A way to make taxes less taxing
A group of tax experts has a few suggestions for President Obama's tax reform commission, including a form that would make the act of doing taxes a lot less complicated. John Dimsdale reports.
Tax form with pencil pointing to "Amount you owe" (taxextension.info)
More on Taxes
TEXT OF STORY
Bill Radke: Taxes may be inevitable, but filling out a 1040 every year? Maybe that can be avoided. A group of tax experts is out today with a set of recommendations for President Obama's tax reform commission. One idea could make April 15 a lot less stressful. Markeplace's John Dimsdale reports.
John Dimsdale: How about having the IRS figure out your taxes and send you a form that needs little more than your signature?
Bill Gale at the Tax Policy Center says the government already knows your wages, your mortgage interest, your stock dividends . . .
Bill Gale: With all that information, they can calculate a lot of things, like your eligibility for certain subsidies or deductions. And it's those side calculations that are often the most difficult for tax filers.
Gale says getting those complicated forms already filled out would not only save taxpayers time and energy, he thinks Americans would be more willing to pay their fair share of taxes if they didn't have to work their way through complex instructions.
The Tax Analysts Group is also recommending shifting the tax burden from what we earn to what we spend. The president's Economic Recovery Board has been asked to issue a comprehensive set of reform recommendations by the end of the year.
In Washington, I'm John Dimsdale for Marketplace.
Comments
Comment | Refresh
From Charleston, SC, 09/30/2009
For more info on that idea, go to www.fairtax.org or read The FairTax Book by Congressman John Linder
From Charleston, SC, 09/30/2009
"John Dimsdale: How about having the IRS figure out your taxes and send you a form that needs little more than your signature?"
John, here's a better idea... let's abolish the IRS and don't send in any forms.
No filing, no withholding, no FICA, no invasion of your privacy... simply pass a bill that already has over 60 cosponsors in the US House and Senate.
Simply pass HR-25, the FairTax.
Gone would be the income tax, the payroll tax, the death tax, capital gains tax, AMT and 60,000 pages of convoluted tax law that consumes $300+Billion in compliance costs each year before it collects the first dime in taxes.
Simply pass the bill that is currently stuck in the same committee that would have allowed the House Ways & Means Chairman to get off the hook with his current tax problems of not claiming $2.5million of his assets that he “forgot about".
With the FairTax, no one needs to give a hoot about Charlie Rangel's off-shore rental properties, or his NYC condos. The FairTax would make the U.S. the world’s tax haven attracting mfg business…and their jobs… back to our shores. The typical worker earning between $25k and $80k is in the 25% tax bracket and has 7.65% FICA deducted as well. With the FairTax, that 32% would provide that worker with a 50% take home pay increase when withholding is abolished. It also would remove the approximately 22% of the cost of all new goods and services that our current tax code has embedded in the cost of virtually everything that we buy. Considering the exemption of investments, tuition and used products from this national sales tax and considering the progressive feature of the ‘prebate’, the FairTax is really the BEST tax reform proposal currently being discussed.
So John, while you might want the IRS to do your taxes for you, how about simply moving the tax from the production, income and wealth side of the equation to the consumption side? That would allow YOU to choose just how much you want to pay for the government that we all enjoy.
Adakin Valorem
Charleston
From Atlanta, GA, 09/08/2009
This is a very intuitive and old but impractical idea. From my new book, "The Sex of a Hippopotamus: A Unique History of Taxes and Accounting" (see more at www.starkman.com/hippo). You should do a story on my book.
"Most people have simple finances and don’t itemize. With so much information on its computer databases, IRS could automatically prepare tax returns for them, send the completed returns to taxpayers for review, revision, and signature in order to get their refunds.
Many countries using withholding have return-free income tax systems. Legislative proposals to do the same here have been made occasionally during the past 20 years.
"The main reason this isn’t implemented is that it would take months for the IRS to calculate and send refunds. People run to a tax preparer in January to get a quick refund, much faster than the IRS
can calculate. Employers needn’t file W-2s with the Social Security Administration until February 28 (March 31 if filed electronically) and a 30-day extension is available. The IRS doesn’t have complete W-2 information before May.
My book also explains why we must physically sign our tax returns:
"The main reason signatures are required under penalties of perjury, a former
IRS chief compliance officer once told me, is so the Criminal Investigation Division can obtain an average of four convictions annually for tax evasion. Most criminal convictions involve fraud or tax schemes, not perjury. Must we physically sign millions of returns
just for the sake of sending four people to prison for perjury?
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.