Taxes: A Tale of Two Countries
Filing taxes in the United States and Sweden differs vastly for Jens Peter de Pedro. In Sweden, he receives a pre-filled tax return from the government, allowing him to file it promptly and effortlessly. Conversely, in the US, his American spouse grapples with taxes for days, describing it as "a pain point."
According to Alex Muresianu of the Tax Foundation, the US tax code's complexity stems from decades of incremental changes. Compounding this is the 4-million-word tax code, making it challenging for Americans to navigate.
Comparison with Other Countries
In contrast, the United Kingdom has a simplified tax system with "Pay As You Earn" payroll deductions, similar to the US. However, the UK aims for more precise withholding due to fewer tax complexities. Additionally, individual taxation regardless of marital status simplifies withholding calculations.
Other countries streamline social welfare programs through designated agencies, while the US offers assistance through tax credits, leading to a complex tax code.
Simplification Challenges
Simplifying the US tax code presents hurdles, particularly for freelancers and gig workers. Globally, this category faces manual tax calculation processes.
Some progress has been made: the Tax Cuts and Jobs Act (TCJA) of 2017 expanded standard deductions, reducing itemization. Additionally, the IRS's Direct File program simplifies filing for eligible taxpayers by pre-populating W-2 information.
Further simplification measures include pre-populated tax returns and automated tax calculations. However, these require legislative changes and earlier reporting of income by companies.
Conclusion
The US tax system remains complex, leading to significant time and financial burden for taxpayers. Despite challenges, the country has made strides towards simplification, such as Direct File. To achieve more substantial simplification, legislative action and increased collaboration with companies are necessary.