I live in New Zealand. I don't have to file taxes if my income is a standard wage my tax payments are automatic. My employer deducts them from my wage and they are sent to the IRD (Our government tax dept). My student loan and super payments are also automatic. If there is anything wrong then at the end of the tax year I can file to correct things.
I also get donations rebates, this is a one page form that lists all my charitable donations. Very easy very quick.
All my details are available to me online. All transactions are there and it's very transparent.
Why would anyone oppose a simple system like this?
> Why would anyone oppose a simple system like this?
Because you want to make people angry and upset at least once a year at the government? Because you want to remind people that taxes are something the government takes, instead of letting them think of taxes as money they never earned to begin with.
I love paying my taxes, but if you think taxes are bad (and lots of people do), then the current U.S. system makes total sense.
I'm sort of with you on this. I am proud to know, for example, that my taxes help pay for healthcare for everyone and schools and roads and so on. I like to believe I'll pay in more than I'll get out and that's brilliant.
However. Come bonus time I really struggle with the bit where they say "we're going to give you £x" and then I actually get a bit over half that in the bank. Somehow I internalise the number x and it feels like the tax has been 'taken' in a way I never would for my monthly salary.
It's an interesting if purely psychological difference in my response to taxation.
I completely agree, it's the one time I find paying tax annoying (UK tax payer). My current employer has an option where you can pay any bonus directly into your pension, which is tax free.
If you aren't relying on the bonus for other things it's a good option. It means the bonus sort of 'disappears' psychologically, but then if you have a mortgage it probably just gets swallowed up by that anyway.
Income tax is still very visible in NZ. On your payslip it lists the before-tax value, and then deductions for PAYE, student loan payments, etc. Plus wages/salary are still expressed as a before-tax rate, so you can see the disparity there too.
I get the argument, but whether or not I /want/ to pay taxes, I still have to, so why make it inconvenient? The NZ government finds plenty of other ways to make me angry and upset anyway.
Hidden transactions are a problem in any somewhat free economy, whether it's insurance, club dues, auto payments to service providers, or taxes. The usual sales point is that "But you don't have to think about them!" and the problem is that you never think about them -- when you should.
That's not saying taxes should be onerous or deliberately painful -- any more than paying your bank's monthly fees should be onerous or painful. But none of those should be invisible, either. Transactions that are never consciously reviewed are never scrutinized for value. That's no long-term good to either participant in the transaction.
Nobody's advocating taxes as "hidden" transactions. You used the example of your bank's monthly fees... which is far less transparent than this suggestion. My bank simply emails me a reminder to check my account with them once per month. It doesn't allow me to contest or correct their accounting at all.
Your fear -- that by removing the hassle of tax preparation, people will dwell in blissful ignorance of their tax burden and the government will jack up tax rates -- is not borne out by my experiences in countries where return-free tax filing is the norm.
In what country are you paying taxes? And is your tax rate above or below 30%?
Based on anecdotal evidence, I think that people paying more than 30% rarely ever "love" paying taxes. Below that, it seems to feel much more ok (I'm also below 30% and - while I'm not enthusiastic about paying taxes - it feels like a fair deal).
Let me add another anecdote here. I live in Denmark, which together with Sweden has some of the highest marginal tax rates. I am certainly in the high end of income, and i am happy to pay my taxes.
First of all, it means supporting a robust social system, that have provided treatment for my family member's cancer for free. Something that would likely have resulted in bankruptcy in the US, prior to ACA.
Secondly, being in the high end of the tax rate, means i have a high income as well - and it seems only fair that i pay more in taxes than people who make very little to begin with. Society has to function, and let's make the broadest shoulders bear the largest burden.
40-45% combined rate here. I'm thrilled to be privileged enough to be in this tax rate, and while I disagree on some of where my taxes go to, I'm upset with that distribution more than I am the rate. I do not want my taxes to be lowered.
Tax rate above 30% here. Considering I just finished a master degree education that was virtually free, with even living costs heavily subsidized (both stipend and ridiculously low student loan interest), I pay my taxes gladly. I'm not sure I will be a net positive for the government for another decade at least.
I think free higher education is one thing that really help sell higher taxes to high income earners. Free(ish) healthcare is awesome, but you get the feeling that it mostly benefits poorer and older people. Free higher education is comparatively cheap, but it makes our lives simpler and stress free.
I'm from Sweden, way above 30%, still love to pay taxes. Countries where they avoid to pay taxes at all cost like Greece is usually a reminder of why it is important that the government really enforces tax paying and that the taxes are high.
Actually, Greece doesn't remind us about why high taxes are good. Their taxes are high. The problem is corruption; the money is squandered, and the economy is choked by taxes, favouritism, corruption and nepotism.
