Norquist is just twisted, sabotaging the government to convince people that it doesn't work. It would cost the IRS almost nothing to send out pre-filled forms, and giving them enough money to audit the wealthy (i.e. ensure they aren't cheating) would more than pay for itself.
While I think the IRS should do this, it would require a lot of additional work and resources, as well as a reshuffling of filing deadlines throughout the system. The IRS currently does not have all the information it needs to prefill forms, and inly has the resources to review a fraction of the 140M+ returns filed each year.
I don't know why so many people in this site seem to think this is a trivial thing for the IRS. 100% review after the fact isn't even feasible right now, let alone having the information in January.
First off, I never said anything about the US not being able to afford it. I said the IRS can't do it with their current resources. Big difference.
Second, the IRS processed 247.8M total returns[1] and 3.59B supporting documents[2] in 2017. While I think the IRS could do a better job (like, well, the entire rest of the US federal government), what other tax system processes anything near that volume?
Also, I'm not buying "just about every other country". Not even close. For starters, I find it hard to believe that more than a handful of African countries manage to do it.
The volume doesn't really matter, because it scales linearly with population - a larger country just needs more bureaucrats, but it can afford them because it also collects more taxes from more people. There's nothing unique in that regard in US.
But if you want something in the same ballpark, we can look at, say, Russia (population of 150 million), or even at Nigeria (200 million).
There may be many arguments in favor of having the IRS sending out pre-filled-in tax forms, but this one just isn't true:
> It would cost the IRS almost nothing to send out pre-filled forms
Enhancing the IRS databases to actually plug in the information used on a typical tax return almost certainly would not cost "almost nothing." Back when it existed, less than 20% of people filed a 1040-EZ (the simplest tax form). That means you need something beyond just "plug in the numbers from the W-2" for the vast majority of tax filers. The IRS almost certainly doesn't have all that machinery already. Some of that data, the IRS doesn't have at all. (How many children live with you for purposes of the EITC?)
The US government currently takes in about $1.7 trillion in individual income taxes per year, so even spending $500 million to pre-fill forms would be almost nothing (0.03%). Heck, that's less than a useless aircraft carrier or a Facebook consent decree violation.
The IRS already has W-2s and 1099s, which cover ordinary pay and retirement investments, and enough money has probably been automatically withheld already. Remember that this isn't automatic billing, but automatic filling. They'll send you the form, and you can insert the number of children. If your taxes are much more complicated than that, you can probably afford TurboTax.
The whole point of doing it this way - via the tax companies' own services - is to make it an advertisement for those companies, so that once somebody starts earning more, they would preferentially pick them. It's also a form of mild lock-in, since already having their return history etc there makes filing that much easier, creating an incentive to pay.
In the meantime, the same lobbyists who created this scheme are trying to prohibit IRS from developing its own free filing system:
The proposals I've seen for having the IRS prefill returns are that they'd just do the equivalent of the 1040EZ for you. If you want something more comprehensive than that, then you'd still have to do your own taxes.
> Back when it existed, less than 20% of people filed a 1040-EZ (the simplest tax form). That means you need something beyond just "plug in the numbers from the W-2" for the vast majority of tax filers.
Or it means that lots of people who qualified to use the 1040-EZ didn't know about it.
Or it means that lots of people who qualified to use the 1040-EZ kept on filing 1040s because that's what they were used to doing.
Or it means that lots of people who qualified to use the 1040-EZ were using tax software that just generated a 1040 for everyone, regardless of their eligibility to use the 1040-EZ.
The IRS releases aggregated information on what % of people take various deductions or use various aspects of the different tax forms. This information does not support your various alternative hypotheses.
For the record any of the following disallowed someone from using the 1040-EZ
- being over the age of 65
- having any dependents/children
- making over 100k in income
- claiming any deductions at all
Lower income people with cash business are far more likely to cheat than wealthy people. (Of course the return for the IRS going after the small player may not be worth it.)
> Lower income people with cash business are far more likely to cheat than wealthy people.
The statistics I've seen indicate the opposite. But I suppose it depends on how you measure. Perhaps on a per-incident basis, you may be correct. But I don't think you're correct if you measure by the amount of money.
"Likely to cheat" usually means something like "the probability of a person cheating is higher," meaning it would be based on the number of incidents, not on the amount of money.
If the poster has meant the amount, they might have said "Lower income people with cash businesses cheat more than wealthy people" (which is ambiguous) or "The IRS loses more money to low income cheaters with cash businesses" (which is unambiguous, and, when you phrase it that way, truly sounds ridiculous given the high level of wealth inequality I would expect one wealthy cheater to cheat the IRS out of more money than all of the other cheaters in the world)
That may depend on what your goals are. To put myself in the IRS' shoes, their goal is to minimize the amount of revenue lost due to fraud. In that view, the important thing to do is to go after the people who are cheating them out of the most money.
If the goal is culture change, that may be different -- but the IRS is probably the wrong entity to address it.
I will say that I have not noticed that lower-income people have any greater sense of "cheating is OK" than higher-income people. My observations are not necessarily representative of the wider culture, but it looks to me like the percentage of people who think cheating is OK doesn't change based on income.
Do you have any evidence to support this? It could be true, but any cash business owner (low income or not) is likely to cheat precisely because it's not feasible for the IRS to prove exactly how much cash income you made.
