Monday, April 18, 2016

John Oliver and FiveThirtyEight on Tax Day

Yesterday's program note was "Tax Day on Monday."  I'd wish you a happy Tax Day, but if you're like most Americans, you're filing your taxes this week, according to FiveThirtyEight.
Americans are a nation of procrastinators. Our tax returns prove it.

Last year, 21.5 million Americans1 waited until the last minute – or at least the last week – to submit their tax returns. That’s roughly one in seven filers, according to data from the Internal Revenue Service.

If anything, that count probably understates the number of people leaving it to the last minute.
However, it's not just the taxpayers who deserve our sympathy and support today, it's also the tax collectors.  John Oliver makes that surprising argument very effectively in Last Week Tonight with John Oliver: The IRS (HBO).

Nobody likes the IRS. But recent budget and staff cuts have made it increasingly difficult for the department to do its very important job. Don’t take our word for it. Ask Michael Bolton.
Oliver makes the point that Tax Day combines two of Americans' least favorite things, taking money away from them and math.  Follow over the jump for a proposal to minimize the math.

Ben Casselman of FiveThirtyEight proposes to Ban Tax Day (As We Know It).
Ted Cruz and Elizabeth Warren don’t agree on much. The Texas senator is trying to become the most conservative Republican presidential nominee since Barry Goldwater, or maybe ever. Warren, a senator from Massachusetts, is a darling of the left. But the two senators agree on this much: They both want to make Tax Day, at least as we know it now, a thing of the past.

Cruz and Warren are onto something. According to the IRS, the average taxpayer spends 13 hours and $200 on tax preparation each year. Nearly two out of three Americans paid someone else to prepare their taxes last year1 — all to tell the government information that it already knew. In other words, the U.S.’s current system for filing taxes is expensive, time consuming and totally unnecessary. But chances are it isn’t going away anytime soon.

Cruz’s solution is to rip up the entire tax code and replace it with one simple enough that Americans will be able to file their taxes on a postcard. He wants to eliminate the payroll tax, implement a new tax on spending and replace the existing system of tax brackets with a 10 percent flat tax.

But those kinds of radical changes aren’t necessary to make Tax Day easier. The existing progressive income tax certainly isn’t a barrier to simpler filing. For most taxpayers, particularly the more than two-thirds of filers who take the standard deduction, the government already has pretty much all the information it needs to calculate their tax obligations from the W-2 forms that employers file with the IRS.2 In several European countries, the government sends tax forms that are already filled out; taxpayers just need to review and sign them (or send a confirmation text message).

That’s pretty much the model Warren wants to adopt. On Wednesday, she introduced a bill that would let people with simple taxes file for free without filling out a return — essentially, the IRS would do people’s taxes for them. Bernie Sanders is a co-sponsor; his rival for the Democratic presidential nomination, Hillary Clinton, said she supports the bill, too.
It certainly won't eliminate taking money away from Americans, but it sure would reduce the math, at least for the taxpayer.  Of course, what is really needed is a simpler tax code.  As long as it's also just, I'm on board with that.


  1. I think everyone can agree that the tax code is broken. Something needs to change.

    1. So say we all.

      Yes, I'm a Battlestar Galactica fan.

  2. It's broken and they want to keep it broken. The less we know the better for them.

    1. Define "they." Elizabeth Warren blames the tax preparers. Yeah, they have an interest in keeping it broken, but they didn't break it. Congress did and they have to fix it.