Thus, Greece is an example of why we need to remember to keep our politicians at check.
US worker here with taxes above 40% (if you include state). My taxes are not high enough. We run a deficit. Schools don't get enough money. Roads have potholes. We have poor and homeless people who don't get enough to eat. Etc.
What a sophomoric, bad faith quip. What agent of common infrastructure do you prefer? How many dams have they fixed and how much diplomacy do they engage in?
If people in general "loved" paying taxes, then taxation could be replaced with a voluntary system. It is precisely the fact that the people who love paying taxes are a minority that coercion has to be used.
I don't think that's a fair assessment. Time and time again voters approve plans to increase spending on things they want to have. If the people generally really wanted to drastically reduce government spending and reduce their tax burden they could vote for it, but they don't as long as they think they're getting a fair enough share of benefits from it.
Yes, funding a $600 billion military industrial complex [0]. Just think, your complete yearly taxes were probably almost enough for a single JDAM [1] which was then dropped on Iraq, in a war where 13% of all civilians were killed directly by US-led forces [2], and many more in the chaos that ensued from the invasion.
The problem with that isn't taxation, it's voting in people who approve that spending.
UK tax payer here, so the specifics are different, but I have no problem paying my taxes. We have decent free health care, a capable and I think 'right sized' armed forces for our needs, competent policing and security services and my children get free education. If any of those things were not true I wouldn't necessarily want my taxes to be reduced, I'd want the problems with those services to be fixed.
Right-sized? You have almost no tanks anymore, and the ones you do are 80's era. The Royal Navy is a shadow of a shadow navy. The RAF is woefully under-equipped to protect against Russian incursions.
Its called "chain of numbness". Chasing doesn't murder innocent Iraq children; he is far from it but by aiding financially the army that does murder, are his hands truly clean?
The $600 billion figure is misleading when compared to other countries, as it's not adjusted for cost of living, cost of countries we trust (and therefore buy arms from) also having a higher cost of living, etc.
Why precisely is having the worlds largest military bad? Do you think it doesnt add any value? It seems theres a lot of people outside of America who'd like to see it shrunk for very bad reasons.
Why not keep the military and solve our problems without it? We need it to be safe now, and until we've already solved our problems, we'll still need it.
Obviously it doesn't always work well and it definitely causes problems, doesn't mean we should get rid of or even reduce it.
The bad is there is an opportunity cost of dollars spent. And the US could likely still dominate global firepower rankings at half the current spend, meanwhile this saving could significantly improve the education or health system with that money. Or reduce the tax burden on people. Or simply bank it to reduce the debt and burden of repayment for future years. Lots you could do with hundreds of billions.
"the US could likely still dominate global firepower rankings at half the current spend"
True, but just winning a war or conflict is not an ideal outcome. Overwhelming advantage not only prevents conflict from occurring, it also assures that casualties are low in even low intensity / regional conflicts.
The US operates on the principle that it must outspend the next 2 countries in military spending. It's an insurance policy in case say, Russia and China team up against the US.
Which is madness, of course. Because spending twice as much doesn't necessarily mean Americans see twice the value. I can easily spend twice as much on a worse car than my neighbor owns.
Some people would disagree with you. I believe military and defense spending should actually be one of the only role of governments. Leave healthcare and education to industry. Let the free market decide the curriculum, teachers salaries, and come up with innovative ways of teaching. I see no reason Khan academy shouldn't be allowed to teach our children. Since when did it become common place to allow a government to come up with a path of study, and make it mandatory to send your kid to for 13 years? As governments slowly accept more and more social programs, the government balloons. Value produced slowly stops representing capital. In germany, where social programs are abundant you get a lot of leeches on the economy. Very long unemployment timeframes, with reltively good pay, Full health coverage, unlimited sick time if you have a doctors note. In a system that can be "gamed", there will be a large amount of people who do so.
I don't believe there are systems that can't be gamed. Given that assumption it's probably better to decide policy based on actual results. In places where social programs are abundant you have fewer suffering individuals, it seems healthier to count that as a win and not get hung up on the (truly rather small) percentage of people potentially gaming the system.
Seems like the comment you're replying to is fine with our system that can be gamed by those at the top but is afraid of gaming by those at the bottom.
A large military "in reserve" becomes stagnant, and unable to operate in new real world conflicts. Look at the Vietnam war, or the current conflict in the Ukraine. Tactics change, and large militaries bent on keeping their swollen budgets in tact are poor at responding to emerging threats.
My point is that these smaller conflicts (albeit mostly misguided) are useful to guide and reform strategy, tactics and spending.
