Tax prep cost

[scrabbler1]

Sometimes, tax simplification and tax fairness work in opposite directions. Making tax returns easier to prepare, which would reduce their cost and perhaps put H&R Block our of business (or at lease put a dent in their income) might be a consequence of making the tax code less fair. Conversely, making the tax code fairer would make completing one's tax returns more difficult. I am often wary of claims to make the tax code simpler when it only worsens any existing unfairness.


I agree with samclem that the complexity in the tax code is in the determination of one's income, not in determining taxes due based on that income. I remember watching a debate on William F. Buckley's "Firing Line" show back in 1995 about the Flat Tax and how it was brought out that this was the case.

[samclem]

Quote:

Originally Posted by meierlde One idea that has been discussed is to take the standard deduction up to where most folks don't need to itemize which which make filing for most not much of an issue. (No need to save reciepts etc)

The share of taxpayers who take the standard deduction is already close to 50% (it was considerably more than 50% a few years ago, I couldn't readily find more current numbers). But one problem is that many folks are "close to the line", so they'd be saving those receipts and crunching the numbers anyway.

[meierlde]

Quote:

Originally Posted by samclem The share of taxpayers who take the standard deduction is already close to 50% (it was considerably more than 50% a few years ago, I couldn't readily find more current numbers). But one problem is that many folks are "close to the line", so they'd be saving those receipts and crunching the numbers anyway.

The numbers I have heard suggested is 15k/30k single/Married filing jointly. Which would also mean most homeowners in the center of the country would not benefit by itemizing.

[meierlde]

Quote:

Originally Posted by scrabbler1 Sometimes, tax simplification and tax fairness work in opposite directions. Making tax returns easier to prepare, which would reduce their cost and perhaps put H&R Block our of business (or at lease put a dent in their income) might be a consequence of making the tax code less fair. Conversely, making the tax code fairer would make completing one's tax returns more difficult. I am often wary of claims to make the tax code simpler when it only worsens any existing unfairness. I agree with samclem that the complexity in the tax code is in the determination of one's income, not in determining taxes due based on that income. I remember watching a debate on William F. Buckley's "Firing Line" show back in 1995 about the Flat Tax and how it was brought out that this was the case.

Which suggests the issue is not with those who are employees with a few 1099s but small business people, landlords and the like, not the employee with a few 1099s which have already for all practical purposes determined you income on those items.

[pjigar]

I have always done my tax return since first one with just two pages to now crossing 40 pages. It doesn't feel complex at all because complexity grew over the years and I learned everything incrementally. All my friends think it is crazy that I do my own tax return!

[RobbieB]

I used to do mine with a pen and paper and a calculator. Hand written, not even typed.

No more, I'll gladly pay the hundred bucks for TT and the efiles, I consider it a bargain.

[braumeister]

We are certainly not alone in having complexity here, but do you really want to move to the Maldives?

An interesting study done a few years ago:

Quote:

To determine the relative arduousness of various taxation systems, researchers from the World Bank and PricewaterhouseCoopers dreamt up a hypothetical, but very specific, company—a ceramic flowerpot manufacturer that owns one building, two plots of land, and one truck; has 60 employees; and pays 50 percent of its net profits to its owners, among other assumptions—and brought it through the taxation process of 183 nations and territories. It would take the imaginary flowerpot manufacturer's accountant less than an hour to comply with the Maldives' tax code. Compare that with Brazil, the lowest-ranking country, where the company would have to spend 2,600 person-hours—about 108 days of nonstop work, or 325 eight-hour shifts—to meet the requirements. That makes filing taxes in Belarus, the second lowest, seem like a cakewalk—at 1,080 hours. The United States, where it would take the flowerpot company 187 hours to comply, ranks 66th from the top by this measure.

Which country has the simplest taxation system?

[audreyh1]

Sure - doing your own taxes lets you know "how things work" and plan better to reduce taxes.

We've been doing our own taxes forever, with software support.

I can easily see a day when we decide we'll hire a professional to do the taxes for us. They had better make it easy on us. That's why we'll pay them the big $$.

I'm becoming a lot less patient about dealing with some of this financial stuff. I can set up investments to more or less manage themselves. That's not too hard. But dealing with taxes is a pain and I think we'll give ourselves a break before too long and hire someone to handle it for us on a regular basis.

[Gumby]

Quote:

Originally Posted by audreyh1 Sure - doing your own taxes lets you know "how things work" and plan better to reduce taxes. We've been doing our own taxes forever, with software support. I can easily see a day when we decide we'll hire a professional to do the taxes for us. They had better make it easy on us. That's why we'll pay them the big $$. I'm becoming a lot less patient about dealing with some of this financial stuff. I can set up investments to more or less manage themselves. That's not too hard. But dealing with taxes is a pain and I think we'll give ourselves a break before too long and hire someone to handle it for us on a regular basis.

I can certainly see the logic in this. The young wife and I could easily swab floors and clean the toilets and tub in our house, but we still have a cleaning lady.