BTW: You know that controversy over Obamacare? The way it works is that the federal government set up an insurance market, and even the poorest can afford to buy insurance because of Federal subsidies. You know how they do the subsidy? You tell the marketplace how much you think you'll make. It runs an algorithm for how much you can afford to pay, and then calculates the subsidy necessary for insurance to be affordable.

That subsidy is an income tax credit. Which you have to repay if you got a raise and didn't report it to the exchange so they could cut your subsidy a little, or if you got fired and still made your payments you might get some money back.

And the US income tax system is so ridiculously complex and stupid that I was able to fill a huge post on the topic without thinking about Obamacare.

I don't know about the Danish system as a whole, but the income tax system for individuals is much simpler then the US. For example, there are three different tax forms Americans file (1040EZ with about 15 lines, 1040A with fifths, and the full 1040 with 79 lines). Your income tax is calculated in stages.

First you add up all potential sources of income -- wage income, independent contractor income (which usually has to go on a Schedule C so your software calculates the Self-Employment tax correctly), interest from your bank account, capital gains (which could come from selling Bitcoin at a profit), etc. This is your Gross Income.

Then you adjust the Gross Income by taking out certain other expenses the government really approves of. This are called "above the line" deductions. This year I paid student-loan interest, so I subtracted that interest from my wages to get my Gross Income. This gave me an "Adjusted Gross Income." Many retirement accounts, health savings accounts, etc. are here which means the Feds are using the Income tax system top subsidize a) health care, b) higher education, and c) retirement. You will also note that since it's done through the income tax system, the tax-break used to pay for all these things is much more advantageous for people who have a lot of income to tax (like Mitt Romney) then the poor schmuck whose so proud that he's full-time at Walmart.

After that you take out your exemptions ($3,950 per person claimed on your return, and there are lengthy legal tomes devoted to the thorny subject of who gets to claim whom for what), your Deduction ($6,200 for single or married filing single, $9,100 for Head of Household, or $12,400 for Married Filing Joint; or some completely different number you calculate yourself based on a completely different list of expenses The Government Really Approves of them the aforementioned above-the-line deductions). This results in a Modified Adjusted Gross Income.

But now that we've grossed our income, adjusted it, and modified the adjustment, surely it will be a simple matter of math to figure out the taxes owed? Don't be stupid.America has multiple tax brackets, and if you told an American just on the cusp of going from the 10% bracket to the 15% that his tax bill would increase by 50% if he'd made just bit more he will scream to high heaven and start a rebellion. So what they did is they made a table. It's in $50 increments. If you're in the 10% bracket every increment is $5 of taxes until you get to the end of the bracket. Then it's 15%, so it alternates going up by $7 and $8 (including pennies so you could just do $750 would make sense, so we don't). Then you hit the 25% bracket and alternate between $12 and $13, the 28% bracket is $14, but once you're halfway through the 28% bracket they stop the table and you have to calculate by hand for the rest of the 28% bracket, and the entirety of the 33%, the 35% and there 39.6% brackets.

Congratulations! We're half done! You see now that we know what you should theoretically pay we can start using tax credits. Tax credits are better then deductions because credits reduce the full amount you pay. There're child-care credits, education credits, and retirement credits. We're now about 2/3 done. Maybe 3/4.

Now we have to factor in your payments. Your withholding is just a very small part of what you officially paid. The thing about the credits in the last paragraph is they can make you own $0 taxes, but the can't make the Federal government cut you a fucking check for $5,000 (note: I actually had someone at my tax desk today get a $5,000 check from the Feds). Some education payments double as tax payments, there's a credit for buying gasoline for your tractor, there's the infamous Earned Income Credit which is de facto the major element of the modern welfare state because it gives people who made very little money and are raising families multi-thousand$ checks.

So my friend, if Denmark has managed to make it's income tax system more complicated then the US I will be both extremely disappointed and impressed.

It would be more complicated then you think to do this. Americans with very boring tax lives do not get the simple form, so the forms would have to be reworked.

