I don’t think being sent a statement of account is what causes other nations’ countries to not get riled up culturally about tax. To the extent that a nation’s populace doesn’t get riled up about the taxes they pay, I think it is from a feeling of (a) representation and (b) the tax dollars being spent effectively.
In the US there is a feeling of lacking representation on both sides, which I suspect is due to corporate lobbying and the culture wars, and I think a feeling of ineffective spending, again I think due to lobbying, and also pork barrel projects.
I think the answer is to remove corporate lobbying and limit campaign spending.
Agree, as an American now living/working overseas, it is mind blowing how easy it has been to deal with taxes in my foreign country - I don't have to do anything. Taxes are withheld out of my paycheck, and this foreign government sends me a letter at the end of the year telling me how much I paid. I don't have to submit anything. So much easier.
Except I have to still have to spend $ to Turbotax efile an American IRS return to tell the IRS I owe no taxes. How dumb is that.
Our tax system covers a lot more types of 'income' than most other countries. The USA taxes you on all earning worldwide, but they don't see anything out side of the US. Now since 1993 you are supposed to declare any foreign bank accounts too. And there are many still cash based businesses that they can't easily estimate your earnings for. It is crappy, and it is also part of lobbying to keep in complex. Both accountants, lawyers and for the lower classes the tax preparation companies all want complexity.
That kinda doesn't matter. Those things account for a single-digit (at most) percent of all taxpayers. People with complicated tax situations will have to do more work to pay taxes. But well over 50% of US taxpayers could make use of a simpler, IRS-provided system wherein they just get sent a bill and can choose to pay or contest.
This doesn't impact most people in the USA. A simple system offered for free by the IRS is good enough for 99% of folks. If you have a complex situation then that's your problem to pay for. Not mine.
I think GP is suggesting that some interests want the process of filing your taxes to be annoying/frustrating/degrading/disruptive to increase anti-tax sentiment.
(I.e., most people have already been deprived of the funds for some fraction of the year; what interest is served by making them waste time finding records and jumping through hoops and potentially paying a third party to help them provide the IRS with information that it mostly already has?)
I think there's another group of people who want to more closely tie the notion that "government is funded by taxes" to "government spending programs are largely choices in the short-term and entirely choices in the long-term".
To that end, I would like taxes to be due about 4 Tuesdays before the Election Day Tuesday. If you want to vote for politicians who are campaigning on spending a lot of taxpayer money for good programs, so be it, but do it with recent memory of having paid your taxes (assuming you are in the slight majority* who pay federal taxes on net). If you want to campaign on spending a given amount of taxpayer money, whether more, the same, or less than today, your campaign should be interpreted close to taxpaying time.
I don't want it to be more onerous or annoying to pay taxes. I do want people to recognize that taxes and spending are linked (and frankly, ought to be more closely linked than they are today, IMO).
* - which until very recently was a slight minority of households who paid federal taxes on net.
>I would like taxes to be due about 4 Tuesdays before the Election Day Tuesday.
Most people pay taxes in small increments every 2 weeks then get a refund around tax day, so your plan may not do what you think.
>I do want people to recognize that taxes and spending are linked
To your own point, they really aren't. [0]
>But do it with recent memory of having paid your taxes (assuming you are in the slight majority* who pay federal taxes on net)
To add some color on this [1]:
But, for the most part, people don’t pay income tax because they have little income. About 60 percent of non-payers make less than $30,000 and another 28 percent make between $30,000 and about $60,000.
Of the 72 million households that will pay no federal income tax this year, about 24 million, or roughly one-third, are age 65 or older.
Oh, right. I did skip stating an important step in the plan [so, upvoted]. I would do away with the withholding scheme (perhaps creating a parallel savings mechanism) and force income earners to write a check/do an ACH for their taxes.
Under that system, I'm totally fine if people get a $1K refund after writing a check for $15K in taxes withheld. That would still demonstrate the linkage sufficiently to inform their voting choices.
Sure, but again to your own point, the share of voting Americans who don't earn income (and therefore pay no taxes) because they are over 65 is already 1/3 and only going to increase.[0]
There will always be zero tax payers with the right to vote.
That's OK, especially since most of those who are now over 65 and retired worked and voted on reps/platforms/policies from 18-65 and earned income/paid taxes for probably ~40 of those years.
Is the status quo not fairly neutral in terms of which aspect of government spending is more fresh in peoples’ minds—the benefits vs the cost? Otherwise this just seems like it’s about biasing people in a particular direction.
I think what you really want is a receipt of how your tax money was spent for say, anything above $1.
The problem is that would only apply to federal taxes. Not state or local income taxes, nor real estate taxes, or retail tax, or tax on gas or other things you might buy or use.
I'm not sure if you're describing something else, but tax withholding is voluntary. You can opt out and choose to pay your estimated taxes as a lump sum, but that also requires a level of budgeting that I'd argue most people don't have the financial literacy/self-control to do effectively.
I did this as a 1099-contractor, since that’s about the only way to do it as a contractor.
Paying estimated quarterly taxes four times a year wasn’t bad. I calculated my withholdings, remitted my tax payment through EFTPS, and was never surprised at tax time. I don’t think I ever got a refund or owed when I was doing it myself.
I learned that many people who have never contracted before are shocked they have to do this, lost on how it works, and had (then) no good place to go for actionable advice. I found that surprising and kind of sad in a way. We could be doing so much better with financial literacy.
This brings something up which I don't understand about US tax code. Why can't I be taxed on income which I've already earned instead of having to estimate to within ~5% (IIRC) what I should earn? I'm sure there are reasons for this, but this seems broken.
I think this is largely do to having a progressive and conplicated tax system. If work one job, earn salary, don't receive a variable bonus, and work the whole year at the same rate, it's easy enough to calculate.
But, get a raise, take a pay cut, find a new job, start or stop a second job, or a third, or fourth, get paid hourly, get sick, take time off to care for a sick family member, have a kid, go back to school, graduate, get married, get divorced, get a mortgage, pay down your mortgage, ... There are all sorts of scenarios that could change your tax situation on both the federal and state level, making it difficult to calculate how much you would owe up front.
What it really boils down to is our tax codes suck, and too many rich folk are keen on keeping it that way.
Please explain in detail the legal process that allows you to opt out of paying your payroll taxes as you go and instead pay after the tax year has completed.
An individual can't ever opt out of payroll taxes, that's an employer's responsibility. Income tax withholding, however, can be adjusted with a W-4. As others have mentioned, though, anyone making a reasonable income is going to have to pay estimated quarterly installments or get angry letters.
Setting aside the 90% thing, to your original point, paying taxes is not a voluntary thing. There is, however, at least some flexibility in how you pay them.
The flip side of this is: who cares, withholding is actually fine. For a vast majority of people, estimated withholdings is pretty close, and the few percentage points one might earn on a $1k refund in the meantime just isn't worth it.
In my opinion, the best easy tax situation would be that at the end of the year we can skip (most of) the filing step and I either get a check or a bill.
Edit/delete window is past, so mea culpa for anyone else in this thread: sibling comment from bandyaboot is right on the limited path to exemption. I was mistaken on how much withholding flexibility there was for employees (aside from increasing it), and how much W-4 allowances could realistically (or, rather, legally) have an impact. https://www.irs.gov/publications/p505
To dispense with the unnecessary snark, you can claim exemption from withholding, but only if you had no tax liability in the previous tax year and you expect the same to be true of the current tax year.
