I am relieved that tax season is done. It’s not that I mind paying taxes. What bothers me is how complicated they are.

My wife and I paid about $60 for Turbo Tax this year, even though our finances are pretty straightforward. It still took us about 10 hours to complete our taxes.

We have had trained AARP volunteers complete my mom’s equally straightforward taxes over the past several years, and they had difficulties. I’m not questioning AARP’s services or abilities. But I am questioning why our elected officials have made it so difficult to complete our taxes.

According to Wikipedia:

  • In 2007, 59 percent of people required to file taxes paid a tax preparer to complete their taxes. Shouldn’t most everyone be able to quickly and easily complete their own taxes?
  • The cost of preparing our tax returns is estimated to be between $100 billion and $150 billion each year. Shouldn’t we be able to keep our money instead of spending it on figuring out what the government wants us to do?
  • In 2012, there were 1.2 million tax preparers in this country. That’s more than the total number of law enforcement officers and firefighters combined. Shouldn’t the tax preparers put their talents into something more worthwhile?
  • The tax preparation industry made a profit of $6 billion in 2012, and they have lobbied our elected officials to keep our taxes complicated. Shouldn’t we stop paying these middlemen, and stop their undue influence on our elected officials?

I would be pleased if our taxes were simpler, quicker, easier and less wasteful, and even more pleased if the tax code was fairer to the middle class.

William Limpert

Smithsburg

(69) comments

beansprout59

We need to replace the income tax with a consumption tax.

gary4books

For what good reason(s)? Most people consume all they earn and would pay taxes on all of their income. Unless, of course, you want deductions for food and perhaps also mortgage interest and even charity donations Then you are back with forms only experts can fill out.

But the very wealthy spend 10% or so on consumption and the rest would be tax free.

Is that what you want?

Feel free to inform me on anything I have missed.

shiftless88

Just to state the obvious (since no one seems to have noticed this), taxes are generally only complicated if you are trying to reduce your total tax liability by every means possible. If you just count your income, a couple of simple deductions that are straightforward, then calculate the tax, it's very easy to do. You don't HAVE to dig up all your receipts to itemize and document every charitable donation, you don't HAVE to do the calculations to deduct some part of your home office expenses for your home business.

threecents

How about a big deduction for hiring a tax preparer??[smile]

HappyMedium

I idea is to keep your money not to pay it out to reduce your tax liability.

glenkrc

Are you suggesting they eliminate the 2% AGI threshold? (Ref: 1040 Sch A, lines 22ff)

DickD

As long as you can prove it, why not.

DickD

Yes, the system if over complicated, too many loopholes, too many exceptions, too many ways to look at all items. For instance, anyone doing taxes with Social Security money income, has to figure out if all is excluded or some taxed at 85%. This is just plain baloney. Make it so if your income is below $200,000 or some other figure, all is exempted. Then if you have dividends, they are taxed different, as is long and short gains. If you have rental income, all expenses have to be itemized to determine gains or losses.

But for those not doing the long form, the income tax form is relatively simple. I just do not understand 59% needing to get software or a tax preparer.

HappyMedium

Data entry is tricky. It is easy to make a typ@.

DickD

Isn't that the truth.

HappyMedium

You can't deduct membership fees to clubs that are basically recreational.

Why should you be able to deduct donations to your church or any other nonprofit.

The Shriners lost their nonprofit designation because they didn't do enough for children with disabilities and their activities were mainly to support a private club.

DickD

Churches are allowed because they belong to a religion. Is it right? The people that make the laws think so. And why should someone be allowed $10,000 property tax deduction because they have a large expensive home, while someone with a mere $2,500 property tax on a smaller home can't.

As far as the IRS is concerned, a bean is a bean, that is what they count and the way it was decided it should be counted. We don't need to like it, we need to do it.

HappyMedium

Isn't a church a private club. How does it interfere with your free exercise of religion to pay taxes on all your income. You are still free to donate as much as you want to the church.

One year we were waiting outside a church for it to open for a free give away of used goods. Meanwhile the members were coming out carrying what they wanted before they would let anyone else in.

Do the members of the church benefit from the donations they make to the church so they are getting goods or services they would otherwise have to pay for free of charge. It's a form of barter which is also taxable.

DickD

Happy, all valid points, but the IRS is following legislation passed many years ago and frankly, I don't think it is likely to change. It irritates me that Mitt Romney can give all the money he does to the Mormon Church to get his name everywhere and if you follow the Mormon religion reach the highest level of heaven. As far as I know, the Mormons are the only ones with seven heavens. Frankly, I don't believe in any of it, but that is just me.

