John Edwards wants to simplify the way some people pay taxes. In particular, he has noticed that about 50 million Americans have very simple tax returns — so simple, that the IRS already has all of the necessary information to just go ahead and calculate their taxes for them. Obviously this won’t work for self-employed people or anyone with an interesting set of deductions, but there are plenty of people not in that category.
So Edwards is proposing Form 1, a short form that the IRS will fill out and send to those who qualify, so that they can look over it and make sure it all seems correct. (Via Neil the Ethical Werewolf.) If so, just sign and return it and you’re done. Not only will it greatly decrease the burden both on taxpayers and the IRS, it will also benefit the millions of low-income workers who are eligible for the Earned Income Tax Credit but might not realize it.
It is, in other words, one of the most obviously good ideas to come out of a Presidential candidate in a long time. But wouldn’t you know it, readers of the National Review don’t agree.
Basically they have a single objection, phrased in multiple ways: if we decrease the pain involved in paying taxes, people won’t mind as much. And then they won’t agitate as vociferously for tax cuts. That’s basically it. Some get overly enthusiastic and start griping about employer withholding more generally, suggesting that every taxpayer should be forced to save up money and file quarterly tax reports. That would truly drive home the pain.
And all I want to say is: I really hope this becomes a major talking point among Republican candidates. More pain at tax time! I’m sure voters will appreciate the shrewd calculation underlying this enlightened policy. And as a benefit, since Republican voters are unenthusiastic about the current Presidential field and have already begun to long for a novelty candidate to swoop in and shake up the race, this opens the door for the perfect nominee!
If the Terminator can become governor of California, I don’t see why Clubber Lang can’t run for President. The Mr. T Doctrine is as well-thought-out as what we currently have.
From what I understand, that’s basically the way it’s done in Chile. You log in, you’re told, “this is what the government surmises about you, is it correct (y/n)?,” you say “yes,” and you’re one your way. And then when Chileans come here they can’t figure out why everything is so complicated!
Edward’s idea is goog as far as mainstreamish ideas go. One thing to beware of: the so-called “fair tax”, of Neal Boortz (the corporatist phony libertarian) et al, whic is basically a sales tax on consumption. That let’s investors keep trading commodities and stocks etc. with no tax on their trade income, only when they spend. The idea supporters don’t want you to know, is to let the wealthy continue to accumulate more and more through financial wheeling-dealing, while most of us pay very much for what we buy. Instead of taxing money “once” (a fallacy anyway), better to tax it every time it moves (changes hands) at a lesser rate, if we’re going to change to a truly new system.
[ sarcasm ] Oh, yes, that is such a good idea. Let the government decide what you owe them, and then they send you a bill. Because the government is never wrong. [ /sarcasm ]
And here I thought you guys were a bunch of smart people. So you check Yes on the form and send in your money, and all is well – or check No and get audited by the IRS. Brilliant.
I don’t know, I can see how it might be better, long-term, for taxation to be felt for the evil it is — rather than made “easy.” Think of the kids born without the ability to feel pain — they’re perfectly happy short-term, but tend not to do well after the damage builds up.
Think about how much worse taxes would get if the voting public didn’t feel them.
My GF, about as liberal as you can get without actually being Al Franken, was recently filling out her taxes and nearly driven to tears. She thought she actually had to write the IRS a check this year, instead of receiving a nice refund/gift. During this emotional crisis, being the fiendishly cold hearted beast I am, I offered the following phrase as consolation:
“Perhaps you should consider joining the libertarian party?”
If you are single and can’t handle a 1040EZ then well… I don’t know what to say. 1040A isn’t that much more challenging. I’ve never understood all this nattering about how hard taxes are. I would venture 99% of taxes are pretty straight forward, fill in the blanks – wages, interest, dividends, mortage interest, real estate taxes, perhaps a few stock trades. Most people don’t meet the requirements for a lot of the schedule A deductions (ie medical) which is where a lot of people bonk their heads trying to save a buck (likely because they underwithdeld and will owe money otherwise).
But to place your trust in the government’s ability to know (correctly) your income and deductions is misguided. And are you just suppose to say ‘oh that looks about right’ even though it might be hundreds of dollars off?
If I understand correctly the proposal is that the Form 1 would be voluntary – if you want to file a different form you are free to.
And I would just looove to see people argue to the electorate, “You’re life should be harder so that you don’t get complacent.” Uh huh, that’ll sell.
I ended up owing a boatload to the IRS this year due to some income that didn’t have taxes withheld. I knew it was coming, though, so I saved enough to make sure I could pay it then did. I grumbled a bit, but don’t have any serious complaints since I still came out ahead of where I would be without the untaxed income.
Oh, and it’s not like people won’t look at their earning statements and say, “Gee, wouldn’t it be nice if some of that money stayed in my pocket.” Not to mention the very real reductions in income from tax increases will make people scream more than consistently than having to do taxes each year.
