Filing taxes doesn't have to be so painful

·Senior Editor
·6-min read

“The 360” shows you diverse perspectives on the day’s top stories and debates.

What’s happening

It’s April, which means it’s once again time for Americans’ least favorite annual tradition: tax day.

Every year, millions of families and individuals wade into the tangled morass of the U.S. tax code — or pay someone else to — so they can file their tax returns. Americans cumulatively spend nearly 2 billion total hours and pay more than $32 billion per year to file their taxes, according to one government estimate. It’s no surprise that three quarters of people surveyed say the complexity of the tax code bothers them.

Despite these complaints, filing taxes has only grown more complicated as Congress has added more deductions, exceptions and qualification rules through the years. Tax returns have become even more elaborate in the past two years, thanks to a series of pandemic-relief programs — like the Child Tax Credit and small business loans — that must be accounted for when filing.

There are plenty of examples around the world that show filing taxes doesn’t need to be so burdensome. At least 36 countries use various versions of “return-free filing” which typically put the onus on the government — not individuals — to calculate how much money residents owe.

Why there’s debate

Lawmakers have been putting forward plans to make filing taxes less onerous for decades. Proposals range from simple ideas to make the current system more manageable to major reforms that dramatically change how the U.S. tax code functions.

A common view among many on the left is that the government needs to end its reliance on private tax preparation companies like Intuit and H&R Block, by creating its own online filing platform. They argue that taking for-profit companies out of the process would mean that millions more people would take advantage of free filing opportunities that are already available and, in a broader sense, undercut the political influence of companies that have a vested interest in keeping tax returns as complicated as possible.

Others say that, since the Internal Revenue Service already has the information it needs, it's well within the agency’s capacity to create the kind of return-free filing system other countries use. They argue that pre-filled returns would ease the burden of filing, ensure that low-income Americans receive all the benefits they’re entitled to and even increase tax revenue, by making it harder to hide income.

But many skeptics say the only way to make tax filing less painful is to dramatically simplify the tax code itself. To conservatives, that would mean getting rid of most — if not all — of the deductions, income thresholds and programs that make taxes so complex. Some liberals, on the other hand, say lawmakers should stop using the tax code to implement important social welfare policies and instead turn those into simple benefits that go directly to the people who need them.

What’s next

As part of his "Build Back Better" proposal, President Biden has asked for $80 billion to increase the budget of the Internal Revenue Service so it can process returns more efficiently and devote more resources to rooting out tax evasion. The fate of that legislation has been in doubt for months, thanks to opposition by at least two Senate Democrats.

Perspectives

Americans could have return-free filing if the government was willing to put in the work

“So why can't that system work in the U.S.? Given how complicated the tax code is after years of its having been used to provide social benefits, it certainly would be difficult to implement — but not impossible.” — Hayes Brown, MSNBC

The government should not have its own online filing system

“There's also a concerning incentives problem created by government-run software that seeks to help people file taxes. TurboTax has every reason to help taxpayers take advantage of all deductions available to them. … But an IRS-built system would probably be built to represent government interests, not to maximize your deduction or protect you from the prying hands of those meddlesome auditors.” — Liz Wolfe, Reason

Filing taxes is a burden because the tax code is too complicated

“The ultimate solution to the problem of IRS incompetence is to make the agency less important by simplifying our endlessly complex tax code. Filing a tax return does not need to be a dreadful and confusing experience.” — Dominic Pino, National Review

There’s no reason to implement social welfare policy through the tax code

“Good government would fund good causes directly and transparently: with public spending, debated publicly.” — Rich Barlow, WBUR

People hate the tax code, but love the individual policies that make it complicated

“The tax code is so complicated because it is filled with myriad deductions and exclusions that Americans can take for engaging in certain activities, such as buying a home, saving for retirement, and paying down student loan debt. … And with very few exceptions, all of these programs are exceedingly popular with the American public, consistently earning majority support in national surveys.” — Christopher Ellis and Christopher Faricy, Fortune

Republicans have a political incentive to make tax filing as painful as possible

“Trickle-down politicians love to use American frustration on tax day as a mechanism to promote their anti-government crusade. When you absolutely loathe filing and paying your taxes, it makes you more likely to see the government as a too-complex system that always takes and fails to produce meaningful benefits.” — Paul Constant, Business Insider

Big for-profit companies have too much influence over how Americans pay taxes

“For what seems like forever, Americans have been asking why it’s so damn hard — and expensive — to file their taxes. One reason is that the U.S. tax code is complicated, the result of government’s using it not merely to raise money but to implement social goals. But the greater reason is that the tax software industry has made free filing difficult, if not impossible, for tens of millions of taxpayers.” — Michael Hiltzik, Los Angeles Times

It’s actually a good thing that filing taxes is so complicated

“There is a flip side: income tax filing provides ‘one stop’ shopping that enables taxpayers to receive, in one fell swoop, the benefits of numerous social policies and economic incentives. The provision of these programs in the tax code complicates filing returns but simplifies people’s interactions with government.” — William G. Gale, Brookings

The IRS needs a major funding boost

“The IRS desperately needs to put together an easier-to-use, simpler way for people to file their taxes and access benefits free of charge. Accomplishing that, of course, is easier said than done. The IRS has been underfunded for decades and does not have sufficient in-house technical expertise to build a free file system on its own.” — Dylan Matthews, Vox

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AP Photo/Jon Elswick

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