So we should kill a couple of hundred thousand people every decade or so to keep our game up? Seems pretty indefensible. I'd rather invest a much smaller amount of money into honest red team war gaming.
I said they're useful, I don't agree or advocate the strategy. Like it or not (I do not) small regional conflicts teach valuable lessons that cannot be learned in training, or during "war gaming". When the enemy possess weapons or tactics that you have not seen used, or demonstrated they cannot be integrated into a war game. Look at the upgraded armor, drone usage, IED detection/suppression, sniper detection developed for and used in the middle east. This barely existed (maybe in concept) before the conflicts of the 00's. Similar lessons are being learned in the Ukraine right now (counter drone operations, active tank armor, electronic warfare/signal jamming etc.)
I think people argue not with having the largest military, but with having military expenses which are 3 times those of China and 10 times those of Russia, and with the rest of the big countries being US allies.
I agree with you completely. There are so many unknown benefits that we gain with having such a large military that its very hard to calculate. Also, one of the worst things that could ever possibly happen in a war is being evenly matched. If one country (or group) isn't completely superior in every way, the war becomes a meat grinder and lasts longer than it should have.
Would you like to pay more? Because that is an option.
edit: OK, I understand the sentiment of being happy to contribute to society, but no-one assumes a perfect equation of their taxes to the appropriate and desired government spending thereof.
I take great pride in paying taxes. It's such a good deal when I look at what it would cost to be American.
I'm not trying to rag on being American. But I've got close ties with the U.S. so often I compare what a life event would have been like, had I been a typical U.S. family of my economic class.
Sweden. Free university, no fee healthcare for kids, a few dollars for adults. But it's a sketchy country... be careful if you go there. #lastnightinsweeden
You'll find sketchy things in any country. "Be careful" is quite the exaggeration in my opinion. Not going to the worst neighbourhoods during Friday nights applies to anywhere.
Southern Sweden seems to have a "last night" problem pretty much every night except when Trump spoke about it.
(Swedish crime rate is still low, at least in homicides it's much lower than the U.S., but Sweden is unlike most Western countries in that the murder rate has stopped going down and has turned upwards, and the politicians sem to be in denial. The police are laying down unsolved murder investigations simply because there are so many newer cases.)
Same here. Every time my son is unwell, I get an almost instant appointment with our local doctor. All his medicine is paid for. He gets a good education, a safe environment in which to grow up, lots of good activities. Taxes might have been lower in Victorian England, but I sure as hell am happy I was born in the 1980s.
I equate this to the first time I paid my own rent. I loved it. I was paying my own money for my own place and it felt awesome. It seems crazy to love paying rent but there was a period of time where I did.
That makes sense if you're a 3rd world immigrant, because the value delta between your old life and your new life is immense. For someone born in a 1st world country, it makes little sense to compare their situation with that of a 3rd world denizen. Reference points are subjective. I take issue with the way my government collects taxes and how it distributes them. I don't care how Africa or India are doing.
When I went to Australia I was surprised at the number of people from my ethnic background who had immigrated as adults and would complain bitterly about taxes. They loved the safety and security, general standard of education, healthcare, amenities, infrastructure, opportunities and their secondary effects (well-educated employees for their businesses, people who showed up to work instead of being home sick and so on). They just couldn't connect with the idea that taxes might be the reason that these were available.
It would guess it's a pretty common thread among people who grew up unused to a properly functioning government.
You were forced to immigrate to this country?! Otherwise... the "force" part here is more like, "I was forced to pay for the meal I decided to eat at the restaurant! How dare they!"
Maybe because in real world the choice is between fixed alternatives and not imaginary scenarios? Even if you think US taxes are way too high and immoral, it's not like you can live in a country like US but without taxes. You can live in a country much worse than the US with taxes, or in US with taxes, or in a country with failed government where there are not taxes but instead people might just kill you on the street. So you might make non-ideal choice, knowing it's not ideal, but it's best of what you have. Every country has its benefits and its flaws, and accepting it as it is doesn't mean one has to be blind to the flaws.
Maybe there's a correlation for a reason? Namely that functional governments which keep the peace and provide services to their citizens need income in order to operate.
What US government is doing goes very far beyond "keeping the peace". Only the discretionary budget is 1.5 trillion dollars. Americans would be a really wild bunch if it required $1.5 trillion to "keep the peace".
Roads are the go-to argument for the value of taxes. But it's a dumb point to make because there are a ton of programs which we fund but do not benefit from. In fact, the vast majority of every dollar we pay in taxes does absolutely nothing to benefit us directly. No one argues against true infrastructure investments, it's all the other b.s. that we hate (immigrants and non-immigrants alike).