Good luck with Fair Tax or Flat Tax. Obama just proposed ending a tax break I have never seen anywhere outside of an IRS textbook (the 529 deduction, I do taxes three months a year and I've never seen anyone use it, I know how to report it in theory but I could;t tell which button tho click on the software to put it on a return) and got crucified by his own party. The other party sat back and smirked. The Upper Middle Class which dominates the country is absolutely convinced each and every tax write-off they get is something sacred, handed down by fucking God, which means that it is virtually impossible to get rid of said write-offs. And if you can't do that you can't simplify the form, because the form is how you tell the IRS you're taking the deduction.

Like I said, this is how we run most of our welfare state. Saying "cut all the deductions, simplify the code, and reduce the rates" works about as well here as telling the Danes/Germans/Brits that their entire welfare state would be replaced by a simple check cut to every citizen resident in the country this year.

Number one, you'd still get people doing their taxes early. Believe me, I work in a tax office and we get people before the first filing day (the 20th this year). Some of them even have a good reason (i.e.: a surprising number of anti-poverty charities require a 1040 to prove you're poor). Moreover if you did this places like my office would probably extend their loan eligibility through the 15th, which means a lot of people who need $500 NOW and can't wait until May would file in January or February.

Number two, if everybody's form is in the system before it pays out a lot of the automated defenses work a lot better. For example right now if I get your Social and your birthday I can file your taxes and get your refund before the IRS gets a single W2 from your employer. If I get your kid's Social and name I can get several thousand by filing for EIC/child tax credit/etc. fraudulently, and then you either have to fight it with the IRS (and delay your refund until a human has time to look into it AFTER tax season), or just let yourself (and the kid, for whom you are paying 100% of the expenses, while the cheat -- frequently a relative -- goes to Vegas) be fucked over. I have had more then one client whose needed money NOW so badly that they let some asshole use one of their kid's social every year.

If we delayed that payment until May then the IRS computer knows "OK we've got two tax returns for this guy, and only this one is accurate, so the fraudster gets no money." In more difficult cases the refund could be delayed until a human has time to do an audit. It would also force people to fight for their kids once, which would mean that instead of 18 years of not-enough-trefund-to-cover-childcare you'd get delayed once and then 18 years of proper refund.

BTW, the main point of that little comment wasn't to solve the problem, but to illustrate that if Americans really wanted to solve the problem there are a whole host of things they could do that delay their refunds but reduce fraud.

That would work so much better if most of our social safety net was;t the tax code. Day care, college education, a significant proportion of health costs (obviously Obamacare, but also the Employer Health Care Exclusion), etc. are all run through the tax code.

Which makes our taxes much more complicated then a place like Denmark, where they just pay for that shit directly and mostly fund the government through a VAT (i.e.: a sales tax).

There's dozens and dozens of things that the IRS/companies/tax places/etc. could do to make taxes more secure. W2 info is just the tip of the iceberg. In many cases it's actually irrelevant, because you can make the numbers up and file on Jan 20th, but the IRS will not have most W2s until closer to the W2 deadline of the 31st. You've got a decent chance of getting the money and being gone before anyone's the wiser.

As a country, most Americans strongly prefer quicker refunds, which means that any security feature that takes time (and almost all of the most effective ones take at least some time) is a non-starter. It will be worked around by the magic of the combined powers of the free market and democracy, because the American people would rather have a significant proportion of tax returns be fraudulent then wait an extra 48 hours for their god-given refunds.

It's required by law that there be an option to receive a W2 by mail, not that it actually be sent out. I personally have not been offered a physical copy of a 2 from an employer in years because I made a point of checking the e-everything box. I sincerely hope nobody's tried to physically mail me one, because my address from Feb '11 to Aug of '14 was a Boarding House where some incredibly sketchy people had access to the mail.

You can add all the security features you want, the core problem is that they will get worked around by the massive demand for extremely quick tax refunds until the identity-theft problem gets serious enough that people actually care. This little thread was actually started because one security feature (the employer id number that's on every W2) can now be easily compromised by anyone who has access to enough personal info to get into an H and R Block account.

BTW: The Feds won't screw you if the mistake is tiny. If you put something on the wrong line, but the answer you end up with is correct, they may make you back-up your claims, but they literally can't screw you. You paid your taxes, on-time, so there's no back-taxes for them to collect, which means the penalty and interest are applied to $0.

