FOR MANY people with simple finances, filing a federal tax return is an unnecessary chore. Employers report workers' income to the Internal Revenue Service. And perhaps 9 million taxpayers claim no dependents or major credits, opt not to itemize deductions, and have little or no interest or capital gains income. So why make them fill out paperwork, which still has to be checked against the government's own figures?
Senator Barack Obama would eliminate millions of hours of such forced labor. The IRS would use its records to generate a so-called simple return for qualifying taxpayers. A filer who disagreed with the agency's numbers could fill out a standard return. Otherwise, a taxpayer would sign it and send in a check or wait for a refund. This automatic tax return proposal is a winner, no matter who is elected in November.
In a 2006 paper, Obama's economic adviser, Austan Goolsbee, suggests that the system could be phased in over time. Using 2003 data, Goolsbee indicates that the simple return, if expanded to those who take the Earned Income Tax Credit and those with mortgage interest deductions, modest capital gains, and charitable contributions, could take in 57 million taxpayers.
Right now, many people even of modest incomes pay $125 or more to have their returns prepared. Some local governments, including Boston's, go to some lengths to provide free help. Alan Gentle, director of the Roxbury Resource Center, a program of Mayor Menino's community service office, says many clients are too intimidated to do their own returns: "They will tell us, 'No, you do it. You've been trained. I don't want to get in trouble with the IRS.' " Obama's plan would allay those fears. Gentle predicts that more taxpayers would file on time, and fewer would take out high-interest loans against their expected refunds.
Barbara Anderson of Citizens for Limited Taxation raises a practical objection to Obama's idea: IRS error. A notorious 2001 report by the Government Accountability Office concluded that people who called the agency's help line were frequently given bad information. But if anything, Obama's simple returns would be less subject to human error than the existing system.
Tax skeptics also argue that when collection isn't painful, people grow complacent about taxation. "The problem isn't that the forms are too complicated," Anderson says. "The problem is that thousands of pages of tax policy are too complicated."
But these objections aren't sufficient reason to waste taxpayers' time. Working Americans are ever pressed for time, and most would love to have a few more free hours in the weeks leading up to April 15.
