Would You Give Up Your Favorite Tax Deduction?
I received my W-2 yesterday and sat down to do my taxes. Every year, I get frustrated with the US federal tax system all over again. It’s maddening to try to comprehend the thousands of different rules that exist so you’re taxed slightly differently for every little situation. Our federal tax system is so complex that several hundred thousand jobs exist solely because people need help navigating the federal tax rules. Personally, though, I’ve never felt very comfortable with letting someone else do my taxes.
Part of that may come from my job. At work, I spend all my time solving technical problems that other people couldn’t solve. Every day I see things that others overlooked, mistakes they made, and do my own research and investigation to properly identify and solve the problem. That isn’t exactly a recipe for confidence in others. It’s trained me to be very skeptical of the conclusions other people have reached, and the evidence on which they based those conclusions. If I hired a tax professional to do my taxes, I would be very tempted to double-check their work, but if I’m going to go that far then why not just do it myself to start with?
In a limited study of only 19 returns, the Government Accountability Office found that professional tax preparers couldn’t accurately file taxes for people. 100% of the 19 returns had mistakes (though it didn’t affect the final tax amount on 2 of them). Similar studies have been done by various private organizations, with similar results. I doubt I’m doing any better than the professionals, but I bet I’m not doing much worse either.
That study back in 2006 resulted in some increased scrutiny of tax preparers. Finance Committee Chairman Charles E. Grassley said, “Americans have a right to expect that when they hire a tax preparer they’re going to get honest, straightforward advice.” That statement seems a little strange to me. I have little doubt that these tax preparers really were doing their best to create honest, accurate returns for people. The scrutiny should be on the tax system itself. Maybe I’ve been spoiled by the State of Texas. I don’t have to file a state return at all – I pay all my local taxes through property and sales taxes.
At the federal level, a consumption-based tax like the Fair Tax would be fantastic (although I wouldn’t be willing to vote for Huckabee to get it), but failing that I’d be almost as happy with a greatly simplified income tax like the one Cato proposes. Either way, if we want a simpler tax system, we have to be willing to give up all our favorite special rules. I’d gladly give up my mortgage interest deduction to see all the other special rules wiped out. The hours of my life I’d get back at tax time and the elimination of the stress of wondering if my return was completely accurate is easily worth it.
What’s your favorite deduction, and would you give it up if it meant you never had to file a return again?
A flat tax can still be spent irresponsibly.
Indeed. Regardless of whether we have a flat tax, progressive tax, or whatever tax, I just don’t want to have to spend so much time agonizing over my taxes. I’m pretty sure it’s going to be spent irresponsibly either way, so why can’t it at least be easy?
Bill, I agree 100%. Although I’m a fairtax supporter my bigger goal is to give me more time. Jason(my partner) and I spend way too much time trying to collect all of the information neccessary to do our taxes….and being a gay couple just aggrevates the situation.
I also agree that I can not support Mike Huckabee, but I guess the FairTax would be the one good thing to look forward to….I mean after he isolates us from the rest of society.
I agree that the current tax system is Byzantine and generally a pain in the ass.
And I HATE thinking about my dollars going to feed this disgusting and unnecessary war! But I really don’t think the fair tax scheme is the answer. I thought this article
http://money.cnn.com/2005/09/06/pf/taxes/consumptiontax_0510/index.htm
provided a balanced view about the pros and cons.
I wish the Dems would take this issue on more fully!!!
I’m curious if there is any research on the accuracy of tax preparation software like TurboTax.
I did a google search but couldnt find anything.