Each year on this day, I think of a 2016 piece by Derek Thompson in The Atlantic about how much easier it ought to be for most Americans to file our tax returns every year. We should be following the lead of Finland, Norway, Estonia and other nations where the government — which already gets your income information from your employer, bank, mutual fund, etc. — does the work for you and then sends you a postcard or email asking you to confirm the information.
In Sweden, the vast majority of taxpayers don’t do battle with tax documents and fine-print questions about itemized deductions. They just get a document from the government with all the relevant information already filled out. Some even get a text message with their prepared tax information, and if they respond “yes,” their taxes are done. Andreas Hatzigeorgiou, a chief economist with the Stockholm Chamber of Commerce, told PRI that individuals with more involved filings can always spend more time on their taxes, if they like. “If you don’t have any complicated things that you want to do”—like listing business expenses from a sole proprietorship —“it takes you five seconds,” he said.
That’s so much easier than the American system, in which — even though the government knows your numbers — you still have to fill out paperwork re-reporting your details, then do the math and, if you get it wrong or leave anything out, you’re penalized for your errors. That would be like a supermarket that posts the prices of each item on its shelves but, when you take your cart to the cashier, they don’t tell you the total. Instead, you have to guess how much you owe, and if you’re wrong, you have to pay extra for everything.
The reason returns are so complicated in the US is because tax preparation companies like Intuit (TurboTax) and H&R Block want them that way. The more difficult and bothersome, the more likely you are to pay to use their services. If the process was free and easy, it would hurt their bottom line — so much so that they have lobbied Congress (i.e. gave members $6.6 million last year alone) to pass a law making it illegal for the IRS to create its own online system of tax filing. Ever.
So much for Abe Lincoln’s promise of a “government of the people, by the people, and for the people.” Where exactly are our lobbyists?
I happen to like my accountant and, because we have a complex tax situation, would happily continue to use his services to decipher the details, run the numbers, and put the pieces of the puzzle together (not just for April 15th, but throughout the year). But tens of millions of Americans whose finances are simpler, who have one job and one bank account, are owed a better way.