I just finished my tax returns for the year (federal and state), and while it’s not that difficult when using a software package like H&R Block’s, it’s still a bit time consuming, and then at the end, there is still the printing and mailing to do.
I have yet to meet anyone who gets excited about doing their taxes, and many people hire someone to do their taxes.
According to an article in the Atlantic, several years ago the White House estimated that American taxpayers spend 7.6 billion hours and $140 billion a year figuring out what they owe the government and paying people to help them owe less.
So I started wondering how other countries do it, and what I found was eye-opening.
- Eight OECD countries, including Finland and Norway, fully prepare returns for the majority of its taxpayers.
- In Estonia, it takes the average person five minutes to file taxes.
- In Sweden, the vast majority of taxpayers don’t do battle with tax documents and fine-print questions about itemized deductions. They just get a document from the government with all the relevant information already filled out. Some even get a text message with their prepared tax information, and if they respond “yes,” their taxes are done.
- For most people in New Zealand, they don’t really have to take any time out to take care of their taxes every year.
- In the Netherlands, a person simply goes online to check their tax situation. The government’s filled in every line. If the numbers look right, he clicks OK. It takes five minutes.
- 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.
So why can’t we implement such systems in the U.S.?
Well, I am sure companies like Intuit and H&R Block would be upset, as would the tens, if not hundreds, of thousands of people who offer tax preparation services. And I’m guessing they have strong lobbies to help maintain the status quo.
I think the first step needed to have such a system would be to drastically simplify our current tax code by eliminating the many “loopholes” that exist.
Once that is done, it should be easy to study what these other countries are doing and work to implement such a system here.
I know I wouldn’t miss doing my annual tax return. I’d love to hear from people outside the U.S. what their experience is with taxes…
Although it did give me something to write about…