Home » Uncategorized » Automating Taxes

Automating Taxes

It’s tax day!

This year was particularly complicated for me (due to moving, leaving my job, etc), and so over the past few days I’ve spent hours trying to wrangle Turbotax into submission. Along with over a hundred and thirty million other people, I paid my membership fees for civilization, but only after a collective billion or so hours was spent on needless paperwork.

Why needless? Because the IRS already has the information they need. Most of us are in essence sending them duplicate information, except scattered with random errors. All of the information that goes onto a tax return, pretty much, comes to us from sources that send the exact same information onto the IRS. Your employers send your W2s to the IRS. Banks send in your interest earnings, profit and loss from investments, mortgage interest, IRA distributions, whatever. We just parrot it back to them, except we occasionally transpose digits, make arithmetic mistakes, forget occasional 1099-INTs, etc.

Imagine receiving forms in which all you need to do is look at the information aggregated on your behalf and either accept or reject the result that is computed for you. Sweden already does things this way. You need to do more paperwork only if you itemize your deductions, which only about a third of people do.

The people this would help the most are those likely need it the most. A low-wage worker who didn’t earn enough to be required to file a return might have a refund waiting for them, but is likely to be among the people for whom filing the paperwork is most challenging.

All of us would be better off, and not just because we save a little of our own time. Making it easier to pay taxes means higher levels of tax compliance. If you pay your taxes, then you should want your neighbors to do so too.

Advertisements

1 Comment

  1. Jessica says:

    I completely agree! It is also a money-making machine. Think about all of the money paid to companies like H&R Block and software publishers like TurboTax that profit from this ridiculousness. It seems crazy that we should pay to electronically file a state return, when they probably prefer e-filing anyway because it prevents some of the careless errors. I also agree with your point about this affecting low-income populations. I was a volunteer tax preparer when I lived in Boston and helped low-income people file for the EITC. Luckily, that program is really effective and has a high take-up rate.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: