Intuit Still Fighting Government Tax Software 374
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."
Re:Electronic tax filing should be FREE (Score:3, Interesting)
In theory, you'd think this would be the case. In practice, most people filing on April 15th are filing to get their money back, not send money in.
There are actually no incentives for governments to make it easier for taxpayers to get refunds. Taxpayers can create those incentives by reducing their withholdings to $0 so that they owe the government on April 15th rather than the other way around. Given California's problems, that seems like a pretty good idea anyway. [mymoneyblog.com]
Any Fair Tax Supporters? (Score:4, Interesting)
Actually, the USA isn't all that corrupt. (Score:5, Interesting)
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?
Collapse of Complex Societies Anyone? (Score:4, Interesting)
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.
Re:Huh?! (Score:5, Interesting)
Flat vs Progressive tax 101 (Score:5, Interesting)
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
Re:Any Fair Tax Supporters? (Score:5, Interesting)
Do you know what proportion of the population payed the federal income tax when it was reintroduced in 1913? Or a couple of years after that? It has moderated a lot over the years, early on only the very rich had to pay the tax.
In fact, when it was first passed they didn't even consider having everyone pay the same rate (or pay at all). One of the more extreme senators I could find (quickly) who supported your position (having everyone pay) would only go this far:
(Senator) Lodge did not attack the essential idea of the income tax. Such a tax, he said, was well fitted to distribute equally the burdens of Government upon those best able to bear them. The viciousness of the Democratic bill, he said, lay in its exemptions from all burdens of the great middle class. Instead of exempting all incomes of less than $4,000, he said, he would rather see an impost like that suggested by Mr. McCumber of North Dakota, which proposed a tax of one-tenth of 1 per cent. on incomes of $1,000, with gradual increases of rates as the income increased. In that way, said Mr. Lodge, practically every citizen would feel that he had a share in the Government, as well as a personal interest in its economic administration.
That was in August, 1913 (from http://query.nytimes.com/gst/abstract.html?res=9A02E7DC113CE633A2575AC2A96E9C946296D6CF&scp=3&sq=income+tax&st=p [nytimes.com]). At that time the average annual income rate was a little over $700 (in 1913 dollars, which is obviously what he was referring to in the quote). So even this senator was only proposing to include the middle class rather than relying solely on the rich, and only adding a very slight tax on the middle class. He didn't even consider levying the tax on the poor.
Why just low-income? (Score:2, Interesting)
Re:Huh?! (Score:3, Interesting)
Third parties airing their opinions in the public debate is an 'end-run' around our political system?
"Third parties"? Interesting that you would phrase it that way. In our political system, there is the electorate and the elected. By definition, anyone not of those two groups would be outside of our political system and thus not entitled to engage in it. To suggest that a piece of paper, which is all a corporation really is, is entitled to the same level of Constitutional freedoms as a living, breathing human being is, well, inane. What's next? The right to bear arms? "Dear employees, in accordance with our company's 2nd Amendment rights, all employees are being issued a sidearm for use in protecting corporate IP..."
Why are you so afraid of free speech?
Question cocked and loaded, huh?
Do you think the American people are too stupid to see corporate speech and decide for themselves?
Yes.
Re:Any Fair Tax Supporters? (Score:3, Interesting)
But the "fair tax" doesn't do that. The "fair tax" includes sending people a check every year as a means of making up for deductions they now have and making the tax more progressive. The idea is that instead of getting the "standard deduction" you get now, you get $X back, assuming you spent $Y and paid something in taxes. That means the IRS still has to deal with every person it deals with now. Every damn one of them, PLUS all the businesses that suddenly become subject to collecting this "Fair Tax" and have all the additional forms to deal with.
Can you IMAGINE the squealing that would take place if the "Fair Tax" did NOT keep as many people out of the tax system as there are today? How do you keep those who aren't making enough to pay taxes today from having to pay a POS based "Fair Tax"? You can't. You MUST implement a refund, or what most people would call "free money", or just welfare.
I'm one of those who are hardly considered rich, and this "Fair Tax" pretty much screws me as far as how much I would have to pay each year. Remember the Obama promise not to raise taxes on people making below $250k? Kiss that good bye with any "fair tax".
Re:Any Fair Tax Supporters? (Score:3, Interesting)
[raises hand] I've run the numbers using the "Fair Tax" proposal and current taxation and I lose big time. I doubt that I'm unique. I AM one of those who Obama pledged would not pay additional taxes under his reign.
They would be getting a nearly 24% raise in pay since they wouldn't be paying any taxes out of their paycheck, no income, no social security, nothing.
That's YOUR hypothesis, but real life will be very different. The "Fair Tax" is a federal income tax. It will not replace state or local income taxes. It will not replace state or local sales taxes. It will not replace SSI -- it can't afford to, since SSI is so deep in the hole that cutting SSI is impossible. And you imagine that everyone's income will go up, when the truth is it will stay the same. Employers aren't stupid, they know you work for what you get after taxes, if they can cut wages they will.
