Easing the Tax Burden

We’re not the only ones who want to ease the tax burden, though! The national conversation about adjusting the Internal Revenue Code is resounding and there is an increasing push towards corporate and personal tax simplification.

“Death, taxes and childbirth!  There’s never any convenient time for any of them.”

Margaret Mitchell wrote this line in her 1935 book, Gone with the Wind, and almost 80 years later it still rings true.  While we may not have a solution for the inconveniences of death and childbirth, reducing consumer tax burden is something we pride ourselves on.  We want tax time to be as simple and stress-free as possible for you.  With your Shoeboxed account, you can easily store and organize pesky tax documents in the cloud that you used to cram in your desk drawer haphazardly.  Your account allows you to export tax information from last year to speed up this year’s process.  We also provide other strategic tips to get motivated and organize your life during that dreaded time of the year.

We’re not the only ones who want to ease the tax burden, though!  The national conversation about adjusting the Internal Revenue Code is resounding and there is an increasing push towards corporate and personal tax simplification.

Many controversies surround the idea of tax collection.  Very much a strongly divided partisan discussion, the debate includes talk of expansion versus elimination of tax loopholes, progressive rates and exemptions.  However, there is something that both parties can agree on in regard to taxes:

The current tax system is placing a huge paperwork and reporting burden on public taxpayers. 

In 2011, the American public spent a combined 9.14 billion hours responding to Federal information collections.  This estimate of public paperwork burden is an increase of 355 million burden hours from 2010, which is about 4 percent.  Additionally, the Department of Treasury accounts for 6.7 billion (74 percent) of these annual burden hours, which result mostly from the implementation of tax-related statutes.

So what can be done to ease this massive paperwork burden?

Congress requires most of the actions that account for the time it takes to complete tax paperwork.   A recent Time article suggested Congress’ implementation of three changes to the tax code could significantly decrease those 6.7 billion hours put in by the American public:

 1.  Streamlining the system

 2.  Reducing redundancies

 3.  Allowing less frequent and detailed reporting

Austan Goolsbee, former chair of the Council of Economic Advisers, outlines another possible revision to the current tax system in his paper, The Simple Return: Reducing America’s Tax Burden Through Return-Free Filing.  Many American taxpayers receive all of their income from just one employer and one bank.  Most of the time, the IRS receives information about an individual’s income directly from his employer and bank.  So that’s it, right?  The Internal Revenue Service has the information and the income tax process is complete.  Not exactly.  As you well know, the IRS still requires individuals to gather up their tax documents and fill out lengthy forms, essentially duplicating the information they have already received.

Instead of this redundant process, Goolsbee recommends his program, The Simple Return.  In this alternative tax method, the IRS would continue to gather information from employers and banks, but then would subsequently send taxpayers a return pre-filled with the relevant information.  While this program would be voluntary to the public with the option to continue filing taxes with the current system, it would allow for millions of people to file a tax return by simply checking the numbers, signing the return, and then sending a check or getting a refund.  It could even be done electronically (and we always say yes to paperless)!

Goolsbee says this program could apply to 40 percent of taxpayers, saving them up to 225 million hours of time dedicated to taxes and up to $2 billion per year in tax preparation fees.  Sounds great to us!

California has already implemented a program along the lines of the Simple Return, called ReadyReturn.  More than eleven thousand California residents used ReadyReturn at the introduction of the program, and 90 percent of those users said ReadyReturn was more convenient than the traditional tax system and saved them time when filing their taxes.  European nations, such as Denmark, Sweden, Norway and Spain have implemented tax programs similar to the Simple Return, as well.

Programs like this could reduce the tax process to as quick and easy as five minutes of your time.  Would you use a program like the Simple Return that mailed you a pre-filled tax return?