Well that’s the difference between the GOP and the Dems you see. The Republicans are creative, always inventing new forms of stupidity like making taxes more complicated. The Dems are the conservatives: they stick to tried-and-true forms of stupidity; some of them even want to pay MORE tax, which is even more stupid than anything the Republicans can dream up! But since it is a familiar form of extreme stupidity, people can accept it. Familiarity really does breed comtempt.
I don’t understand. Don’t people check out the difference between their net and gross on their pay stubs? It’s all laid out there, every pay period. It’s not like it’s all a big shock come tax time that we’ve been *gasp* taxed.
People who budget monthly know when their taxes have increased. Seriously, yo.
I know I’ve been taxed. I don’t mind being taxed, really. I like having a police department and military and paved roads and social services. I like a great many things that come from my taxes. The stuff that makes me nuts is stuff I vote against. Rinse, repeat.
What I mind is filing them. This year I’ve had an assload of issues trying to figure out deductions because of the book, and it all makes my head hurt.
The Edwards thing sounds solid to me. It reminds me of when I was in college, filling out Stafford Loan forms was a bitch on wheels. And then there was an overhaul, so all I got was a form that read, “Is all your shit the same?”
And I could reply, “Yep.”
And that was that. Easy peasy. Instead of having to fill out the same twenty pages of crap every year.
I think it’s cool that you can scale the heights in science, ala Sean, and still appreciate a good YTMND!
i think it is not quite on the mark to portray this a totally novel idea opposed by conservatives.
Many similar ideas have been floated in the past, e.g. the flat tax etc.
And, I am sure the democratic special interests would vigorously oppose such changes as much as the republican special interests…and politicians of every stripe would have trouble resisting the enormous amounts of money poured into the opposition to such a plan…
it would be great if everything were simpler, much more efficient, but the real trick how to get it done…
Hmmm,
I don’t think the point of the economy is maximum efficiency. I think the point of the economy is to generate the maximum amount of commerce. Maximum commerce occurs when a maximum number of companies with the maximum number of employees make the maximum number of transactions.
Do you see where I’m going with this? The Dutch traded tulips to generate commerce. We made tax forms complicated, and created tax preparers.
I’ll give Edwards and his ill concieved idea the benefit of the doubt, and assume he is proposing this soley for mass political comsumption, and not serious discussion.
mbecker,
This isn’t a flat tax. It has nothing in common with a flat tax. It’s just a simplification of the April tax forms, designed to save time for people whose income streams have already been reported to the IRS.
It works even better than this in the UK. They don’t even bother to send you a form if you are not self-employed and there is rarely any money to be paid in either direction if you are in this situation, i.e. they put in some effort to get your paycheck deductions right in the first place. I had never even seen a tax return before I moved to North America.
Also, you don’t have to fill out a full tax return for simple things, e.g. they have a special form if you only worked in the UK for part of the year. These forms are much friendlier than a full tax return – they just ask a series of simple questions and then the tax office does all the arithmetic for you once you have submitted the form.
Coming from this system, it is hard for me to understand why anyone would complain about simplifying the tax situation in the US.
As another brit I second Matt’s comment. There’s no need for the system to be so complicated. The California state form is actually worse than the federal return! I also lived in Australia for several years, where you do fill in an annual return, but it’s nothing like as hard as the US return.
BTW Garrett, if you get a refund, it just means you’ve been giving the government a free loan.
And for the “taxes are evil” bunch, nobody likes paying taxes, but the system should be fair and transparent. I quite like having schools and highways and the NIH. There are places in the world with no central government and no taxation, but they aren’t very nice places to live.
I don’t complain (too much) about having to pay taxes [although the NJ state marriange penalty sucks royally]. I DO, however, dislike having to juggle all the forms. I hate going through all the stacks of W-2s, 1099-Divs, 511 keVs, etc, just to find $2.87 in interest that I earned last year. I would love it if all this info was sent to the IRS directly and it came pre-populated on the 1040. THen I’d just have to add in whatever corrections were needed.
I also think there needs to be a better way to manage deductions. Once you buy a house, you generally dump the standard deduction and start itemizing. At that point there are a ridiculous number of options that no one ever seems to be able to keep straight. I always wind up kicking myself that I didn’t keep a reciept for some large item I bought last January that I just found out now I could write off. I think we should dump most specialized deductions and find a better way to lessen the burden.
-EDT
I’m going to keep going with the “taxes are evil” rant, because it’s so much fun.
Here’s a great place to see where the money goes:
http://thebudgetgraph.com/
So, Andy, the things you like:
Department of Education = $54B
Federal Highway Administration = $42B
NIH = $28B
Out of a total budget of… $983B
So about 12% of your taxes are going towards things you like.
But this is misleading. Most of the money that goes into the DoEd, FHA, and NIH goes towards restricting these areas, not producing in them. Do you think education, roads, and health advances wouldn’t happen were it not for these government agencies? Ha!
America is a nice place to live because Americans are a great, fantastically inventive, entrepreneurial, and productive bunch, living in an area rich in resources. The government mostly just slows us down.
