simple, and fleece them for a preparation fee (and an "early refund" fee too, if they can).
But god help you if you actually have something complicated going on, because the people they staff are not qualified to deal with anything you couldn't have done yourself on a 1040EZ.
posted by tocts at 6:44 PM on August 26, 2015 [8 favorites]
My taxes have typically been very simple, and so I almost always handle them myself. However, the one time I did have a weird tax situation, it seemed like it would be safer to talk to supposed professionals about it, so I went to H&R Block. Only after wasting a ton of my time did it become clear that they literally had never even heard of the specific (real) issue I had, and the person working with me had to consult like 5 other "professionals". And then they still fucked it up.
I ended up having to go spend a bunch of time doing it over myself, and reading all the relevant rules, to get it right.
The experience I had with them made it very clear that their ideal client is someone who absolutely does not need any kind of professional tax preparation services, but is not savvy enough (or confident enough) to know that. That's their business model: make taxes sound scary to people whose taxes are actually super simple, and fleece them for a preparation fee (and an "early refund" fee too, if they can).
But god help you if you actually have something complicated going on, because the people they staff are not qualified to deal with anything you couldn't have done yourself on a 1040EZ.
posted by tocts at 6:44 PM on August 26, 2015 [8 favorites]
The government could require Amazon to pay sales taxes just like local brick and mortar businesses
Businesses do not pay sales tax, purchasers do. Businesses collect sales tax from consumers for the state within which they do business.
That aside, sales tax is regressive. The ability of Amazon and other internet based vendors to avoid being the collection arm for states they don't reside in is a positive. If the states have to start transparently taxing actual income and property because they can't pinch the working class then GOOD
posted by phearlez at 8:51 PM on August 26, 2015
Businesses do not pay sales tax, purchasers do. Businesses collect sales tax from consumers for the state within which they do business.
That aside, sales tax is regressive. The ability of Amazon and other internet based vendors to avoid being the collection arm for states they don't reside in is a positive. If the states have to start transparently taxing actual income and property because they can't pinch the working class then GOOD
posted by phearlez at 8:51 PM on August 26, 2015
That aside, sales tax is regressive. The ability of Amazon and other internet based vendors to avoid being the collection arm for states they don't reside in is a positive. If the states have to start transparently taxing actual income and property because they can't pinch the working class then GOOD.
Your utopian vision is all well and good but in the real world, a parasite like Amazon, who treats their employees like garbage, is getting a free ride on the backs of all of the local stores who have to pay sales taxes and are being driven out of business because they can't match Amazon's no-tax prices. Those local workers are being replaced by Amazon warehouse droids.
posted by JackFlash at 9:54 PM on August 26, 2015 [1 favorite]
Your utopian vision is all well and good but in the real world, a parasite like Amazon, who treats their employees like garbage, is getting a free ride on the backs of all of the local stores who have to pay sales taxes and are being driven out of business because they can't match Amazon's no-tax prices. Those local workers are being replaced by Amazon warehouse droids.
posted by JackFlash at 9:54 PM on August 26, 2015 [1 favorite]
I worked for Liberty Tax - an offshoot of one of the big tax prep firms - for a tax season, and it was incredibly depressing to work with people who only needed to submit a 1040-EZ or a simplish 1040 and came to us where they were subjected to $275-$400 in fees for me to type some numbers into a form. Often it was the majority of their refund. Like Jack Flash says, tax forms - even with itemized deductions - are really pretty simple. The exceptions, I think, are income property and sometimes self-employment. In addition, the phone help from the IRS is usually cordial and very helpful. I agree 100% that tax prep companies are parasites that exploit people who think they can't do their own taxes and they create that need by making taxes sound scary.
IME, once you're tax-savvy, not only do you avoid tax prep fees (bullshit) but you also learn to manage your money with an eye toward minimizing your tax debt and maximizing your refund. That's an important skill that relying on tax prep joints robs you of.
posted by bendy at 9:59 PM on August 26, 2015 [1 favorite]
IME, once you're tax-savvy, not only do you avoid tax prep fees (bullshit) but you also learn to manage your money with an eye toward minimizing your tax debt and maximizing your refund. That's an important skill that relying on tax prep joints robs you of.
posted by bendy at 9:59 PM on August 26, 2015 [1 favorite]
Yeah, 1040-EZ forms should never be a way to gouge accountancy customers (I'd like to see a regulated price cap), but it's definitely true that self-employment, freelancing and contracting can be tricky, depending on the type of business. It doesn't help that the de facto standard is QuickBooks, which falls short of the mark for basic business functions like invoicing, using the Self-Employed version for freelancers. A bookkeeper is often still worth the money to eliminate the hassle, including software quirks and bugs.
posted by krinklyfig at 2:41 AM on August 27, 2015
posted by krinklyfig at 2:41 AM on August 27, 2015
> The Forbes flat tax is not a good faith example of tax simplification. It's a massive reversal of every progressive feature of our present tax system.
