Hurst Photo/Shutterstock.com

The Easy 10-Second Tax Return

Letting the government do its citizens’ taxes is cheap, efficient, and accurate. Naturally, the United States won’t do it.

Each tax season, tens of millions of American households have a decision to make.

A) They can collectively spend hundreds of millions of hours preparing tax information that the federal government already has.

B) They can pay other people billions of dollars to do it for them.

But let’s add a choice C: They go for a walk. Or, they have a nice dinner. Basically, they do whatever they want with those millions of hours and billions of dollars. Because their taxes are done for them, for free. They receive a document from the government with all of the relevant information already filled out, and they check a box to say, “okay!"

In the United States, the third choice sounds like a fantasy. But the excruciating pain of tax season is just another example of negative American exceptionalism. In fact, about one-half of American taxpayers earn all their income from one employer’s wages (which the IRS can see) and interest from one bank (which the IRS can find out without much effort). The IRS could easily send tens of millions of individuals their nearly completed taxes by mail—or even, by text.

“Rather than some crazy, wild idea that’s never been tried before, this is doable and a lot of countries do it,” said William Gale, a tax expert at the Brookings Institution. Eight OECD countries, including Finland and Norway, fully prepare returns for the majority of its taxpayers. In Estonia, it famously takes the average person five minutes to file taxes.

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.

In the United States, however, taxes are tortuous—for those who pay them as well as those who collect them. Compliance costs are 10 times higher than in most European countries. Poor Americans in particular suffer for the time and money it takes to fill out what are essentially redundant documents. "These taxpayers are just copying into a tax return information that the IRS already receives independently,” the economist Austan Goolsbee wrote in a Brookings paper.

In 2006, Goolsbee proposed a "Simple Return” that would pre-fill forms for workers with the most straightforward taxes. California tried something like this in 2004, when it sent 50,000 single taxpayers a European-style "ReadyReturn.” Ninety percent of users said it saved them time. The median cost of completion? Zero dollars.

The Simple Return could proceed in several steps. First, the IRS could start with a pilot program for the most straightforward tax returns: single, low-income taxpayers who don't itemize their deductions. There are about nine million such people in the U.S. They would get a document from the IRS early in the year showing total income earned and total taxes owed. They could check a box saying "Okay,” make changes, or—if they insist—burn the page, throw the ashes in the trash, and log onto TurboTax.

If millions of people seemed happy with the streamlined one-pager, the IRS could expand the program to the millions of people with the second-easiest returns, like married couples who don’t itemize their deductions. “We might never get everybody in the system, because some people’s tax situations are quite complicated,” Gale said. But step two of the Simple Return could still reach about 17 million taxpayers.

What’s stopping the Simple Return? There are three barriers, and appropriately, since the issue at stake is taxes, they are all fundamentally about money.

First, changing the tax-payment system for tens of millions of people would require resources for the federal government, and the IRS is already squeezed. Its budget has fallen in the last decade and Congress hasn’t shown much enthusiasm for making their jobs any easier.

Second, America’s federal income tax system is byzantine—a messy reflection of the messy will of the people. "A simpler tax code is everybody’s second priority,” Gale said. Their first priority? That would be to keep the tax breaks they already have—or even to create new ones. It’s often said that Americans love their congressman but hate Congress. It’s the same with tax breaks: Everybody loves their tax benefit and hates the tax system. Without a simpler tax code, it’s hard to imagine a Simple Return working for more than the low- and middle-class Americans with the most straightforward earnings.

Third, the opposition to simpler taxes unites two unlikely allies. First, Grover Norquist and other conservatives who want to cut taxes don’t want tax collection to be more efficient. They’re afraid it will be easier for the feds to raise revenue if taxes feel effortless and people spend less time considering them. Second, tax preparers like H&R Block and Intuit,the company behind TurboTax, have spent millions of dollars lobbying against painless taxes, since those companies are in the business of pain relief. It’s a rich irony that the coalition against simpler taxes creates strange bedfellows: Those who want more tax complexity and those who want the simplest tax code of all—one that doesn’t exist.

Even if the Simple Return became a reality, some Americans would still have to deal with their deductions. For example, donating to charity reduces a person's taxable income. If I donated money to the Red Cross, how would the IRS know to withhold less money from my paycheck?

Once again, perhaps the U.S. could take a lesson from the world. An American donating to charity takes a deduction at the end of the year. But a British resident donating to charity can simply leave out the amount of the tax deduction from her charitable gift; then the UK’s tax collector pays the charity the equivalent amount. To put it another way: Rather than donate $100 in December and get $10 back from the government in April, she gives $90 in December and the government pays the charity the final $10. This essentially makes charitable donations a kind of government matching program, but it has the same effect: helping charities by rewarding donations.

Several years ago, the White House estimated that American taxpayers spend 7.6 billion hours and $140 billion a year figuring out what they owe the government and paying people to help them owe less. Those who want to play the game—and have the money to do so every year—are welcome to continue. The rest of the country deserves a 21st-century approach to taxes.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.