As I was slogging through my 2007 taxes, answering a myriad of questions, some of which seem to be very repetitive, I got to wondering what the shiny new presidential candidates are proposing to help me with this annual nightmare. I did a little digging and found that one of the candidates does have a plan for tax reform.
According to the information at TaxFoundation.org, Mr. change, himself, Barack Obama, is proposing that the US government fill out your tax forms and send them to you for signature. He asserts that this will save you money and all you have to do is sign the dotted line and of course, pay your taxes.
Now that would be a big change. Let’s examine this a little more closely. I know taking off the rose colored glasses is no fun, but we really need to look a little deeper at his proposal.
TMI (too much information). There seems to be numerous amounts of personal information that I must tell the government on my tax form. How would Uncle Sam know whether or not I am the head of the household, my tax deductions, gifts to charity, cost basis on shares sold, etc. What if he gets it wrong on my forms? Maybe I am paranoid, but I don’t trust the government to get it right. And we all know how hard it is to change something with the government.
No Time Saved. Because the government does not have all that information, it is not going to be able to “help” me with the most time consuming part of my tax return which is filling in all that personal information, schedule D, capital gains, deductions, etc.
Growing Government. Another result of this proposal would be the elimination of a lot of private sector jobs – tax preparers, accountants, CPAs, as well as the jobs and businesses associated with Tax software. Sure we might still need a few of those, but most could go. The government is going to do all the work, now. This would shift a lot of private business to the government and greatly expand the Department of Internal Revenue Service.
Red flags. Say you did need to amend your return, it seems that any changes would require extra scrutiny, that would be out of the norm and there goes the red flag for an audit.
Now that would be a big change. Let’s examine this a little more closely. I know taking off the rose colored glasses is no fun, but we really need to look a little deeper at his proposal.
TMI (too much information). There seems to be numerous amounts of personal information that I must tell the government on my tax form. How would Uncle Sam know whether or not I am the head of the household, my tax deductions, gifts to charity, cost basis on shares sold, etc. What if he gets it wrong on my forms? Maybe I am paranoid, but I don’t trust the government to get it right. And we all know how hard it is to change something with the government.
No Time Saved. Because the government does not have all that information, it is not going to be able to “help” me with the most time consuming part of my tax return which is filling in all that personal information, schedule D, capital gains, deductions, etc.
Growing Government. Another result of this proposal would be the elimination of a lot of private sector jobs – tax preparers, accountants, CPAs, as well as the jobs and businesses associated with Tax software. Sure we might still need a few of those, but most could go. The government is going to do all the work, now. This would shift a lot of private business to the government and greatly expand the Department of Internal Revenue Service.
Red flags. Say you did need to amend your return, it seems that any changes would require extra scrutiny, that would be out of the norm and there goes the red flag for an audit.
I wonder if the candidates spend much time thinking through some of their grand proposals? It seems to me, once again the politicians are off the mark when it comes to the real problem with taxes. I will spell it out: The IRS tax code is too complex. I don’t want help filling out my form, I want a more simple tax code, an easier form! Argh
For more PF information, please visit the Carnival of Taxes. My article "Tax Stimulus is Steroids for the Economy" was included.
"I wonder if the candidates spend much time thinking through some of their grand proposals?"
ReplyDeleteApparently not. Or perhaps they know it won't work but they will say it anyway because it appeals to the masses.
This would be for EZ filers which actually account for something like 40% of filers. It may take the easy money out of tax preparation but there would still be ample work for complex tax filers. It could actually improve compliance at little cost. Many other countries already do this.
ReplyDeleteThanks for the comments.
ReplyDelete@TFB: Maybe a better question is: Does the public spend much time thinking through these proposals?
@Lord: I understand what you are saying, but there is a reason why it's called the EZ form. It takes 5-10 minutes to complete and well, it's Easy.
The time and money savings for an EZ filer would be trivial, and any proposal to grow the IRS is frightening.
IMO, making a change for the sake of change without addressing the real problem with complex tax filings is poor policy.
You wouldn't believe how many EZ filers use tax preparers though. It may be easy for the rest of us, but it is far from easy for them, and the cost savings for them and the economy would really be tremendous.
ReplyDelete"the cost savings for them and the economy would really be tremendous."
ReplyDeleteNo, actually, there would be a raise in cost to the economy-- we would ALL be paying for lazy EZ filers through more government bureaucracy. In addition, if the people can't afford tax help and want it, there are always income tax assistance programs in any community that will do your taxes for you for free (the ones in my town are advertising like crazy, apparently they don't have any takers). I believe the government may already do this for free through some social programs.
In any case, you must realize that shifting a cost to the government doesn't make it free; it means everyone pays for it now rather than the person using it.
That's an excellent point, Libertarian Girl. Free tax assistance is readily available.
ReplyDelete