HappyMedium

The number of taxpayers who actually attend a church are dwindling so I see good reason to eliminate the deduction now. Eliminating a tax deductible nonprofit status will also eliminate any complaints about favoritism on the part of the IRS against the tea party and save taxpayer money to defend law suits.

Only people who benefit from completing a Schedule A can deduct their donations so I never bothered with the whole numbered envelope deal at church and just gave cash. Only God knows if that was enough to buy my way into heaven. Except for the first year when I paid points, I couldn't deduct my mortgage interest because I didn't own more house than I could afford.

glenkrc

Dick - That's certainly one way of looking at the standard deduction.

Looking at it another way, you might ask why someone who doesn't pay property taxes or state income taxes, doesn't have a mortgage, doesn't give to charity, and has no expenses in deduction categories subject to AGI percentage thresholds still gets the same standard deduction that you do.

And as for that person who PAID $10k in property taxes: Unless they have other deductions that together total more than the standard deduction, they're really not getting the benefit of deducting the full $10k. (Something that realtors, in my experience, will not dwell on when discussing the economics of buying vs. renting with clients.)

HappyMedium

I pay rent and my rent pays the property taxes.

If you buy anything other than food you pay sales tax.

If you earn income from investments or employment you pay income taxes. Anything over $25,000 in social security payments is taxed.

You can only itemize if your expenses exceed the allowed minimum.

Just because you can't itemize doesn't mean you don't have living expenses.

Why should donations to our favorite charity be pre-taxed dollars. Wouldn't you give as much of your post-taxed dollars because you are just that kind of charitable giver.

HappyMedium

If your spending priority is for military superiority why shouldn't you pay for it instead of deducting donations to your church and charities then cutting public benefits to children, the disabled, and the elderly that your church and charities don't fund.

I understand you like to go to $10,000 a plate charity balls so you can hobnob with your ilk but why should everyone else pay for your security.

gary4books

Some lack ability, others need confidence and for most it is just convenience. Fast food anyone?

pixie-dust

I daresay more people need to file taxes than need to have a fire extinguished or a law enforced.

Dwasserba

Run for office.

Nicki

Whoa, Rick -- you always turn it political and love to use idiotic labels. That is also the way of your party (Obamacare?)
And this is a partisan issue. Bluedawn is so right.
Gary - Turbotax also files federal for free. I don't think it is an app thing. We are not charged to file electronically at the federal level but are charged by the state of Maryland. You can print the state return and mail it in if you choose not to pay the fee.


DickD

If you print and mail either form, you should send it certified mail and you can get a receipt showing it was mailed and you can track it electronically.

HappyMedium

I filed my Maryland State Taxes online for free in just a few minutes.
iFile Maryland

I think there is an income limit for free Turbo Tax filings.
Did you make $31,000 or less Adjusted Gross Income (AGI)?

Same old song; people who have money trying to keep it.

MCEDDE21

Last week, House Republicans eliminated the inheritance tax for estates in excess of $5 Million, affecting only the top 3,400 families in America (0.2%). This will cost the taxpayer $269 Billion over the next ten years.

Meanwhile, our Republican Partiers have slashed food stamps again, even as more children (and adults) live in poverty and have become homeless than at any time in US history.

The Yellow Trickle Down "theory" is this: If you give the rich more money they'll work harder and, if you give the poor less money, THEY'LL work harder.

HappyMedium

Are you sure that's not if you give the poor less money, THEY'LL crawl off and die and decrease the surplus population.

Comment deleted.
gary4books

A sophisticated person never lets the facts get in the way of a good story. I call it sophistiry. This is it.

Rick Blatchford

Ya know? I signed on here to make a relatively common sense response to William's letter. Still amazed that the usual suspects have turned it political. SO, for all you LEFTIES I have a question. Youse guys had the White House and both houses of Congress when you elevated Obama. You had that mental genius Harry Reid and of course the Queen of the May Ms. Nancy Pelosi.

Why was this problem that you've exclusively dumped on the Republicans not fixed by YOUR elected representatives? Were they incompetent or just stupid? Could it be that they are on the take???? Hmmmm? Folks, if you can't admit the shortcomings of your own people... Well it's clear that you have no objectivity. [wink]

Sallyforth

Yes, they are on the take, just like republican representatives. Vote out all incumbents.

DickD

Rick, your response is nonsense! The income tax has been changed and played with by both political parties. I don't blame either party for the present income tax complications, they all had a hand in it. That does not mean it shouldn't be changed, to make it easier, if it is fair to all parties. The problem I have is the changes the Republicans want to make would penalize the poor and the middle class. We already have a large income disparity, let's not make the problem worse.

threecents

Rick, You evidently forgot that House repubs made it their mission to block or change any legislation Obama proposed even when there was a democratic majority.

gary4books

There was a thought, earl;y on, that if they did not force it with their majority and actually invited Republicans to planning sessions and to participate we could have a new age of cooperation. It did not work.

