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Intuit Still Fighting Government Tax Software
Back in January we discussed Intuit's opposition to California's free, convenient software to file tax returns. TechDirt noticed a recent article in the LA Times about Intuit's continued lobbying efforts to get rid of those programs. Quoting:
"Most importantly, Intuit is offering nothing that California doesn't already have. The state has arranged with other tax software providers to do exactly what Intuit proposes: Help low-income folks fill in and file state and federal returns for free — although Intuit refuses to participate. It apparently only wants in on this deal if the state knocks out its free programs, thereby creating a larger potential paying customer base for TurboTax. Not surprisingly, Intuit has been greasing the wheels in order to try to sell its scheme in California. Since 2005, public filings indicate that Intuit has spent $1.25 million on lobbyists in the state. Over the same period, it contributed an additional $2.12 million to statewide campaigns, including more than $1 million to state Sen. Tony Strickland (R-Thousand Oaks), a ReadyReturn foe who is running for state controller. In all, Intuit has doled out cash to nearly 120 politicians. The impact has been clear, even if Intuit hasn't gotten its way — yet. As documented in The Times, in 2009 California Republican legislators held back their votes on 20 bills in an attempt to do the corporation's bidding and force the abolition of ReadyReturn and CalFile. They didn't succeed in killing the tax programs, but they did kill funding for domestic violence shelters, police and fire departments, and prevention of swine flu outbreaks."
Virginia used to have a web-based filing program, iFile. After successfully running the program for four or five years, the legislature voted to do away with it this year, even though I'm sure it had paid for itself and was generating significant cost savings for the state. The sad part to me is that most Virginians seemed to have been unaware of it, as I haven't found anyone else who is even remotely bothered by it. They already pay for Tax Cut or something like that. <sigh>
"Who controls the past controls the future. Who controls the present controls the past." -- George Orwell
So, let me get this right. A tax code is so confusing and complicated - in part because of lobbyists and politicians carving out special exceptions for each other and special punishment for their enemies - that even cash-strapped California sees the need to assist its citizens with compliance? And the result is *more* lobbying from a company that's (frankly) had a windfall for years because of the degree of difficulty of that compliance, to convince the state ... to help the company *make money* from its constituents instead of helping those constituents? Unbelievable.
I have long thought that it is a scam that you have to pay a third party to do electronic preparation and filing like the usual services (TurboTax, etc.) provide.
The government made the convoluted tax system - they should make the web-based application to navigate it.
A work that expires before its copyright never enters the public domain and thus enjoys eternal copyright protection.
Stuff like this is why a program like the "Fair Tax" won't ever pass. There is nearly a 400 Billion dollar tax preparation industry. They would all be out of work if something like the fair tax ever passed, so not only are we stuck paying income tax we have to pay for all those tax services and tax lawyers that go with it. Intuit is part of the problem, not part of the solution, they are making your life harder not easier.
I read that as "Inuit still fighting tax software" and had prepared myself for an amazing story of Eskimo software standards. Imagine my disappointment.
They didn't succeed in killing the tax programs, but they did kill funding for domestic violence shelters, police and fire departments, and prevention of swine flu outbreaks.
What were these doing in a bill about tax software in the first place?
This is more government of, by, and for the corporation. Bring on the National Sales Tax of 18%. Try evading that you shady fuckers.
You do realize that corporations just pass their taxes along to their consumers as a cost of doing business, right?
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
A lot of people hate big corporations and 'the man' for rather mindless reasons, and others blame 'big government,' but their understanding isn't nuanced enough to see the real problem.
The real problem is when corporations get special favors from the government. A large, evil corporation will be limited by market forces and legality (it's illegal to kill, illegal to ruin the environment, etc), but when a company gets special favors from the government it distorts market forces and can get around the force of legality. This happens all the time, and its why companies lobby in the first place. Right now it is easy to get put on a board if a company if you have strong 'political connections,' but if politicians didn't bow to this pressure, that wouldn't happen because those connections would be worthless.
Intuit is just the most vocal right now. Another case in California was portable building manufacturers lobbying to make a law that schools need to buy (ugly) portable buildings. Another case was some internet dating company whose entire business model was based on doing background checks for people dating online lobbying to make background checks required by law. Fortunately that one failed.
Fannie May and Freddie Mac are other examples of when this goes wrong. They are private companies whose risk is taken by the public. There is nothing wrong with the goal of helping poor people get houses, but that isn't what Fannie and Freddie have been doing primarily. Banks of course do their lobbying. And lawyers are among the worst: Attorney Generals have their pay-to-play schemes set up all over the country.
Because of how this distorts the market, if it all got cleaned up, it would easily add 5% to the GDP. The rent-seekers would suffer a bit, but let them go do something productive.
Qxe4
The United States is not even close being as corrupt as a 3rd world dictatorship. According to: World Audit, the United States is 16th in the world in terms of being free from corruption. All the countries above it in the rankings are first world democracies (although I admit some people would debate Singapore).
