American Exceptionalism – How We File Our Taxes

American politicians love to throw about the words “American Exceptionalism” and to use them as a weapon against other politicians who dare to claim that perhaps America can learn from other countries.

Which is sad.

It’s always sad to see the government of the people, by the people, for the people (1) refusing to do things that benefit the people. I’m referring to something that I’ve wondered about every tax season.

It’s always struck me as strange that for most people, the government already has all the information we need to fill in our tax returns. Most working American’s get a W2 at the end of the year and they copy data from the W2 onto their tax return. About half of Americans have a single bank account, and they copy data from that 1099 onto their tax return.

In other words they copy information that has already been filed with the government onto another form that they will file with the government. How crazy is that?

Let’s complicate things a bit. If people have multiple bank accounts they will get multiple 1099s. If they have a normal house mortgage, then will copy the interest from a 1098 form onto their tax form.

For many varieties of investment account they will get a 1099-INT or 1099-DIV, which have already been filed with the government. This just gives them more information to copy from one form to another and then file with the government.

For a least 50% of Americans there is no need to file a tax return. The government already has all the information it needs for those people. It could simply send a tax bill if we have underpaid, or a check if we have overpaid.

Many other countries already have a tax filing system that make life very easy for their people (2).

But we are exceptional, so we can’t copy what other countries do; we have nothing to learn from them. We have to do things in exceptional ways. Except that our way is exceptionally stupid.

As Derek Thompson says, “Letting the government do its citizens’ taxes is cheap, efficient, and accurate. Naturally, the United States won’t do it.

But we can hope. As Winston Churchill said, “You can always count on Americans to do the right thing — after they’ve tried everything else.”

Links and Other Clicks

(1) From Lincoln’s Gettysburg Address. But you probably already knew that 🙂

(2) Okay, now you really have to read Derek Thompson’s wonderful article that inspired this post: The 10-Second Tax Return.


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1 Response to American Exceptionalism – How We File Our Taxes

  1. YES! Agreed, exceptionally stupid.

    As a person that has many bank accounts, businesses, mortgages etc.. I spend a lot of money, time, and extreme effort on what are usually the best days of spring fucking around trying to legally lower my tax bill wishing it was a little higher in exchange for a great deal simpler. When I say I wish it was higher and simpler if mine was then I might feel assured that those that make a lot more money than me would be paying their fair share – which I know they are not.

    As simpler and fairer tax code would not only produce more revenue it would stop all of market making shenanigans that our current tax code codifies. For example why should a person that owns a home get a tax break that a renter can’t have? Conservatives always talk about free markets but want to preserve the tax breaks that twist markets into unrecognizable shapes.

    Why should a person digging a ditch pay a greater percentage of their income in tax (social security + medicare even before income tax) than the hedge fund manager who takes advantage, legally, of the carried interest rule? It is not only stupid – it is clearly morally wrong.


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