I never cease to marvel how easily the blue is distracted when rich folk or Republicans are introduced into the picture.
The point was that here was a guy who theoretically benefits from tax complexity promoting simplicity, something a commentator said did not happen. You want progressive rates (and nb, Forbes plan involved no tax at all for modest of income), fine, we can talk. That's what politics is all about. The main point was - good bye to H&R Block and the corruption and billions they cost the country, chiefly those at the lower end. Put it in those terms and give it to Bernie and even the excitable Tony might consider it.
Any tax software is going to calculate if one is in AMT and then calculate the AMT if due....Of all the things in the code, the AMT isn't even close to one of the more complicated. Any competent tax pro gets it.
AMT can often be avoided depending on various factors, factors which TurboTax did not always make clear. "Any competent tax pro" is the operative phrase, and said pro will point this out, even if TT did not. Even smart people are unaware of this particular gotcha. Anyway, the whole objective here is to find alternative, more productive work for tax pros.
posted by IndigoJones at 4:53 AM on August 27, 2015
I never cease to marvel how easily the blue is distracted when rich folk or Republicans are introduced into the picture.
The point was that here was a guy who theoretically benefits from tax complexity promoting simplicity, something a commentator said did not happen. You want progressive rates (and nb, Forbes plan involved no tax at all for modest of income), fine, we can talk. That's what politics is all about. The main point was - good bye to H&R Block and the corruption and billions they cost the country, chiefly those at the lower end. Put it in those terms and give it to Bernie and even the excitable Tony might consider it.
Any tax software is going to calculate if one is in AMT and then calculate the AMT if due....Of all the things in the code, the AMT isn't even close to one of the more complicated. Any competent tax pro gets it.
AMT can often be avoided depending on various factors, factors which TurboTax did not always make clear. "Any competent tax pro" is the operative phrase, and said pro will point this out, even if TT did not. Even smart people are unaware of this particular gotcha. Anyway, the whole objective here is to find alternative, more productive work for tax pros.
posted by IndigoJones at 4:53 AM on August 27, 2015
For most people that file on a 1040EZ, their taxes are simple enough that there really isn't a good reason for them to even have to file. You're not really sending the IRS any information that they don't already have. It would be so much simpler if, on April 15th every year, the IRS submits a 1040EZ for you unless they've received a full-return from you or a request for an extension.
That way, if all you have is straight W-2 income and you don't qualify for any other deductions, all you have to do at tax time is nothing. Then just wait for the check/bill to show up along with a summary of your return and, while I'm tossing out pie-in-the-sky ideas, the summary will include information about your effective tax rate compared to others in yours and other income brackets and a break-down of what the government spends your tax dollars on.
posted by VTX at 6:55 AM on August 27, 2015 [3 favorites]
That way, if all you have is straight W-2 income and you don't qualify for any other deductions, all you have to do at tax time is nothing. Then just wait for the check/bill to show up along with a summary of your return and, while I'm tossing out pie-in-the-sky ideas, the summary will include information about your effective tax rate compared to others in yours and other income brackets and a break-down of what the government spends your tax dollars on.
posted by VTX at 6:55 AM on August 27, 2015 [3 favorites]
...some people don't understand why getting a tax refund is actually the undesirable result of bad financial planning, not something to be celebrated.
This is such an amazing point. I think that a lot of people think of a tax refund as free money rather than money that has been on loan to the government at 0% interest. From there it's easy to justify spending a few bucks on having someone else file the forms for you, especially since they have a decent chance at getting people a larger refund than they would on their own. Then it's just a few more bucks to get that check today instead of in a week or two (the last couple of years we've filed as early as we could and the direct deposit of the refund came really fast). It's free money anyways and I don't even have to "pay" the fee, they just take it out of my refund!