I know it is the fashion to insult the US government at the moment, and there *is* a hell of a lot of room for improvement. However, hyperbole and fighting words (comparing the US government to that of a third world dictatorship) just shuts down debate and, frankly, damages your credibility. Let's keep this civil and factual, OK?
in the classic Collapse Of Complex Societies, Joseph A. Tainter theorizes that societies collapse when they hit a point at which increasing complexity creates negative returns. For instance, the Romans funded their society on plunder of outlying civilizations for a long time. Eventually, each incremental conquest required more and more funds to maintain while not providing enough real wealth in return. Similarly the Mayans collapsed because they farmed more and more marginal lands leading to soil degradation, etc. and tried to fix civil wars through more and more ostentatious temple building. Tainter, in his book profiles more than 20 different significant societies that all collapsed following this pattern in one form or another. He says the only solution is voluntary simplification, which has happened only a few times in history.
Now here in California we have an actual complexity industry, with its own lobbyists! How long can that last when you have an actual industry that makes money off of negative returns on additional complexity.
Flat tax sounds like a good idea. You have two people, one makes $200,000 a month and one makes $1000 a month. Both should be taxed at a flat rate - let say 10% - so the first pays $20,000 in taxes while the other pays $100 in taxes. Fair, right?
Okay, let say the cost of living (minimal housing, basic food staples for cooking, basic transportation because in the USA there are very few total basic services walking communities, etc) comes out to about 20% of income with a minimum cost of living of $950. Thus the first individual he pays the greater of $40,000 or $950, while the second pays the greater of $200 or $950.
Thus, the first individual has a net income of $140,000 a month while the second has a net income of -$50 a month. This means something has to give - don't eat, don't have basic shelter, or don't have transportation for work. In other words, a flat tax is a detriment to those who are in poverty - and to say that those below a certain income threshold do not need to pay income tax is merely implementing a very simple progressive tax (0% up to the poverty line, 10% above the poverty line).
This is not some theoretical discussion either. When growing up my mother was our sole source of income, and as such she constantly had to make the decision between paying the rent, buying basic food staples, or having transportation to work. Even after she finally divorced my father and was able to cut out his useless spending she still faced this decision all the time. Pardon my graphic description but even with a slipped disk she would opt to walk what should have been a 30 minute bus commute because she wanted feed and shelter her children - despite the pain being so great that she'd soil herself and have her s**t running down by the time she'd get to work. Her friends said she could work miracles with flour, and I still remember going and picking wild berries and living off them for a week. Until she was divorced, evictions were a semi-annual to annual event because she needed to feed us.
However, despite our poverty, I realize we were far from the bottom of the heap. My mom still worked hard despite all the pain to feed and shelter us, so we never had to be exposed to the dangerous winter lows that caused her so much hardship or go without food for more than a couple of days at a time.
So, no, a simple percentage based tax income is something beyond silly - is is criminally inhumane
"but they did kill funding for domestic violence shelters, police and fire departments, and prevention of swine flu outbreaks."
At least, through a perfect storm of corruption, it ended up that the Republicans acted fiscally responsible.
What I don't understand is why free tax filing is only available to low-income citizens. It's got to be cheaper for the state or the feds to process returns electronically. Why not offer it free to _everyone_? I think it would save the government money.
It occurs to me that a simple percentage based income tax would not require anything more complicated than your W-2 form and a calculator to figure out.
The reason you are wrong is because you first have to define "income" and doing that is actually quite complicated. Seriously - it's not easy. Especially if you don't want any loopholes. Just define income as W2 earnings and every taxpayer will magically make no money on their W2's the following year and all of them will be compensated some other way that isn't taxable. I'd be perfectly happy to be compensated in stock grants or in bullion instead of fiat currency if my compensation wasn't taxable. If a loophole is available people will take advantage of it and while we dislike taxes, they are actually necessary for the efficient functioning of society.
It is true that some of the social engineering has made our tax code more complicated, but MOST of the complication is simply due to the difficulty of defining what income is (and what it is not). The social engineering bits add a little to the complication but they aren't what keeps your friendly neighborhood CPA employed. The actual payment calculations are pretty simple even now. For what it is worth, if your financial picture is very simple you probably actually can do your taxes with just a 1040, a W2 and your calculator. This describes more people than you might think.
Disclosure: I'm a certified accountant.
Try flat tax plus a rebate. You give welfare checks to *everyone*, not just the unemployed or pensioners. This means that if you don't have a job then you get a small amount of money. If you get a job then you keep getting checks. This allows a fairly steep flat rate tax while maintaining a passable standard of living for low-earners. It gives incentive to earn an income without getting caught in a welfare trap. You keep every penny that you earn. It also eliminates several classes of tax fraud.
Most importantly, it provides a way to manage immigration. If you're not a citizen then you still pay flat rate tax but you don't get the rebate. This gives a home advantage to voters while allowing productive foreigners to contribute to an economy.
You obviously didn't pay enough attention to what the OP was saying in the third paragraph and made his argument for him. Perhaps you need Taxes 202, too.
So do the best of both... Institute a flat tax while allowing a cost of living deduction, say $30,000 just to throw a number out there, on the income. Earn anywhere up to $30,000? Pay nothing. Earn $90,000, pay tax on $60,000. Earn $1,000,000, pay tax on $970,000. The simplicity of a flat tax with the humanity of a progressive tax.
Congratulations, you just reinvented the progressive tax: 10% of 60K is 6.67% of 90K, but 10% of 970K is %9.7 of 1M. I.e. your tax rate starts at 0% below 30K and asymptotically approaches 10%. A very simple progressive tax, a very appealing progressive tax, but a progressive tax.
"You saved 1968." - Ms. Valerie Pringle to the crew of Apollo 8