April 17th, 2007
Death and taxes
Oh, the sweet joy of being an American during tax season. Those who have never experienced a foreign tax process might not be aware that ours is particularly onerous. Most countries don't require citizens to file returns at all, unless an individual runs a small business that doesn't automatically withhold taxes from paychecks. Further, the byzantine tangle of regulations that is our tax policy seems particularly unique. Though I'm sure foreign politicians have incentives to game the tax system to benefit favored constituencies, we've gotten particularly carried away with the process here in the U. S. of A.
America is one of a handful of countries (Ireland is another) where citizens have to file a tax return - and possibly pay taxes, even if they live full-time overseas. Granted, you get a much larger deduction to account for the fact that you are likely paying foreign taxes, but if you make over a certain amount, you pay American taxes for that "excess," even if you don't set foot in the US for the entire year.
Televisions have been filled with ads featuring citizens "freaking out" over the prospect of having to file their tax return on April 17th. That, too, is unique, though completely understandable given the random nature of America's tax policy - which isn't really random, so much as so devilishly complex that it is difficult to predict what you will owe in a given year.
Of course, this is unlikely to change. Huge industries populated with names like Intuit, H&R Block, or "Price Waterhouse Coopers" have arisen that make a sizable living off of our byzantine tax laws, and can be expected to lobby against any attempts at simplification. Worse, most Americans would probably oppose simplification, too, if it involved removing "their" deductions - such as those related to servicing a home loan (and we wonder why we keep inflating new housing bubbles in the US every couple of decades).
There's always a vested interest somewhere.
At least tax preparation software exists to help mitigate the complexity. I haven't filled out my own tax return since I qualified to use form 1040-EZ (for non-Americans, that's the one-page "simple" tax form). I used to use TurboTax by Intuit, but flirted with H&R Block's TaxCut product this year and last, though I will return next year to TurboTax (H&R Block's help system was suprisingly terse this year, and it occurs to me they have little incentive to fix that given that they would prefer you to visit a human being in one of their tax service offices).
As noted, such companies would likely serve as lobbying barriers to tax reform, but they have already managed to add one more layer of cost to our tax system by ensuring that I am forced to pay $15.00 to e-file my tax return.
E-Filing isn't all that new, though I wasn't able to make use of it until I returned to the United States (you can't e-file from overseas, for some reason). The IRS wants taxpayers to e-file, as it removes the need for humans to enter return-related information into their computers. Unfortunately, Intuit (among others) lobbied hard to prevent the IRS from allowing consumers to e-file directly. You MUST go through a private company if you want to e-file.
I found this statement by Steve Ryan, a lawyer for the tax preparation industry who helped negotiate this "deal," particularly bizarre (and am astounded the IRS bought it):
"When the government becomes my competitor," Ryan says, "then I have every right to run an ad that says 'Big Brother is watching your keystrokes.'"
Yes, we wouldn't want government to reduce the expense of our unnecessarily complex tax system because it enriches too many companies. Besides, I probably wouldn't use an IRS-provided tax preparation product. The IRS has a vested interest in MAXIMIZING revenue, whereas Intuit sells more product if it helps you to save money. I would, however, like a standard digitally-signed format that any software package could generate and which could be uploaded to the IRS web site, for free.
But that would make too much sense.
John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup. See his full profile and disclosure of his industry affiliations.
Subscribe to A Developer's View via Email alerts or RSS.
| 04/17/07
