This so much. I’m fine with taxes (I benefited a lot from services provided by them, when I needed). But the whole process is made complex for no good reason. I want to show to government all my money, have them tell me what I owe, and if I don’t agree, have an appeal process.
The IRS does not get a feed with the details of our charitable giving. They also don’t get a feed of various ad valorem taxes I pay.
Those are common, non-business cases where the IRS doesn’t have enough info to properly prepare a return. Small business returns (even simple Schedule C “hobby businesses”) definitely can’t be done correctly in an automated fashion.
With current tax code it's not possible. But that's the thing - tax code needs to be updated. It works now because of weird combination of stockholm syndrome and giving people a feeling of getting a deal.
Tax code is messy and complex, with tons of loop holes. And those loop holes mean most of the people pay much less anyway, but they get to feel good that they're getting a great deal. It's brilliant from psychology point of view.
Well, I can’t see any feasible way to automate Schedule C and preserve a tax system that taxes income/profit (rather than revenue).
I’m not sure which part of my reply you think is amenable to tax code changes (and I don’t want to erect a strawman). If it’s just ad valorem taxes, you might be able to compel every jurisdiction seeking to impose one to provide a data feed to the feds. I’m not sure I think that’s Constitutional. You could also block the deductibility of charitable giving and property taxes (and likely hurt charities who are currently struggling; the Gates Foundation will be fine; the local soup kitchen may suffer.) That still leaves Schedule C as unsolvable, Schedule D as only partially (though increasingly) solvable, and Schedule E as likely unsolvable [having many of the same complexities as Schedule C and then some additional ones around basis, depreciation, and some real estate specific taxes/expenses that are not necessarily reported to the IRS today].
For the record, I don’t think I’m getting a great deal at all despite having a quite complicated return.
