While this is a fair criticism of our federal tax system, it still wouldn't be simple for me to file my taxes even if the IRS filled out all of my federal forms. Many places in the US have state and local income taxes, so for some people, the IRS is only one of two or three agencies that they fill out tax forms for. There are hundreds of different governments that impose income taxes in the US.
We do have several local taxes as well (in France). They are all handled by your equivalent of the IRS, everything is on the same web site (I do not even know what I pay in local taxes, I get an email telling me that it i due, and it is then direct debited from by bank account).
Yes, but you have a unitary government. In the US, states have a constitutional authority to independently administer taxes inside of their borders, and there is no way in hell that they are going volunteer that power away. Also, states have the power to tax income that is generated outside of their borders where have no power to require reporting. So they couldn't legally automate those tax filings even if they wanted to.
The US government has zero power to change any of this.
> Many places in the US have state and local income taxes, so for some people, the IRS is only one of two or three agencies that they fill out tax forms for.
(1) In many of those cases, state/local filing requires very small additional paperwork plus same-year federal forms.
(2) In many of those cases, the same thing the IRS could do for federal forms could be done by state/local tax authorities for their own forms.
So, solving the federal case both solves most of the problem and provides a template for solving most of the rest of the problem.
... and all you have to do is get hundreds of different organizations to agree to do something that nobody has managed to convince any of them to do. The template you propose is imaginable, yes, but logistically unlikely.
It makes sense to have a tax authority to fill out their own tax forms. I don't think it makes any sense to have what amounts to a nationalized TurboTax that interprets tax laws outside of their own jurisdiction.
States' tax laws are not just federal taxes on a different form. They're independent tax systems with different legislation and different judiciary. Maybe in some states the tax code is simple enough that it can be filled entirely from information on your federal taxes, but this is often not the case.
I've done state taxes by hand in 5 different states, including nonresident taxes. All of them go through the same basic process: copy your AGI from the federal form, adjust for local purposes (which for me meant running my finger down the list of adjustments in the instructions and going "nothing applies"), compute taxes, add in the use tax, and you're down. If you've got multistate tax issues (whether nonresidency or part-year), things get spicy because you have to allocate income across the different states.
And even then, the only difficulty I had was doing CA nonresident taxes, because it turns out that there's a weird collision with CA and a few other states for nonresident taxes, the other one being the state I lived in at the time. And CA's instructions doesn't tell you about needing the other form unless you read the instructions for that form in particular.
> It makes sense to have a tax authority to fill out their own tax forms.
That's all that is being talked about with #1.
> I don't think it makes any sense to have what amounts to a nationalized TurboTax that interprets tax laws outside of their own jurisdiction.
No one is suggesting that.
> States' tax laws are not just federal taxes on a different form.
Typically, a component (often the main component, with the state firm being smaller to capture special situations that cause variations) of state tax filing is exactly federal tax documents (not on a different form.)
Getting the state to prefill their own forms is a separate policy decision, but it's generally smaller impact in time/effort per filer as well as smaller impact in # impacted.
The acceptance of federal forms by states ranges from
"we don't even have income tax" to "copy over a few lines, multiply by this fixed number, and we have 5 other possible deductions" to "we have our own forms for everything, and you need to file a separate local tax return"
And heaven forbid you have any part year returns with a couple of states like the latter.
My point is that the whole system is inherently a mess and even if federal returns were automated, many people would still be spending considerable amounts of time preparing taxes.
I'm not suggesting that the federal system would print out the state taxes complete, I'm saying that just having access to the federally prepared information would greatly simplify the state filing.
Like my taxes are relatively simple, so my state taxes are just a few calculations using my taxable income from the federal 1040, and then also I have to attach any federal schedules I filed. Having the completed 1040 and printable schedules would reduce the state filing down to a few minutes of work.
If that solved people's problems, then there would be no need for people to buy tax prep software that does state returns... and some don't, but it is an extremely popular selling point of TurboTax and similar software.
My tax situation is not complicated and my state filing is 11 pages, plus 8 pages of worksheets. Federal schedules are not accepted, my state has similar but slightly different counterparts.
In Spain the tax filing includes local taxes as well as federal taxes. Spain has, proportionate to population, more subregions than the US does, and their fiscal policies in relation to taxes vary considerably.
The US system is just terribly implemented and there's no excuse for it.