Being a dick to someone for seeing what's wrong with the taxes here is awfully small of you.
Not really happy paying high taxes, but I think the alternatives are worse. The definition of "first world country" should include "takes care of the less fortunate ones". Which, when I look at countries with less taxes than mine, doesn't seem to happen.
I have a problem with the rate, collection and spending of taxes. I'd love to see us move away from property and income taxes... Income taxes are at least technically a tax on trade though. I'm not quite sure what the answer is, to be honest. I've just seen so much waste, it sickens me.
Come up with an alternative that's better and I'll happily support it. The problem is that too many people are comparing the current system -- taxes to fund governments -- with a nonexistent utopia.
Yes, I love the command line and want to remind people how it was back in the days when they didn't have these GUIs. Everyone will have to give up the GUI! Its a legitimate cause! : ) </sarcasm>
It's almost that simple in the US if your situation is that simple. What happens in NZ if you make $400 selling vintage cabbage patch dolls on eBay? What if you earned $1k in returns on your investment account? What if you are renting your place out on Airbnb?
If all you have is a simple income in the US, then the 1040ez is a single page and you can file it for free online if you make under a certain amount. You can pay a few dollars to file online if you make more.
Obamacare has added an extra level of complexity now, but that is also very simple if you don't need or want the subsidy.
In practice, the difference between US and other countries is still pretty big.
In US, about 60 percent of individual tax returns are filed by a professional tax preparer, at every income level. People who owe no income tax still have to file tax returns to receive tax credits. In many other modern countries, _the_majority_ of the tax payers file no tax returns at all.
60 percent? That's kinda high. Maybe force of habit, since I don't believe 60% of returns need a tax professional. TurboTax or analogous software probably can do most of the middle class returns. That's what tax preparers are use most of the time anyway - they just ask proper questions, get the docs, put them into software in the right places and file the result. May save some time, and knowing where to put the numbers requires some knowledge, so no problem with that, but I doubt it really needs that and can't be done by a good software.
> _the_majority_ of the tax payers file no tax returns at all.
I think there's a confusion here. Maybe several. First of all, in US filers and payers are not the same, as you may pay federal taxes (e.g. by deductions) and still not have to file (e.g. low income). Second, there are state taxes, which most countries don't have. Third, many countries just don't have the tax return as a thing - if you got something deducted, it's gone, good luck getting anything back. In US, you get stuff back for mortgage interest, state taxes, property taxes, charity donations, etc. etc. - you can get quite a decent amount of money back. I think it's better than just sending it over and getting nothing back, even if it could mean a bit more work.
In India mostly people prepare their own tax statement. If you are a govt official then your taxes are auto deducted AFAIK, if you are working in pvt then there is less than a three step procedure if you are willing to do your statement yourself else upload form16 on a online site to pay tax. Mostly those who earn an awfully large income use tax professionals.
My favourite part of our tax system is the advice to file if you have "income from an illegal enterprise"
EDIT:
Just as a reply to the original point. I'm not sure how complicated the US system is. I'm not trying to say it's bad either, it just seems to me that we have a system similar to the one that is getting lobbied against. And I like our system, it works well for me..
FYI - At various stages of my life I've filed in New Zealand, Australia, UK, Switzerland and the US (California).
I can't generalize to all persons, but I do have a decent spread of countries in my own experience - and the US was by some serious margin the most complicated.
It isn't that bad in the US using turbo tax. Just remember to answer no to receiving payments from the "Ottoman Turkish Empire Settlement". (Actual question).
Kind of an ironic comment on an article about how the maker of said software is lobbying to keep taxes complicated so they can continue to sell you their software, isn't it? :)
A counter viewpoint - maybe the system has to be complicated to provide all the various incentives that voters want taxes to do, and to patch all the loopholes that would otherwise be open. Maybe such a system is too complicated for a lay person to understand so they delegate the understanding to private enterprises which can compete to provide the cheapest or easiest interface to the complicated system. If it wasn't the taxpayers paying for the complexity directly, it would be the government which would charge everyone via those same taxes to implement their own clunky government computer system that people would hate even more.
Countries with simple tax rules don't get to micromanage their economy so much.
The system can be complicated, but all those complications can be handled by the tax agency. For the vast majority of people out there, all the data that you put into your tax return is something that IRS already has, or can easily obtain. And when that is not the case, you should really only need to tell them once (and then update if it ever changes, like the number of kids you have).
Tax filing in US is a huge waste of people's time. I wonder if anyone ever computed the amount of people-hours spent on this malarky, and how much productive output it could generate if used for something else.
HR Block is free if you just file a 1040, the "professional" version is $40. If you're paying $100, either you are seeing a tax professional in person or you are vastly overpaying. Presumably you would only meet with a tax professional if your situation is significantly more complicated than most.
