kmgenesis23: RaceDTruck: Fix the tax code

Fix the whole system. Do what the Aussies do. So much simpler.

No first world country has a simple tax code. You simply can't have that in a modern economy.

And for the vast majority of people, US Federal taxes are quite simple and the worst thing about them is the media playing up how awful they are and making people thing that that armed agents are gonna bust down their door if they have one penny out of place. But reality is that a trained monkey could prepare most people's returns.

The US IRC is particularly long in word-count because the US legal system relies on everything being explicitly spelled out. For example, many counties have a law called the "General Anti-Avoidance Rule" that basically says if something is done solely to exploit a loophole against the clear intent of the law, it is illegal. That concept would never fly in the US so every tiny hole found in the tax code needs a new law to cover it.

But it isn't really that bad as 99% plus of the IRC is irrelevant to the vast majority of people. The bulk of it will deal with business income, weird investments, and blocking up loopholes that have historically been exploited. The same goes for the tax laws of every country.

As someone who professionally prepares both US and Canadian personal tax returns, I would say that for most regular people the US tax rules range from equal to slightly more complex than Canada. The biggest source of extra complexity in the US being state and local filings (only Quebec has separate filings in Canada and otherwise you just pay tax for the province you resided in on December 31 as part of your Federal return). The other somewhat notable items that come to mind being the various filing statuses (in Canada everyone files their own return) and, for people with small businesses, depreciation (the various systems and options are much more complex than in Canada).

From working with taxpayers and tax preparers around the world, Germany seems to be about the worst for a mess of deductions and credits available to people (far worse than the US).

Wizzbang: dywed88: kmgenesis23: RaceDTruck: Fix the tax code

Fix the whole system. Do what the Aussies do. So much simpler.

No first world country has a simple tax code. You simply can't have that in a modern economy.

And for the vast majority of people, US Federal taxes are quite simple and the worst thing about them is the media playing up how awful they are and making people thing that that armed agents are gonna bust down their door if they have one penny out of place. But reality is that a trained monkey could prepare most people's returns.

The US IRC is particularly long in word-count because the US legal system relies on everything being explicitly spelled out. For example, many counties have a law called the "General Anti-Avoidance Rule" that basically says if something is done solely to exploit a loophole against the clear intent of the law, it is illegal. That concept would never fly in the US so every tiny hole found in the tax code needs a new law to cover it.

But it isn't really that bad as 99% plus of the IRC is irrelevant to the vast majority of people. The bulk of it will deal with business income, weird investments, and blocking up loopholes that have historically been exploited. The same goes for the tax laws of every country.

As someone who professionally prepares both US and Canadian personal tax returns, I would say that for most regular people the US tax rules range from equal to slightly more complex than Canada. The biggest source of extra complexity in the US being state and local filings (only Quebec has separate filings in Canada and otherwise you just pay tax for the province you resided in on December 31 as part of your Federal return). The other somewhat notable items that come to mind being the various filing statuses (in Canada everyone files their own return) and, for people with small businesses, depreciation (the various systems and options are much more complex than in Canada).

From working with taxpayers and tax preparers around the world, G ...

The laws just keep building up.  Everyone just loves to create new laws.  Not taking obsolete laws off the books. Not changing existing laws.

Every year the rules get more complicated.

It's like pissing against a fire hydrant.

Eventually, this whole web of chaos will become so complicated that no lawyer will really understand it.  We will have to depend on AI to spit out an answer.  This crap is completely inscrutable to the common person.

Of course the laws keeping getting more complicated, every year people invest millions upon millions of dollars into finding ways to exploit the laws and new laws are needed to stop the new ways people find.

LordJiro: dywed88: Of course the laws keeping getting more complicated, every year people invest millions upon millions of dollars into finding ways to exploit the laws and new laws are needed to stop the new ways people find.

Also, companies like Intuit lobby heavily to keep the tax code complex and to make it as hard as possible for the average schmuck to file. Capitalism means tolerating useless middlemen whose entire existence is based around getting rich by actively making life harder for everyone else. See also the health insurance industry.

The thing is, for the majority of taxpayers, they could easily do their own taxes in a couple hours at most. They have just been conditioned by the media to be farking terrified of taxes.

Yes, the process could be made a bit simpler, but not really that much. The government could send out a letter with what they have from your employer, banks, etc and you only respond if it is wrong. Would help a few people but checking the numbers isn't much easier than copying numbers from a W-2 and a couple 1099s into a computer.

But the idea of big scary taxes for regular people are mostly a myth. And if something ever does go wrong, if you are open and honest with the IRS it virtually always comes to a good conclusion. And owing money to the IRS is far better than owning it to any bank or other company.

kmgenesis23: B) Are you saying New Zealand doesn't have a modern economy?

No, I am saying if you look into the New Zealand tax law it isn't simple. It might be simple for most people, but so is the US system.

Ecliptic: You know I'm pretty lefty and all. But what farking right do the feds have to money California wants to hand out to its citizens for whatever reason. The answer should be easy. None, and kindly fark off IRS. Also, the time to figure out what you wanted to do with this should have been WELL before you opened the filing window. Twats.

Income is taxable.

Doesn't matter if it is from the state, the Federal government, or any other source.

The question here is likely if this is considered income or a refundable tax credit.

qorkfiend: dywed88: Ecliptic: You know I'm pretty lefty and all. But what farking right do the feds have to money California wants to hand out to its citizens for whatever reason. The answer should be easy. None, and kindly fark off IRS. Also, the time to figure out what you wanted to do with this should have been WELL before you opened the filing window. Twats.

Income is taxable.

Doesn't matter if it is from the state, the Federal government, or any other source.

The question here is likely if this is considered income or a refundable tax credit.

Your tax refund is taxable and you have to declare it on next year's return

Refunds aren't taxable unless they are of taxes that you deducted from your income in a prior year.