| cheapbag214s |
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Complex IRS forms no big deal
Yesterday,[link widoczny dla zalogowanych], I posted on the fact than nearly 90 % of individual taxpayers need to either pay an expert preparer or buy software to assist file their tax returns. I argued this was,[link widoczny dla zalogowanych], in effect, a government mandate nearly as onerous as the new, much-reviled, requirement that Americans buy health insurance.
To my amazement, many readers responded that tax complexity isn't any problem. Buying software didn't bother them a little. Here, from tanstaafl,[link widoczny dla zalogowanych], is a typical response:
I pay anyone to fix my car--does which means that that cars are extremely complex,[link widoczny dla zalogowanych]? I pay someone to fix my leaky pipes--is plumbing too complex,[link widoczny dla zalogowanych]? I pay someone to fix my shoes--are shoes too complex,[link widoczny dla zalogowanych]? I pay someone to cut my hair--is hair too complex? How much of an absolutely idiotic opinion to hold--that taxes are extremely complex because middle and upper class Americans be forced to pay anyone to enable them to file,[link widoczny dla zalogowanych].
Now,[link widoczny dla zalogowanych], it is possible that tanstaafl is a tax preparer,[link widoczny dla zalogowanych], or maybe files a simple 1040 EZ. However i suspect many people do share this view. And that raises another interesting question: Has relatively cheap software made us indifferent to complexity? Do we no longer care how complicated the Revenue Code is since Turbo Tax can do everything for us anyway?
To conquer a dead horse, the political economy of all this troubles me. Extreme complexity isn't just annoying and somewhat costly. It also makes the tax system more opaque. Voters have no idea who is getting special deals and who is not. Typically,[link widoczny dla zalogowanych], In my opinion most of us don't know just how much we pay in taxes.
Don't think me? Do this experiment: The next time put forth a party, ask people just how much they paid last year. They may remember their refund, but I'm sure they will not know what their total tax bill was.
Here a bit of more scientific evidence: A CBS/New York Times poll drawn in February implies that 77 percent of respondents thought President barack obama either raised taxes or kept them exactly the same in his newbie in office. Actually,[link widoczny dla zalogowanych], the 2009 stimulus bill (the President's major tax initiative) cut taxes for 89 percent of tax units and slashed overall taxes by $200 billion dollars in 2009 and 2010.
This ignorance matters. For just one,[link widoczny dla zalogowanych], tax rates often go up when individuals are not aware what they're paying. Amy Finkelstein at MIT did a nice paper about this in 2007. It cannot be a good thing whenever we do not know what we should pay in taxes. Uninformed voters aren't great for democracy. How can they evaulate tax laws when they can't understand them? And complexity is really a primary reason why they cannot. So,[link widoczny dla zalogowanych], no,[link widoczny dla zalogowanych], spending money on tax prep is not like paying someone to fix your vehicle.
Add/view comments about this post,[link widoczny dla zalogowanych].
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