Sure it would be more convenient for the IRS to fill out people’s tax forms for them. Heck, why not maximize the convenience by having them slurp the money out of our checking accounts — that way we wouldn’t even need to be bothered with writing a check.
Oops, I thought something was off. That graph and budget total leaves out non-discretionary spending like social security, medicare, and unemployment. Here’s a graph with those included:
http://thebudgetgraph.com/forums/index.php?topic=6.0
These apparently bring the total to $2.8T = $2,800B, and the percentage of Andy’s taxes spent on stuff he likes to 4%.
Whatever the opinions, I have to love a blog that tackles religion, politics, and string theory. 🙂
The only difference between your governments spending a portion of your earnings, and you spending them, is that they simply go to different corporations. Governments tend to buy fleets of Fords (particularly for law enforcements) and trucks from GM (particularly for road work and fire departments). Paper is purchased under enormous contracts as are all other stationary supplies; millions of citizens make similar choices because the corporations that get the fat juicy government contracts can provide their retail customers steep discounts (think cpu prices). And so on and so forth. Essentially the only legitimate complaint that a taxpayer has regarding her/his lack of garnering a bigger share of the tax cut (and please please do not suggest that this is something deserved by those whose sole incomes are generated by tax revenues), regards who decides what CEO’s inflated salary gets a boost.
Ultimately not one dollar, not one tenth of a dime, goes unspent along its path back into the corporate largesse, and in most cases these are becoming non-US based companies (Stanley tools is now a Caribbean enterprise for gawd sakes). So complain all you want, but it really comes down to which companies get the money first. It is always sad when i read about people who complain that there are too many people receiving too much money from governments, because eventually all that money goes right back to the same happy greedy corporate enterprises. The complainers are merely expressing their own selfish jealousies. Every dollar you spend goes into the system (extracting most of the real value and returning promised bets against a future that no one can nor will pay off), every dollar you save goes them, every dollar you assume you have invested in real estate or hedgefunds is theirs to do with as they see fit (how many subprimes are going under??).
First: spyder – a very insightful post!
Second, speaking of “taxes” and “pain”:
The worst school *killings* were committed by a guy protesting *taxes* back in 1927, and he used bombs and not guns. More importantly, *he blew himself up*! He was one of our first “suicide bombers”! This is something to throw at arrogant righties complaining about Cho’s gripes against rich kids, or that if everyone there had a gun they could have stopped him (our local ex-marine talk show host at WNIS 790 pointed out that many could die in a cross fire from untrained kids at that time, and in fights before such a tragedy), or Cho’s having an Islamic-themed “Ismael Axe” tattoo on his arm, etc, although I don’t think the general public should give up basic gun rights:
http://freepages.history.rootsweb.com/~bauerle/disaster.htm
On May 18, 1927, 45 people, mostly children, were killed and 58 were injured when disgruntled and demented school board member Andrew Kehoe dynamited the new school building in Bath, Michigan out of revenge over his foreclosed farm due in part to the taxes required to pay for the new school.
http://en.wikipedia.org/wiki/Bath_School_disaster
The Bath School disaster is the name given to not one but three bombings in Bath Township, Michigan, USA, on May 18, 1927, which killed 45 people and injured 58. Most of the victims were children in second to sixth grades attending the Bath Consolidated School. Their deaths constitute the deadliest act of mass murder in a school in U.S. history. The perpetrator was school board member Andrew Kehoe, who was upset by a property tax that had been levied to fund the construction of the school building. He blamed the additional tax for financial hardships which led to foreclosure proceedings against his farm. These events apparently provoked Kehoe to plan his attack.
…
Ed Minchau (#3) is entirely correct.
Also, is anyone else concerned with the issue this raises á la identity theft? It seems to me that this creates way too many opportunities for this information to get somewhere it shouldn’t be.
Just thought I would mention that this has actually been tested before, in California, once a few years ago. It was a very limited test, only for single people in their 20’s, I think, not too clear on the details.
The one thing I do remember is that when they asked the people who received the new form what they thought, it was among the highest-rated ideas the state had ever tried out. They were going to make it a more permanent fixture, IIRC, but all the tax-preparation companies complained and said that this was no different than the government doing their job for them, and the lawmakers folded right away.
So, even if this does enter national political discourse, expect those same companies to invest a whole lot more in lobbying and campaign-funding, and a whole lot of Congressmembers to suddenly develop strong opinions against it.
I wonder if Edwards realized that 40% of America’s households payed ZERO income tax this year?
http://users1.wsj.com/lmda/do/checkLogin?mg=evo-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB117668220910270761.html%3Fmod%3Dopinion_main_commentaries
I like the inverse of this idea:
Conduct national polls via tax forms. You can bubble in for candidates listed on a given years 1040. Then voters will really feel the pain.
In Norway we’ve had simplified tax returns for several years now – it’s come to the point where you can file your tax forms with a short SMS message, and basically say “Yes, you got the right numbers.”
A more common way to file the taxes is the internet-based portal altinn.no , which’ll also give you an updated calculation of how much you owe (or the state owes you) when you deliver the forms. Works pretty well, actually. =)