I pretty much have to pay the higher amount for preparation, lest I end up in a legal quagmire over the few thousand I earn on the side a year via 1099 income. I can handle the EZ form, but the stuff for business expenses and income become interesting to say the least.
Although I guess it could be worse... I generally have extra taken out of my regular paycheck so I don't have to make quarterly payments. But it's just guesswork for the most part, as I just don't know where things will be precisely. Some years, I'm happy not owing anything, or at least much (I've owed the state a couple times), Other years I get more back than expected.
This advice is probably not explicitly given by the IRS, but it is what any decent tax attorney will tell you. They got Al Capone not for his other crimes, but for tax evasion.
"Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."
"If you receive a bribe, include it in your income."
"You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity."
"If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner."
Im not sure if there is anythng special about it. You can take a bribe, get caught and sentenced but that doesn't excuse you from paying taxes. IRS just wants their cut; they are not criminal law enforcers, just a collection agency.
I think the common expectation is that the illegal income/property will be seized by the state and hopefully returned to its rightful owner. No need to tax anything since the thief won't have anything left at the end.
The IRS seems to account for that with "unless in the same year, you return it to its rightful owner."
I wonder what happens if you steal something, keep it until the next year, and then return it? Do you declare it as income in the year you steal it, and a loss in the year you return it?
(Probably not. I'm too lazy to look it up, but I recall another document that explains that, while income from illegal activities is taxable, expenses for illegal activities are not deductible.)
I'm also a kiwi and have been working for over 15 years and have a student loan. The only time I have to do anything is when I file an optional personal tax summary to see if i/them owe anything. It takes less than 5 minutes online and is free.
I'm in Japan, not NZ, but the system here is similar to what grandparent described.
In over 10 years here I have never needed to do anything more than to sign a couple of forms provided (and pre-filled-in) by my employer, once a year.
If you make only the equivalent of U$400 in extra income, there's no need to declare it. I think the cap is around U$2000.
If you own a standard investment account, your broker will automatically levy taxes on your dividends and capital gains (rates are the same, BTW). You can still open a different type of account if you want to pay the taxes yourself. But if you're just investing for retirement and going buy-and-hold-forever there's little reason to do so.
In NZ we have virtually no deductions ... No carve outs for special interests. So no schedule A .... But more importantly that means that employer withholding is simple. As an employer it's also trivial to do PAYE and get it right.
Also we have no capital gains tax (a mistake IMHO). Tax on interest, (and a second income) is withheld by banks at our nominal marginal rate.
In practice if the govt doesn't care about the tax on your cabbage patch doll, unless you are selling thousands of them it costs more to collect that tax than they would receive
And if you incorporated your ebay business, it would likely pay very little in taxes too. But then you'd take the same income as wages and pay the same income taxes you did before you had a legal title on your business.
At least in the Netherlands, that is not allowed.
With an LLC you have to give yourself a living wage. Also, if you mark them as profit (not pay them to your employee (yourself)) you have to pay corporate tax.
You also can't just deduct your breakfast.
In fairness most corporations shouldn't be paying taxes... their investors and customers do though. Also, corporations shouldn't have legal "personhood" or rights to invest in political agendas either. Also, corporate owned property that is unutilized or underutilized should probably be subject to forfeiture for better use.
But that's because I feel that corporations should be mostly about collective ownership and protection from direct liability. It shouldn't be a carte blance.
Well, whether or not corporate income taxation is a good thing or not is up for debate, and it has to do with your own politics. However, I think it's crazy that we have it written in law that corporations should pay income tax, but there's enough lawyers and loopholes that 1/5 of them don't. Meanwhile making some side-cash on ebay could possibly garner attention from the IRS..? It's a misalignment of incentives.
A VAT and tax on currency exchanges instead of income taxes would probably work out better all around... But that would be a huge shift. But in general, corporations serve as collective ownership and have dividends, labor, and other purchases and expenses. These can/should be taxed.. but income tax on a corporation is kind of counter-intuitive to me, only because a "corporation" doesn't actually pay tax, it's their customers. It doesn't come from, or go to nowhere.
I have filed in four countries in my lifetime: US, UK, France, and Germany. No matter how you put it, the US is the worst in terms of complexity. Even people on a regular salary use assistance to avoid making mistakes.
Same here in Norway. They send me the form to fill in but it is already filled in so all I have to do is correct anything that is wrong or missing. For me that is only property and money held off-shore.
And, of course, I can make the corrections on-line using the tax department web site and I get an immediate estimate of how much tax is due (or overpaid) after the corrections.
