Friday, February 6, 2015

Let the Feds File Our Taxes

These two stories greeted me on the front page of today's Star Tribune's Metro section:

What they have in common: criminals are filing false tax returns in order to rip us all off, in one case by exploiting low-income people (the felony indictment) and the other by electronically filing false returns with stolen Social Security numbers and names.

I'll leave aside whether the state could do more, systemically, to catch the false Turbo Tax filers before accepting their returns. (I can think of lots of ways that they could do that). What I want to say about this problem is that there is a clear solution: have the federal government prefill everyone's income taxes (federal and state), based on the information they already have on file for income, name, address, and so on.

It's done this way in Denmark. It won't work for everyone, of course -- you pretty much have to be working regular jobs from employers who issue W2s -- but it would work for a lot of people, and for those with more complex situations, they can modify the return or completely redo it, however they see fit.

But it would keep crooks from filing before the real people get the chance, and cut down on the opportunities for criminal preparers as well. It would also be a good transition for young people with their first jobs -- no need to figure it all out right off the bat, but instead get up to speed as your life and financial situation becomes more complex.

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