Comment deleted.
ReadPhred

If welfare recipients benefit more than anyone else, why haven't you given up your retirement and gone on welfare?

gary4books

Taxes (IRS taxes) are complicated. But I do like my deduction for mortgage interest and property taxes and even for my donations. But I could be happy to give that up for a standard deduction. Simple taxes are fair taxes.

Next time try TaxACT. They can do a Federal return for free and I never pay more than $20 or so for the returns.

DickD

I agree with what you had to say, I will have to look at TaxACT, I had never heard of that. Thanks!

Reader1954

Come up with all the crazy computations you want but I still think if you are taxed on a set percentage of your income everyone pays an equal share. Get rid of all the deductions and set a flat rate. If you make more, you pay more. If you make less you pay less. For every deduction someone gets means someone else has to make up the difference.
It does not have to be complicated.

DickD

I chuckle to myself, you said; "It does not have to be complicated." I agree, but do you really expect something simple while we have politicians making the decision?

HappyMedium

Politicians making decisions to get votes and campaign donations from the wealthy who can afford to make them.

FrederickVeteran

If Congressional wealth puppets are ever to institute flat tax it's the middle class that will bear the burden to pay for the wealthy republicans disproportionate tax relief.

DickD

You got that right, but they could do it on percentage basis of income, with progressively higher percentages for the higher incomes. But, how do we factor in overseas income?

GMrT

Sorry dcg, the wealthy don't "invest and reinvest for us." They invest and reinvest for themselves - even if it means sending jobs out of the country in order to make higher profits. That is the "business mind" as you call it, and there is no guarantee that higher profits for the wealthy benefit us.

Perhaps you confuse making a fair profit and greed.

BlueDawn666

Blame the Republicans for the over complicated and unfair tax codes we all have to follow.

Here's the really bad news: If the Republicans who control Congress have their way, the tax code is only going to get more unfair.

Over the last 12 months, they've pushed on multiple occasions to raise taxes on the poor even as they cut taxes for the wealthy.


In April 2014, for instance, Rep. Paul D. Ryan (R-Wis.) — then the chairman of the House Budget Committee — released a budget proposal that would give millionaires an average tax cut of $200,000. Ryan was vague about how those cuts would be offset, but Citizens for Tax Justice argued that the proposal would require increasing taxes on low- and middle-income people.

Then, in July, the Republican-controlled House passed a bill largely along party lines that would expand the child tax credit for higher-income families — without renewing an expiring child tax credit for poor families.

The fight over the child tax credit resurfaced around Thanksgiving. Each year, Congress renews a package of so-called tax extenders: temporary tax breaks for business that amount to corporate giveaways. Beginning in 2009, an expansion of the child tax credit and the earned income tax credit were added to the mix to help working-class families during the recession.

But in November, when Republicans pushed Senate Democrats to make several corporate tax breaks permanent, they let languish the two expiring low-income tax breaks. The latter help tens of millions of low- and middle-income families get by.

GOP efforts to further skew the tax code to benefit the wealthiest come as economic inequality in America reaches levels not seen since the early 20th century. From World War II through the early 1970s, incomes across the spectrum grew at nearly the same pace. Between 1979 and 2011, however, the average after-tax income of the top 1% quadrupled, while the incomes of the lower 20% increased by only about half.

Today, the top 20% of U.S. households own more than 84% of the wealth in this country, while the bottom 40% holds a mere 0.3%. Of all Western nations, the United States is now the most unequal.

http://www.latimes.com/opinion/op-ed/la-oe-0415-eichelberger-taxes-20150415-story.html

If something seems off look no further than the Republicans because odds are they are behind it.

FrederickVeteran

I'm not a democratic nor am I a liberal and because I'm not republican wealthy (500k annual income) so of course I'm oppose to a flat tax.

HappyMedium

The key to simplified tax preparation is

to have so little income you don't have to file at all.

gary4books

The dead have no expenses.

HappyMedium

An invitation to crawl off and die and decrease the surplus population.

To be expected.

DickD

Unless they have a trust which can have income and expenses.

HappyMedium

Lots of people live on an amount of money less than the minimum required to file.

Federal just over $10,000

Maryland just over $10,000

HappyMedium

Every time a person gets on a plane it costs $250 in tax payer money for the security services, the air traffic control services are extra.

That means a person who flies 12 times per year is getting more tax payer money than someone who receives the full food stamp benefit.