Of course Turbo Tax would be against a system like this because for most people it would mean that they don't need to pay Turbo Tax.
So in other words, the free market has produced a pile of jobs that we don't really need? Lobbyists get paid money to get politicians to supply a deduction as a line item on some obscure form, which increases red tape, which requires a need for a free market service, the revenue from that service in turn goes to feed more lobbying for more red tape. This is basically collusion, using the worst aspects of the free market and government, in simultaneous failures.
Meanwhile, the accounting and tax lay industry is part of the lobbying effort to grow their business on the back end, rather than making the case to the customer on the front end. It'd double dealing.
So I'm hardly sympathetic, but yes considering there are an ass tonne of jobs that would just vanish overnight, there'd maybe need to be a transitional phase, just avoid an abrupt change. But how do you shrink a market in a non-disruptive and fair way considering it grew in a distruptive and unfair way in the first place?
So in other words, the free market has produced a pile of jobs that we don't really need? Lobbyists get paid money to get politicians to supply a deduction as a line item on some obscure form
Politicians protecting an industry through action or inaction, no matter if its lobbyists or others suggesting that they do, isn't the free market.
The free market will necessarily reward a small number of winners way out of proportion to everyone else. These companies will have a much larger lobbying war chest. Stuff like this is not somehow a betrayal of market principles, but the perfectly predictable result.
It is all very well excluding corporate lobbying from your scholastic definition of a free market. Such a market will never exist anywhere for more than five minutes.
I think the implication is that countries that espouse their "free market"-ness end up with a lot of regulatory capture. This, telecoms, healthcare.
A bunch of people with a lot of money have been able to lock in their positions. It sure feels like pulling out of the church of laissez-faire economics would let us, say, pass laws with things like price controls (or just nationalizing the whole industry!).
An aside: complicated taxes aren't the opposite of "free market". For example, giving tax incentives to new companies can help make a market more free by reducing the cost of entry.
Sorry, you're never going to have a society where the government is a 100% neutral referee and everybody else is a part of the 'free market'. As long as there is an incentive to rig the game, people are gonna rig it.
Housing is very far from free market, from zoning regulations to building codes to property taxes and school districts to rental regulations. Banking is also pretty much the opposite of it, from the Federal Reserve dependency to Fannie and Freddie loan guarantees.
Fair, but both are significantly more free than others.
Rent is not really heavily regulated outside of California and New York. Similarly, banking is indeed regulated in specific sectors, but not really across the board
It might be helpful to think of "free market" as a scale instead of an absolute definition. Level one free market: socialism, where people were still using money from a salary to buy everyday goods from people-owned "enterprises". Level ten free market: you buy protection at market rates or someone takes away your sandwich, if the protection takes the sandwich don't buy from the same vendor again.
I imagine discussing relative merits within the range of roughly level four to level eight would be far more fruitful than the usual "my free market is tougher than your free market" posturing.
Why shouldn't they have to adapt to rapid changes in the "free" market like we do? Notice it wasn't called anything like the "dot-com gradual-and-not-too-painful realignment." Why the special consideration for tax people? I mean, if we're going to vaunt the free market, let's let it splash everybody, not just the little guys.
I think that we have a cultural problem. People chose to take out loans for their tertiary education because of our beliefs in the tertiary educational system. College is to get a job, but we believe it's there for us to "discover ourselves." And that's how we end up with accountants.
Sometimes I wish there was some website where non-partisan smart people scientifically identified the current problems and come up with a finite, exhaustive list of possible problems. And then, determine the amount of money it would take to test a hypothesis. If they do and it fails, then they must take into account that hypothesis and correct for it.
How much money would need to be raised?
It's just too bad that I've never encountered anyone in real life that thinks like this. It feels so intuitive when you approach it like a computer problem.
I think the problem is that that political science is paradoxical in itself and goes against on of the most important tenets of science and reason: that we must give up our beliefs if the evidence proves them wrong.
Is there anyone out there who is balanced enough to actually be bipartisan? How would one search for such a unicorn? Is it really impossible?
Such a list isn't possible because of differing interpretations of reality and basic facts and differing interpretations of what even constitutes a problem.
The United States has a complicated tax code because it attempts to make things more "fair" for some people. Some of these are things people like, such as deductions for people with children, paying mortage, etc. Some are more dubious.
One difficulty is that it's easier to pass a tax break through a budget process than to pass an equivalent "handout" through a separate one.
For example, in France if you have more than 3(?) kids, you get 70% off all train rides. That required this whole process to get set up (I imagine it was more through regulation than law but you at least need the budget to the SNCF).