That's why this year, when the tax conversations start coming up, I'm going to talk about my tax rate and how much I paid in taxes, that's it.
"So, are you getting a refund?"
"Doesn't matter, it's irrelevant information. Telling someone how much change you're getting back doesn't tell you anything about what you purchased or how much it cost."
posted by VTX at 7:08 AM on August 27, 2015 [1 favorite]
This is such an amazing point. I think that a lot of people think of a tax refund as free money rather than money that has been on loan to the government at 0% interest. From there it's easy to justify spending a few bucks on having someone else file the forms for you, especially since they have a decent chance at getting people a larger refund than they would on their own. Then it's just a few more bucks to get that check today instead of in a week or two (the last couple of years we've filed as early as we could and the direct deposit of the refund came really fast). It's free money anyways and I don't even have to "pay" the fee, they just take it out of my refund!
That's why this year, when the tax conversations start coming up, I'm going to talk about my tax rate and how much I paid in taxes, that's it.
"So, are you getting a refund?"
"Doesn't matter, it's irrelevant information. Telling someone how much change you're getting back doesn't tell you anything about what you purchased or how much it cost."
posted by VTX at 7:08 AM on August 27, 2015 [1 favorite]
I never cease to marvel how easily the blue is distracted when rich folk or Republicans are introduced into the picture.
[...]
Put it in those terms and give it to Bernie and even the excitable Tony might consider it.
Hey, I have an idea, maybe don't do this.
posted by tonycpsu at 8:22 AM on August 27, 2015
[...]
Put it in those terms and give it to Bernie and even the excitable Tony might consider it.
Hey, I have an idea, maybe don't do this.
posted by tonycpsu at 8:22 AM on August 27, 2015
"They've been lobbying against "simple, free online filing for years", when provided by the government.
Intuit wants to provide the "simple, free online filing" services, and they do. Filing a 1040EZ through them (and many other tax prep companies" has been free for like a decade.
So yeah, they are lobbying for their best interests, but when the line gets trotted out the fact that end user still gets their free filing seems to get left out."
Pump your brakes, Chachi. Intuit et al. also lobbied hard against California providing the easy online filing, because they charge for state tax filing. Additionally, many of the "free file" options also charge to get copies of your data out if you're not doing a state filing through them.
So it's not like they're providing an actual free filing in the vast majority of cases where someone has to file both federally and with their state. They're using a loss-leader of fed filing through regulatory capture, and they're pushing for a rent-seeking solution on state taxes.
posted by klangklangston at 11:15 AM on August 27, 2015 [2 favorites]
Intuit wants to provide the "simple, free online filing" services, and they do. Filing a 1040EZ through them (and many other tax prep companies" has been free for like a decade.
So yeah, they are lobbying for their best interests, but when the line gets trotted out the fact that end user still gets their free filing seems to get left out."
Pump your brakes, Chachi. Intuit et al. also lobbied hard against California providing the easy online filing, because they charge for state tax filing. Additionally, many of the "free file" options also charge to get copies of your data out if you're not doing a state filing through them.
So it's not like they're providing an actual free filing in the vast majority of cases where someone has to file both federally and with their state. They're using a loss-leader of fed filing through regulatory capture, and they're pushing for a rent-seeking solution on state taxes.
posted by klangklangston at 11:15 AM on August 27, 2015 [2 favorites]
But god help you if you actually have something complicated going on, because the people they staff are not qualified to deal with anything you couldn't have done yourself on a 1040EZ.
As a Canadian living in the US with Canadian, American and British income I can tell you that if your tax situation is complicated enough and you are not a millionaire there really is nobody that will help you with your American taxes without charging you more than any benefit their expertise could deliver. The real experts in my issues are largely looking for corporate clients or people in the finance issue. Middle class international Joe? Sorry, you are out of luck.
(Also Canadian and British taxes are delightfully simple.)
posted by srboisvert at 3:47 PM on August 27, 2015
As a Canadian living in the US with Canadian, American and British income I can tell you that if your tax situation is complicated enough and you are not a millionaire there really is nobody that will help you with your American taxes without charging you more than any benefit their expertise could deliver. The real experts in my issues are largely looking for corporate clients or people in the finance issue. Middle class international Joe? Sorry, you are out of luck.
(Also Canadian and British taxes are delightfully simple.)
posted by srboisvert at 3:47 PM on August 27, 2015
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