But the average food stamp benefit is only $113 which would compare to 6 flights per year. It is not likely people who are receiving food stamps are doing much flying.

glenkrc

Did you miss a decimal point somewhere? Your figures don't make sense. Are you sure you're not referring to the $2.50 9/11 fee paid for by each passenger for each flight segment?

US air carrier passenger volume is over 700 million per year. At $250 a head, that would be $1.75 trillion - or nearly 1/2 the Federal budget.

glenkrc

Missed a decimal place of my own. Should be $175 billion - nearly 5% of the Federal budget. Still, not exactly chump change.

HappyMedium

I only see fees generating a very small part of the budget. If tax payers didn't subsidize the service, travelers would have to fly at their own risk. In long run maybe we can't afford to be better safe than sorry.

Budget Request: $7,346,924,000
Gross Discretionary: $7,091,724,000
Mandatory, Fees & Trust Fund: $255,200,000

glenkrc

Depends on what you mean by very small.

My math would make it about 20% of the TSA budget.

An article from 2011 puts it at 25%. (revenue of $2 billion vs. an $8 billion budget)

http://money.cnn.com/2011/09/08/pf/911_travel/

HappyMedium

I posted the figures above which is a blue hyperlink you can click to see the actual Homeland Security Budget.

Fees are only 1/4 of a billion out of a 7.5 billion budget or just over 3% which means the tax payers are paying 97% of the cost of TSA.

glenkrc

You're right about the budget levels - but not about the revenue from 9/11 fees.

In fact, neither of us was right about the amount of revenue being generated NOW. I checked some recent tickets and noticed that the 9/11 security fee went up to $5.60 last summer.

So, the expected annual revenue generated now is $3.6 billion, or about 50% of the TSA budget.

This link explains things: http://triblive.com/news/allegheny/6479711-74/tsa-fee-budget#axzz3XyPIQliA

HappyMedium

I should believe http://triblive.com over the actual Homeland Security Budget because you like their numbers better???

glenkrc

I just realized where you were going wrong with your quarter billion figure. You're misreading the budget document.

Look at the figures you provided in blue. Total budget requested = discretionary + mandatory, fees & trust fund.

All that means is that they're requesting additional funding above their discretionary funding because of the various expenses in which they have NO discretion. These include spending required by law (Mandatory), fees they pay to other governmental entities (Fees), and Social Security/Medicare benefits they have to pay their employees (Trust Fund).

You'll notice that ALL the agencies within DHS have this same kind of funding construction.

Check out this Federal Budget Glossary: https://www.nationalpriorities.org/budget-basics/federal-budget-101/glossary/

HappyMedium

Anything that comes out of the Discretionary Budget comes from tax payers. In the case of TSA that is Gross Discretionary: $7,091,724,000.

What you suggest is that the 1/4 billion isn't all fees and my include amounts from Mandatory or Trust Fund sources.

glenkrc

Yes, I had seen page 63 that you extracted.

Actually, I am not suggesting what you wrote. Rather, I am saying that the $255 million figure has nothing to do with receipts from the 9/11 security fees collected. It is all about cash outlays by DHS to various entities, including the Social Security Trust Fund.

As I told you (and was expressed in the 2 articles I linked you to) the annual revenue from the 9/11 security fees is in the low BILLIONS - and growing.

Getting back to the main point: TSA airport security was formerly subsidized by the Tax Payer to the tune of 75-80%, but the recent fee increase has reduced the subsidy to about 50%. And the subsidy will likely continue to decrease.

HappyMedium

The $420 million increase in revenue will only be a reality if congress approves reinstating a fee. Otherwise there is only a $200 million revenue increase projected from increasing the fee by $0.40 to $6.00; a far cry from the BILLIONS you are so certain will be generated by the fee.

It is all about cash outlays by DHS to various entities, including the Social Security Trust Fund.

You have to look elsewhere in the budget for how the money will be spent. This is a budget not a balance sheet.

DHS Watchlist Service………..........................................................$2.8M
TSA Academy Instructors................................................................$2.5M
Federal Air Marshal Service……………...........................................$5.2M

HappyMedium

The total needed to fully fund the agency is $7.35 billion; $7.1 billion comes from discretionary funds the remaining $0.25 billion comes from other sources whatever they may be.

GMrT

One near cetainty is that any tax reform plan backed by the GOP will disproportionately benefit the wealthy. You can't have trickle-down without a trick.

MCEDDE21

[lol]

DickD

Absolutely right!

FrederickVeteran

No nations economy in the world with a flat tax or value added tax is prospering more than America's current convoluted yet highly benifical tax system to middle class which is why the GOP wealth sock puppets and perpetual FOX whiners have to endorse the bush economics.

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