The easiest way to get an equivalent thing through the US legal bureaucracy would be to do: "If you send us receipts of your train tickets and have over 3 kids, we'll deduct them from your taxes at 70%".
It "pays for itself" in the sense that the government doesn't have to give money to Amtrack, just give back money that was just given to it by the taxpayer. It doesn't require intergovernmental coordination, just the IRS. It can be passed through the huge budget process. Much easier than many other regulatory schemes.
Well, yes. For instance, Finland, where I live, has a very much simplified income tax collection procedure. Deductions for people with children have been eliminated. Deductions for mortgages are being eliminated. All this in the name of simplicity and, yes, fairness.
After all, if you can afford a mortgage, you are clearly well-off, so you should be taxed more.
(And there is a good point: Mortgage deductions distort the housing market. But rent subsidies distort it even more.)
Why is it fair to give a deduction for mortgage? Buying a home instead of renting is just choosing to invest in real estate instead of anything else you might invest in. Why artificially subsidize one extremely illiquid and volatile type of investment?
If you think that is bad, wait until you discover the situation in Australia.
In the US, you get a deduction for interest on your primary residence. In Australia, you cannot do that, but instead, you get to make a deduction of interest in any investment property you own against your personal income! Plus investment properties have a lower capital gains tax rate than other asset classes.
Can someone from US confirm the tax treatment of interest on investment loans? Are they counted as an expense? Can losses from an investment property be deducted against other income?
Also, in US is there any capital gains discount for property?
because you want to incentivize homebuying. Homebuying isn't just an investment. When your mortgage is paid off, it also means your cost of living when you can no longer work is much lower. It also means that you're less likely to be homeless or rely heavily on social services when you can no longer work. Homebuying also spurs a MASSIVE industry of homebuilding, and home furnishing, upgrading, etc.
If I buy real estate as an investment, I can deduct the mortgage like any business loan. Why artificially penalize owners who want to live in their properties over owners who don't?
One could argue that by subsidizing home ownership you redistribute profit from people that rent out housing to those that would have been renting that housing.
Mortgage interest is also deductible for rentiers. If owner-occupied mortgages were not deductible, it would be redistributing income from those who live in the properties they own, to those who own property and live elsewhere.
Yes, and by the same logic, subsidizing buying Apple shares redistributes profit from people that make iPhones to people that buy them. Why don't we do that instead?
That's isn't actually what subsidizing apple shares would do?
But the answer, is that people who buy and rent out property are generally better off than those renting, so redistributing income between them decreases income inequality.
This, in general, shouldn't affect most folks' ability to have a simple tax filing system.
Your bank already has records of things like mortgages which they [can] report to the IRS. You can figure out two-earner tax rates with a program or chart. People already report their children in the W2's. The IRS already has the information on file and I imagine they use it to filter out folks that might need audited.
Even with tax credits, a complicated tax system, and all that, there isn't a reason why this can't just be done upfront instead of after the fact - at least for most folks.
The UK has a similarly simple tax system as New Zealand. Taxes are taken out of pay every month, and that's it.
Every individual gets assigned a tax code, and that tax code defines how much is taken from your pay. That tax code takes in to account how many kids you have etc. etc.
The UK tends to approach tax deductions in a different way, preferring to subsidise stuff up front instead, so you never have to remember to file or figure out what your deductions are. You never paid out the money in the first place.
Do you get any kind of deduction for giving to non-profits/charities? I give about 12-15% of my gross income to non-profits/charities every year and get a generous tax deduction for doing so. The other thing that tends to be complicated with my taxes is selling stocks. How does the UK handle things like that?
People don't tend to invest so much in stocks, instead settling for other instruments, like ISAs that already handle the tax end of things (https://en.wikipedia.org/wiki/Individual_Savings_Account). ISAs are an attempt by the UK government to encourage saving / investment by providing tax incentives to do so. Again, tax considerations done upfront vs after-the-fact.
If you do invest in stocks, you're liable for capital gains tax, just like in the US, but whether you need to file or not is dependent on how much you actually made.
If you make too much, you'll have to file taxes yourself, but it's relatively straightforward.
The point is not that the system is perfect, but that it handles the case for probably >90% of the population, without stress or complications for them.
It depends how you donate, but for payments direct from payroll (if your employer supports it) you essentially pay out of your pretax income.
For cash gifts the charity can claim back 25p in the £ on your gift. For property, land and shares you deduct it against your tax payments at the end of the tax year and claim for a refund.
In the UK people tend not to own stocks directly but through one of the various investment "wrappers" such as the ISA (individual savings account), which are tax-free for up to £15k/year investment paid in.
Stocks shouldn't be complicated; you've got a cost basis, a date of acquisition, a date of disposition and a final sale price. Withhold based on the deltas and you're all set right?