The rebuttal to that point is several pages, but needless to say you are misinformed.
It's simple math. Twenty nine is 29% of 100, but nobody expresses sales taxes in that way. It's always the percentage charged on the value of what you buy. When you express it the way that all sales taxes in the US are expressed, it becomes a 41% tax. A $71 item requires a 41% additional charge in taxes. It's dishonest to express it any other way.
You're 41% number is off, ...
Twenty nine dollars in tax on a seventy one dollar purchase is 40.845%. I rounded up.
EVERY AMERICAN would have to tell the IRS about EVERY DOLLAR they have, if they want to avoid a 41% tax on that money that has already been taxed. Not just every dollar, but every item of value that was bought with post-tax money. You think the Patriot Act was bad? How much stock do you own, how many cars, a house? Any collectable coins or stamps? Keep any money in a cookie jar where the wife doesn't know about it? Guns? Stereo? You do realize, don't you, if you sell any of that stuff after the "Fair Tax" goes into effect, you will have to pay the tax when you use the money to buy something else. If I buy a $1000 gold coin today and sell it for $1000 after the "fair tax" goes into effect that $1000 is really only $710. If you think that every collectable item is going to appreciate by 41% on the day the "fair tax" passes, you're nuts.
I'd rather the IRS be watching Wal-Mart than watching me.
Then I assume you'll be declining your "rebate" check that low-income people will get to help offset the regressive nature of the "Fair" tax, yes?
Unless you're buying a new house there would be no taxes to worry about. Just buy a used house, that is the huge mortgage deduction you want.
What are you, nuts? I bought a used house. That wasn't the "deduction" I'm talking about. Oh, right. The day the Fair Tax passes, every person will automatically make 24% more money every month and the value of used houses will drop by 24%. What a wonderful magical universe you "fair tax" people live in.
Also deductions are already calculated based on your income and given as part of your monthly prebate check.
Wait a minute. You just said the IRS doesn't get involved with everyone, just businesses, under the "fair tax". Now you admit that every person in the country has to be registered to get a "prebate" (welfare) check every month. And you think the IRS will shrink when this goes through?
And just how does the IRS know your "income" so it can send you the correct amount? You'll still be filing "tax returns", just with a different name. You'll still be required to keep receipts for anything that is deducted from your income, and the feds will still have a playground creating new deductions to cater to specific voting blocks. The check comes every month? You better file every month to keep the IRS up to date.
Re:Defining income is complicated (Score:3, Interesting)
Re:Huh?! (Score:3, Interesting)
Here's the problem with a Sales Tax based solution...
I buy expensive shoes when I can afford it. I spend, say $100. That $100 buys me a good pair of shoes that lasts me maybe 2 years.
The guy one income bracket down buys the cheap shoes because he never has $100 cash on hand. He spends the $20 he has to get a passable pair of shoes. In those 2 years he replaces them 8 times.
In two years he has spent and been taxed on $160, I have spent and been taxed on $100. This is not because he *likes* his $20 shoes, it's not because he's simply being short-sighted. It's because he simply doesn't have $100 to spend all at once on shoes.
Now, apply this same concept to any commodity or property you like. The Sales Tax based solutions *always* favor the rich who have far greater latitude to manage their money into tax-free ventures just by virtue of having more of it at any given time.
That's not a problem with a sales tax based system. That's a market situation in which you pay more for quality up front, but less in the long run.
And, with the current system, you're paying the taxes anyway. They're just hidden in the price of the shoes. By removing the income tax component of the price, the price goes down and the consumption tax is paid on the lower price. You spend the same money, you just actually see what the two components (the cost to make them and the tax) are on your receipt now.
The problem with income tax vs consumption tax is that income taxes put a tax on productivity, which is beneficial to society. Consumption is what costs society and thus is what should be taxed. It's also the most fair, because when you add in the pre-bate that the fair tax has, it's an extremely progressive tax that substantially lowers the cost of living burden for low income people while forcing those that spend lavishly to pay a lot more by taking away all the loopholes that their lobbyists buy them in the current system. The only way you can shelter money is to not spend it. And since the pre-bate pays people the cost of the taxes for the basic cost of living up-front before they would ever have to pay the taxes, those under the poverty line actually end up with a net gain on their income because they get money for taxes they would have never paid since they didn't reach that level of income.
Don't listen to all the propaganda and read up on it. There's been plenty of studies done by reputable and independent institutions that conclude that everyone would be much better under the fair tax than the current system.
Actually, that's not entirely true. The politicians and lobbyists that derive all their power and wealth from the current system would be screwed. But, the rest of us would be much better off.