If your mistake is small, and it's in the IRS favor, they may fix it and send you a check. Several tax pros I know have neglected to report certain small tax credits (like the Saver's Credit, where the government sends people money to reward them putting money into IRAs) because the money the client got from the IRS would be less then the cost of filling out the forms necessary to claim the credit (most tax places charge buy the form). It's not unusual for their clients to get a check for the unclaimed credit.

If it's small and it's in your favor you're paying the mistake, plus penalties and interest. But they're capped, and directly proportional to the magnitude of the mistake.

Question: How old are you?

I'm 34 and I don't even know what color paper my paystub is. Direct Deposit to a checking account attached to a debit card means I literally haven't seen a pay stub in four years. And I have two jobs. I vaguely recall Home Depots are blue, but I honestly have no fucking clue what color the ones from H and R Block are.

Which means that if you're using that as a security measure you've pissed off a massive section of your customer base.

I agree that if customers valued their security more highly it would be fairly simple to make tax-based identity theft harder. For example, if you simply said "all refunds will be sent out on the First of May" then a lot of it would disappear because there'd be time for IRS bureaucrats to go over cases where two people filed the same name/SSN/etc., and it would generally be easy to tell the real return. But if you did that voters would howl to Congressman.

If you've done the data entry for the Federal form on Turbotax, not doing it again is a reason to not bother with Utah's site. Especially since Turbotax does not charge for the state if you've got an EZ.

Of course the number of people who actually have an EZ is much lower then the number of people who think they have an EZ (I actually met a woman with an annuity who thought she had the cheap tax form, sorry lady), and their business model is to lure people into answering a bunch of questions that disqualify them from the 1040EZ and then surprising them with a larger fee, but if you're a filer who actually file an EZ through Turbotax, it's fairly silly to go to Utah's site.

Strictly speaking this is the way the vast majority of Americans want it.

They want their refunds within days of filing, and since everybody files within the same few months (i.e.: late Jan to Mid-April), and most actually file within the same few weeks (late Jan and easy Feb), that means checking tens of millions identities a day. It would be possible to make a system that could do this, but it would be cost-prohibitive. So they do obvious bullshit error-checking (i.e.: are your W2s as reported the ones they have on record? do all SSNs, names, and birthdays match? does the bank account you're having direct deposit go to belong to someone on the return?), and deal with fraud after the fact.

The Feds do more cross-checking then the states, so it's harder to just tell Utah "I am totally former Governor John Hunstman, I really really made enough money to owe you $500 in taxes but had $15,000 witheld, and please send all the money to a bank account for Michaleen Czirpinski in Pittsburgh." The example is slightly exaggerated (the state would usually know how much Hunstman paid into the system), but not much.

As a white person I have to say only another white boy would say something this ridiculous.

Every government ever has forced people to pay for things they didn't want. Pacifists funded the revolution at the exact same rate as Patriots. You couldn't get out of paying for the war that conquered the Indians of Ohio by claiming you had a principled disagreement with the policy of Indian Removal to West of the Mississippi.

BTW, the policy of Indian Removal probably would not have worked if the Native Americans had real governments that could do things like insist that the Oglala Lakota of what is now South Dakota send 1,500 number of warriors to a rally point in Green Bay to join the Unified Native Resistance Army. Since they didn't we got to fight each nation thirteen-on-one, with some very rare exceptions (i.e.: Tecumseh), and even those exceptions typically didn't have the political power to enforce taxation or military service. Which meant that when they lost a battle they lost the war.

And this only works if you have a lot of other data in your data set. If you don't know who Scot is, then you can't figure out he's the only person who could go to the bakery on that one exact day and that particular restaurant the next.

I don't think anyone is particularly sanguine about the future of privacy if big companies manage to figure out a way to profit from combining their multiple massive databases. This is particularly true in the US, where it would be virtually impossible to stop the police from using said databases with our warrants. Or worse, using info that the big companies forwarded them as the basis for warrants.

If Apple or Google can silence one of it's critics by figuring out he was paying a hooker with his supposedly anonymous Mastercard gift card, that is a really fucking bad thing.

Best guess?

The number of women buying unique items (i.e.: that one purse that's so cute) is 4-5 points higher then the number of men doing the same thing, which would mean a given data point is 4-5% more effective if the shopper is female.