ESPP are complicated for me because my company withholds the taxes already, but that isn't reflected in the form I get from the stock company so I have to spend significant time every year refiguring out how to adjust and report everything while cursing myself for not taking notes the previous year.
I doubt that it is the only reason, but I can tell you that it is the dominant force also outside the United States. I could not think of a better example for "perfection is the enemy of good" than tax systems.
Just throw it all out and call it good enough. If you really need deductions for expenses, found a business. For persons, expenses are indistinguishable from consumption.
One thing that makes it even more complex is state deductions. For example, in Massachusetts you can deduct rent payments to your landlord from your taxable income.
Yep, same for Australia - taxes are withheld automatically from your pay and then at the end of the year, you put and extra income and your deductions into the free web app that the tax office provides. I don't think I've ever spent more than an hour filing my return.
Yeah,,, consider yourself lucky that you were never employed by a employer who didn't provide PAYG summary. That is all-ways a interesting conversation with the ATO and your accountant.
I've been reading this thread and it's insane. In technology impaired Croatia since this tax season I don't even have to report any tax returns, everything is completely automatic.
"Paying taxes" is a number on my paycheck that says how much money went to healthcare, tax authority etc.
because far too many people vote against their own interest just so gay people can't get married, or transgenders using the right bathrooms or to stop the war on christmas or whatever fake crisis was invented for that election year.
It works the other way around as well. The left votes for social issues that upset the established cultural state, and which in the grand scheme of things will have minimal real impact (like transgender people using any specific bathroom). Social issues are a dividing force that occupies both sides of the spectrum, it's conveniently used as a means to divide and conquer. It's why most politicians will take on social issues as their political battle cry and shy away from issues that will impact financial markets. It's easier if you don't bite the hand that feeds you (wealthy donors).
> because far too many people vote against their own interest
You don't get to decide what other people's interests are, and you certainly cannot make an empirical case that the interests of all individuals would be better served by voting one way or the other. This sort of reductionism and failure to interact with people you disagree with in good faith ought to have no place on a professional forum like this.
>You don't get to decide what other people's interests are,
I absolutely can,there are far too many voters who are now upset that obamacare & the aca are the same thing and they're going to lose their health insurance.
In the US, taxes are usually deducted from your paycheck- however, you have to file every year because the amount deducted is rarely even close to the actual amount owed. Not sure how it breaks down, but I would not be surprised if the majority of people in the US get refunds every year because the Government takes more than they are entitles to. This gives the Government free float. It would be wonderful if we had a more simple tax system where the withholdings could be accurate without needing to tell your employer too much about your private affairs.
Pretty much same system here in .dk. I remember when I was a child back in the 1980s and my dad went through the annual ritual of filing taxes. It was a big hairy mess of papers accompanied with colourful cusswords. These days it's just a quick glance at a prefilled form (we can correct values but we usually don't need to).
U.s. govt uses tax code to incentive behaviors. We have 1040ez which is almost as simple as the NZ system if citizens don't want or have any deductions.
This really has nothing to do with the topic, every country uses tax codes in that way we just have a simplified system to calculate and pay taxes in other countries
I think the comment has everything to do with it: every time you use the tax code to legislate the behavior and choices of the people, it causes the tax code to become less simple by the very fact that the citizen now has to track that behavior. For example, take charitable donations. Because they're tax deductible, I have to track them, or forfeit the deduction. That's extra, manual work that must be done. Now multiply that out for every behavior that some congressman thinks should be encouraged, and it shouldn't be surprised that the taxes are complicated.
A tax form is essentially a giant function, but one with tons of inputs. It can only be automated once all the inputs are known (essentially, that's the job of tax software). The only person that has all of those inputs is you, so you're forced to buy TurboTax to be able to reasonably input and evaluate taxes.
If you're thinking that all these inputs could ever be tracked by the federal government in a giant database, I still think it's crazy: you'd need a database for student loan interest paid, which every loan organization reports to, for charitable donations, for stock purchases, for stock sales, for dependents, etc. (I don't even know how you'd begin to track dependents, aside from how we do it now: manually.)
Complexity counters incentives, though. Unless the only incentives you care about are the ones available to wealthy individuals and large corporations with tax lawyers. If you burry the incentive in a pile of complicated forms, it's not an efficient incentive anymore.
The 1040EZ has a long list of requirements that can exclude someone from filing with it; including, in some circumstances, those with otherwise simple tax situations (1 job with 1 income).
I also get donations rebates, this is a one page form that lists all my charitable donations. Very easy very quick.
All my details are available to me online. All transactions are there and it's very transparent.
Why would anyone oppose a simple system like this?