Hate to Do Your Taxes? There is a Better Way

America likes to think of itself as unique and special. We like to believe we have the best schools, the best doctors, the best movies, the friendliest people.

But American exceptionalism is bad in one way: the way we pay our taxes.

When you think about filing your taxes, does it make you feel happy and excited? No, you probably dread the idea.

That's not by accident. Why is our tax filing process awful? How it could be better? and what you can do about it?

Like most of you, I used to spend every tax season getting my paperwork together, going through my finances, and hoping I was doing it correctly. Since I only did my own taxes, and I only did it once a year, I never got good at it.

I decided to face my fears and get good at doing taxes. I joined Tax Help New Mexico, a United Way program that helps low income folks and seniors get their taxes done for free.

With Tax Help, I got annual training, and then I did taxes for the four month tax season, for five years.

I learned a lot about taxes, and I liked working with the Tax Help volunteers. We made a good team. I liked helping people. And I found that taxes are fascinating.

The most astonishing thing I found, though, was how simple most people's taxes are. After five years of doing tax returns, I started to feel like this:

There's this man who is fishing on the banks of a fast-moving river. All of a sudden, he sees someone floating downstream yelling, "Help, help!"

So he dives in and hauls that person to shore and starts getting the water out of them.

Meanwhile, he sees another person comes down and he's yelling and calling for help too.

So the man jumps in and saves him too.

By the time he sees another person drowning in the river, the man says, "I better go upstream and see why all these people are falling into the river and drowning in the first place."

At Tax Help, I estimate that about seventy percent of people are filing with only wages, maybe some bank account interest, social security, or tuition credits.

The IRS already has this data. Why can't they figure out your taxes for you? It would be much simpler, and more accurate than what we have now, which is frankly bananas.

Could they do that? Sure. In Germany, the UK, Finland, Japan, and Spain, tax filing is barely a blip. Here's T.R. Reid, a journalist who wrote a book about international tax systems:

I was in the Netherlands on March 31, the day before their taxes are due.

I was with an executive who makes $200,000 a year, two mortgages, a lot of investments. He'd have to fill out 12 forms in America. I said, Michael, how do you pay your taxes? He pops a beer. He goes online. The government's filled in every line. If the numbers look right, he clicks OK. It takes five minutes.

And, in Japan, you get a postcard from the IRS that says, we think you made this much. We withheld this much. We owe you a refund of that much. We will put it in your bank on April 1. It takes one minute, if you think the numbers are right.

pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way

It's called return free filing and there are 36 other countries that do this.

So why don't we do that here? Actually, there are efforts to make that happen. I heard about this in a National Public Radio Planet Money podcast last year. Back in 2004, a Stanford professor, Joseph Bankman, worked with California state tax officials to roll out a two year pilot program called ReadyReturn. 50,000 taxpayers received an already filled out state tax return. Of the folks that filed online, 98 percent said they liked it better, and would use it again, because it saved them time, money, and was more accurate.

So because it was such a remarkable success, California expanded the program to everyone and now all state taxes come pre-filled out.

Ha ha, just kidding! Of course not. What happened was, Intuit, the company behind Turbo Tax, spent $1.25 million on lobbyists and donated over $2 million to politicians, and killed the program. California was able to fold some of those features into its low and middle income online tax filing system, so it wasn't a complete fail, but it wasn't the vision that Joseph Bankman had had.

The same thing happens on the federal level. The tax preparation industry is worth $11 billion, and companies such as H&R Block and Intuit spent $7 million in 2018 lobbying against any effort to streamline tax filing for ordinary Americans.

The good news is, although they put up a lot of money, tax corporations do not vote. We, as citizen taxpayers, do vote.

Here’s what I want you to do:

• Use free tax prep software and programs such as Tax Help
• Tell your friends and family not to put any more money into H&R Block and Turbo Tax's pockets
• Make simplified tax paying your issue. Call your state and federal representatives.

Are you a patriot? Do you like America? Are you willing to pay for it? Simplified tax filing should be part of your idea of the pursuit of happiness.